International crude oil prices have hit nearly six-year low of $45 a barrel, but Nepal Oil Corporation (NOC) seems reluctant to adjust the fuel prices in line with international prices.
NOC’s monthly profits from the oil business has reached near Rs 1 billion.
International oil prices had reached the record high of $146.12 per barrel on June 2008, and at that time the prices of petrol and diesel in Nepal were at Rs95 and Rs70 per litre, respectively. The crude price has now fallen by more than $100 per barrel, but petrol and diesel still cost Rs106.50 and Rs84, respectively.
In September 2014, the petrol price was at Rs134.50 per litre and diesel at Rs105.23 in the domestic market, when the crude oil price was at $91.44 per barrel. In last 10 months, the crude price has dropped by $46 per barrel. However, the domestic market saw a nominal drop of Rs28 on a litre of petrol and Rs21 on a litre of diesel over the period.
As per the revised tariff sent by the Indian Oil Corporation on August 1, NOC’s estimated profit has reached Rs 851.4 million per month. It has been enjoying profits in almost all petroleum products.
NOC, however, said it has been unable to reduce the prices significantly as it has to repay its debts. “As we have planned to clear all our loans from the profit earned, we have not been able to cut prices notably,” said NOC Spokesperson Mukunda Ghimire.
NOC adopted the auto-pricing system on September 29, 2014, but consumer rights activists say it has not fully implemented the system. “In fact, NOC is cheating the consumers. The auto-pricing system is just an illusion created to make profits,” said Madhav Timilsina, president of Consumers Right Investigation Forum.
In the last one year, the debt-ridden corporation replayed Rs15 billion to Employees Provident Fund and Citizens Investment Trust. It still owes Rs12.64 billion to the government, Rs4 billion to Employees Provident Fund, Rs3 billion to Citizens Investment Trust and Rs2.24 billion to various banks and financial institutions.
Ghimire said the prices in Nepal are fixed in line with the prices India to prevent smuggling. He said diesel is expensive by Rs2 per litre and petrol by Rs5 per litre in Nepal compared to India. He, however, said NOC could reduce the prices heavily once its debts are cleared.