Laws related to dual LPG pricing prepared

Laws related to dual LPG pricing prepared

The Ministry of Commerce and Supplies has prepared a draft of the Supply and Distribution Orders with the aim of implementing a dual pricing policy for liquefied petroleum gas (LPG) and plans to send it to the Cabinet for its approval immediately after Tihar.

The government’s long-standing scheme to distribute colour-coded LPG cylinders to household and commercial users has been exhibiting an on-again, off-again pattern due to lack of effective laws. Under the dual pricing policy, household and commercial users would get red and blue cylinders respectively, and prices would differ accordingly.

The ministry said that the enforcement of the Supply and Distribution Orders would enable Nepal Oil Corporation (NOC) to implement the dual pricing and cylinder system. Presently, NOC provides a subsidy of Rs 511.33 per cylinder of LPG. Consumers pay Rs 1,470 per cylinder while the actual cost is Rs 1,981.33.

Ministry Spokesperson Deepak Subedi said they had finalized the draft orders in compliance with NOC’s proposed working guideline. The working guideline prepared by the state-owned fuel monopoly is awaiting approval by its board of directors. The guideline will govern the proportionate sale of red and blue LPG cylinders in the market.

“We will submit the draft guideline to the NOC board for its approval,” said NOC Spokesperson Mukunda Ghimire. According to him, the proposed guideline will permit bottlers to distribute 30 percent of their cylinders to commercial users like hotels, restaurants and industry. The guideline will also allow NOC to conduct effective monitoring of LPG cylinder sales as commercial users will be barred for using red cylinders. “As per the guideline, NOC will keep a watch on the market to ensure that commercial buyers are using blue cylinders. The corporation will also check regularly whether bottlers have seen supplying 30 percent of their cylinders to commercial users,” he said.

NOC introduced the dual cylinder system two years ago, but it has not been able to enforce the dual pricing system. In February 2013, the corporation hiked LPG prices by introducing a dual pricing scheme, but it was forced to withdraw its decision the very next day following widespread criticism, particularly from 11 student unions which went on the warpath demanding a price rollback.

Source: eKantipur