Nepal Oil Corporation (NOC) on Wednesday opted not to hike petroleum price in line with the rise in the international market, citing that the increase would not have a significant change in their profits.
Since adopting auto-pricing mechanism on September 28 last year, NOC has been slashing the oil price in line with international price downturn. NOC Spokesperson Mukunda Ghimire said that the state owned oil monopoly did not hike oil price as international price only nominally rose, which in turn would not hurt NOC’s profit to a great extent.
“Abiding by the working guideline for automatic pricing mechanism for petroleum products that says to adjust the price once the international price fluctuates by 2 percent, the management has decided not to change the fuel prices this time,” said Ghimire.
“As per the guideline, the NOC can revise the price either once or twice a month depending on the extent in price fluctuation in the international market.”
He, however, declined to mention the exact amount of price change while importing petroleum from the Indian Oil Corporation (IOC).
At present, petrol costs Rs 109 per litre while diesel and kerosene each cost Rs 86.50 per litre. According to the NOC, it received the increased price lists of petroleum from IOC on Monday. As per the new prices, petrol is dearer by Rs 5.32 per litre while the diesel price has increased by Rs 4.29 per litre.
Sources at the NOC said that the working guideline has also mentioned on maintaining profit of 1 percent on diesel and 12 percent on petrol. If the profits cross the ceiling, the extra amount will be kept in the fuel price stabilising fund.
Ghimire added that with the revised price, the NOC can now only keep a certain amount of money in the stabilising fund.
After adopting automatic pricing mechanism, it has lowered the petroleum prices nine times over the last five months, along with the drop in fuel prices in the international market.
This is the first time since the implementation of automatic pricing mechanism that the NOC has faced a rise in international price. “Oil prices have risen more than 35 percent to $61.50 a barrel since hitting an almost six-year low of $45.19 in January,” states Reuters.