Delighting consumers worldwide, the price of crude oil plunged to a 12-year low of $32 per barrel in the international market Thursday —the lowest since 2003. Moreover, predictions are that it will dip further on production surplus.
However, Nepali consumers are yet to see any benefit from the plummeting oil price. Thanks to an acute fuel supply crisis and government apathy toward ensuring normal supply and controlling arbitrary prices, consumers are still waiting in long queues at fuel stations or remain at the mercy of the black market where prices have no limits.
Had the government at least implemented the automatic fuel pricing mechanism that it introduced in 2014, the price of petrol and diesel supplied by state-owned monopoly Nepal Oil Corporation (NOC) would have gone down significantly, thereby bringing a measure of relief to an inflation-ravaged public. However, government bureaucrats rarely have time to think of the average consumer.
“As per previous calculations, a drop in the crude oil price to $33 per barrel means petrol and diesel prices should have declined by at least Rs 20 per liter in Nepal,” says Chandika Prasad Bhatta, former managing director of NOC.
NOC is supplying petrol and diesel to the market at Rs 104 and Rs 82 per liter respectively. The automatic fuel pricing mechanism would have made it mandatory for NOC to revise prices every fortnight on the basis of rates forwarded by its sole supplier, Indian Oil Corporation (IOC). As it is, the fuel monopoly has made no revisions in the price since September 2015. It is also to be noted that IOC has been sending NOC new rates fortnightly and cutting down its price in recent months.
Meanwhile, people are waiting patiently for the government to ease the supply situation. By way of supporting the country and the government during this critical phase, some of them have cut back on their consumption of fuel. Others have turned to the black market. Consumers who would have gotten their petrol and diesel at around Rs 84 and Rs 62 per liter respectively if the automatic pricing mechanism had been in force, are happy to pay the ‘cheapest’ black market rate of Rs 200. The average rate of petrol in the black market is anywhere between Rs 350-400 per liter at present.
The black market in petroleum products is booming and has gone out of the government’s control.
NOC cites its so-called focus on increasing fuel supplies for not reducing the price in the domestic market. “Though the situation is easing now, we had a very low supply flow from IOC in the initial phase of the blockade and this turned our attention completely toward increasing the supply rather than revising the rate,” said Mukunda Ghimire, spokesperson of NOC. “However, we are preparing to revise the rate. Fuel rates will be revised within a few days,” he added.
Meanwhile, instead of slashing the rates the government has even allowed Birat Petroleum, a private firm to which it has awarded a fuel distribution licence, to sell petrol at Rs 190 per liter, thus hitting consumers even harder.