Kathmandu: The Nepal Oil Corporation that has billions of rupees in stabilization fund has been adjusting price of petroleum products ‘haphazardly’ adding a burden to consumers.
The state-owned oil monopoly had established the fund in 2014 aiming to put fuel price in check.
Although, the fund has almost Rs 11 billion, the NOC has been increasing petroleum prices sans utilizing the amount. It has been levying 0.5 percent tax on petroleum products for the fund it says will be utilized to stabilize the price.
However, in the last six months, the NOC has been increasing fuel prices in the name of implementing automatic pricing mechanism.
Consumer rights activist Jyoti Baniya questions the need of the fund if it is not used for the sole purpose it was formed.
“The price of crude oil in increasing in the international market, but the NOC can stabilize price here by utilizing the amount in the fund. What is the need of the fund if it not used for the purpose it was established?” Baniya told Nepal Live Today.
In the last six months, the price of petrol has increased by 13 percent, and diesel and kerosene by 15.81 percent.
NOC has been raising fuel prices every 15 days in the name of automatic fuel pricing mechanism.
“Despite implementing the mechanism, NOC has been increasing the price even if there is a slight change in international market. It is always reluctant to adjusting rates when price dips,” laments Baniya.
NOC minting billions in profit
When the price of brent crude was plunging drastically in the international market, the NOC had slashed the price of petrol, diesel and kerosene by only Rs 10 per liter in April last year.
It recorded a profit of Rs 16.17 per liter in petrol, and Rs 12.90 and Rs 36.77 per liter in diesel and kerosene.
Likewise, in May last year, the corporation minted a profit of Rs 22.45 per liter in petrol, Rs 25.69 per liter in diesel and Rs 55.35 per liter in kerosene.
In the same month, the state-owned petroleum monopoly recorded a profit of whopping Rs 504 million.
In the last six months, the price of petrol has increased by 13 percent, and diesel and kerosene by 15.81 percent. But still, the NOC is still reluctant in stabilizing the fuel prices.
NOC Spokesperson, Binit Mani Upadhyaya, however, claimed it would have incurred a loss of Rs 810 million in the next 15 days if the price was not adjusted.
“The NOC has utilized the fund to stabilize fuel prices. As fuel price is going up in the international market, the NOC had no option than to increase the price in domestic market,” said Upadhyaya, defending the move to hike price.
The NOC also recorded a net profit of Rs 12.91 billion in the last fiscal year.
Consumer right activist Baniya blames NOC has no intention in providing relief to consumers despite minting billions in profit.
“The NOC has been recording profit in billions every year. But it has no intention in providing relief to consumers,” said Baniya.
As per the price rate of April 15, the NOC is purchasing petrol at Rs 60.55 per liter, diesel at Rs 57.27 per liter and kerosene at Rs 55.61 per liter from the Indian Oil Corporation.
However, the consumers have to pay almost double the amount, given the high amount of taxes, bonus to employees and commissions for petroleum dealers.
“The commission for petroleum dealers is one of the highest in South Asia. The employees of the enterprise are receiving handsome bonus even by charging consumers exorbitantly.
The commission rate for petroleum dealers has been set at 3.39 percent for petrol and 3.12 percent for diesel.
However, NOC Spokesperson Upadhyaya defends the move.
“The NOC has raised fuel prices in line with the automatic price mechanism. Yes, we made profit in billions in the last few years, but have been facing a huge loss in the last three-four months,” said Upadhyaya, “We are trying the make up the loss from the profit earned in the last year. The commission for dealers has been raised after a detailed study.”