Petro product prices
The spokesperson for Nepal Oil Cooperation (NOC) Sitaram Pokhrel was clearly trying to cover up for his bosses. He recently told Republica that NOC was unable to lower price of petroleum products significantly since “the price of petroleum products is cheaper in Nepal compared to India" and "further deduction in price will encourage cross-border smuggling”. He was on the mark, at least on the first count. According to mypetrolprice.com, as of June 19, a liter of petrol in Motihari of Bihar, which is at a distance of 55 km from Nepal's Birgunj, cost Indian Rs 67.8, which comes to Nepali Rs 108.48. But in Nepal, after the latest adjustment, petrol is selling at Rs 100 per liter. In Gorkhpur of Uttar Pradesh, which is just 70 km from Nepal's Sunauli, a liter of petrol on June 19 fetched Indian Rs 67.68 (or Nepali Rs 108.28). This suggests the prices of petro products are indeed higher in India as compared to the prices in Nepal. Yet there has so far been little evidence of bulk smuggling of petro products from Nepal to India. The NOC spokesperson was thus, in a way, trying to justify the corporation's decision to illegally profit from selling petrol products. Illegally because, according to its Articles of Association, the sole objective of the cooperation is "to distribute petroleum products by adding administrative costs on import price" and to "ensure smooth supply in the market". In other words, NOC is not a profit-making entity.
Health facilities see surge in snake bite cases
Yet, in the wake of the falling global fuel prices, it has been making bumper profits by maintaining high margins on its products. For instance, in the 11 months till May, the NOC made profits worth Rs 10 billion. But where does this profit go? Some of it finances its 'infrastructure cost'; the rest is distributed in 'bonuses' to its over 700 employees. Legally, it is not entitled to either tax consumers for infrastructure nor to distribute bonuses as not-for-profit company. If it added only administrative costs to import price, the prices of petrol, diesel and LPG would be lot lower than their market prices today. As the corporation has already cleared all its dues, there can be no justification whatsoever for overcharging customers. How we do make sense of NOC's per cylinder profit of Rs 44.38 on LPG? Cooking gas is something extensively used by people from every walk of life and of every economic background. Taxing them so that corporation employees can pocket hefty bonuses should, in fact, be a criminal offense.
An automatic fuel price mechanism, the idea first introduced in Nepal in 2014, could be one way out. According to this mechanism, a permanent committee reviews the prices of petro products in Nepal every 15 days to bring them in line with international prices. The mechanism had become dysfunctional after the 2015 earthquakes and the subsequent blockade, both of which caused disruptions in fuel supply. Now that the mechanism is finally active, it does not seem to be functioning independently, as it is supposedly working for NOC bosses than in the interest of common people. In public interest, such a mechanism thus has to have representatives from consumers and the civil society with no vested interests. Such daily life issues are also the yardsticks with which people judge their government.
An earlier version of this editorial wrongly suggested that NOC Spokesperson Sitaram Pokhrel was 'lying' when he said that the prices of petro products in Nepal were 'cheaper' compared to the prices in India. The prices are indeed cheaper in Nepal. The editorial team regrets the grave mistake.
