27 Chait, Kathmandu. Less than two days after the government gave a 50 percent discount on the tax on petroleum products to provide relief to consumers, the Nepal Oil Corporation has suddenly increased fuel prices.

Federal Affairs and General Administration Minister Pratibha Rawal announced a 50 percent discount on the tax levied on petroleum products while announcing the decision of the cabinet meeting chaired by Prime Minister Balendra Shah on March 24.

“The government is transparent, does not hide the facts and understands the pain of the people,” she said while announcing the decision.

Hearing this decision of the government, the consumers were hoping that the price of petroleum products would decrease and they would get some relief.

On the contrary, the corporation, who was hoping for a decrease in the price, has made the fuel price hike by increasing the fuel price from midnight.

After this decision of the corporation, the government is expressing anger saying that instead of giving relief to the people in the crisis situation, they are pushing them to the cost of money.

According to the new prices, petrol/kerosene has been increased by Rs 17 per liter and diesel/kerosene by Rs 25 per litre. With this increase, the price of petrol has reached Rs 290 per liter, while the price of diesel and kerosene has remained at Rs 277 per liter.

Similarly, the price of LP gas has been increased by Rs. 100 per cylinder and aviation fuel by Rs. 6 per cylinder.

With this increase, the price of LP gas for cooking has reached Rs 2,000 per cylinder. The price of aviation fuel remains at Rs 257.

Comparing the price of Indian market with the price of Nepal, there is a stark difference. In the Indian capital New Delhi on Friday, petrol is 94 rupees 77 paisa per liter and diesel is 87 rupees 67 paisa per liter. The price of petrol in Nepalese rupees is 151 rupees 63 paisa and diesel is 140 rupees 27 paisa.

When compared like this, petrol in Nepal is about 67 rupees 37 paisa per liter and diesel is 66 rupees 73 paisa more expensive.

Regarding the public complaint that petroleum products are more expensive in Nepal compared to the Indian market, Oil Corporation spokesperson Manoj Thakur claimed that the prices in Nepal cannot be compared with the domestic market of India.

Spokesperson Thakur said that the cost of oil will be very expensive when it is purchased from Indian Oil Corporation (IOC) and brought to Nepal.

According to him, the corporation has paid IOC the purchase price of petrol at 153 rupees 78 paise per liter. Similarly, the purchase price of diesel and kerosene is 242 rupees 49 paise per liter.

However, if you add all the expenses including customs and other taxes charged by the government of Nepal, shipping charges, administrative expenses of the corporation and dealer commission to the said purchase price (after price adjustment), the total cost price of petrol in Nepal will be 221 rupees 32 paise per liter. Similarly, Thakur informed that the total cost price of diesel will reach 294 rupees 99 paise per liter.

“India is not a landlocked country, it has its own refineries (processing centers), India has 3 government and 2 private company refineries, they bring cheap crude oil (crude oil) from 21 countries and refined oil from 41 countries,” he said.

10 billion fortnightly loss even after tax reduction

In the statement issued by the corporation, it is mentioned that due to the increase in prices in the international market, even when the government reduced the customs and infrastructure tax by half, the loss did not stop.

Even after tax adjustment, the corporation has a loss of 16.65 rupees in petrol, 109.50 rupees in diesel and 416 rupees in gas.

The corporation has also appealed to the consumers to use less fuel (to be frugal) saying that even after increasing the price, there will be a loss of 7 billion more per fortnight.

The corporation is a fully government-owned organization. The government’s 50 percent discount on customs and infrastructure taxes means that the government will reduce its revenue and strengthen its company’s balance sheet. Overall, the state has neither profit nor loss. However, it is the ‘consumer’ caught in the middle, who could not realize the tax exemption.

The corporation always says when the price increases in the international market, ‘we are in an automatic price system, there is no option to increase the price’. However, when the government lowers the cost by reducing the tax, instead of reducing the price, it advances the argument that ‘the old deficit has to be covered and IOC’s debt has to be paid’.

Consumers are questioning what kind of automatic system this is, when it increases ‘automatically’, and when it decreases, ‘manual’ brake is applied.

This is a relief to consumers: Executive Director Bhatt

The corporation has defended its action when the government is facing widespread criticism for killing consumers by increasing the price of petroleum products after giving tax exemption.

The executive director of the corporation. Chandika Prasad Bhatt has argued that the tax exemption given by the government has stopped the ‘intolerable increase’ in the price of fuel and this is a big relief for the consumers.

“There was a bigger price increase than this, the government decision stopped it,” Bhatt told Online News.

According to him, the corporation was forced to increase the price due to the huge losses incurred while purchasing from the international market. Stating that there is still a loss of Rs 95 per liter in diesel, he claimed that in the absence of tax exemption, all this burden falls on the consumers.

Stating that the corporation itself is in extreme financial crisis, Bhatt asserted that within the next one month, the corporation is preparing to manage losses by investing around 13 to 14 billion rupees.

Outrage of consumer rights activists: The corporation and the government are bullies

Consumer rights activist Madhav Timalsina has termed this step of the oil corporation and the government as ‘big game and bullying’. He alleges that the government is pretending to give tax exemptions, but on the contrary, it is working on the backs of the people.

“The price of crude oil is falling in the international market, but the corporation has increased the price here by showing the old and expensive price list 15 days before the IOC,” Timalsina said.

Reminding that in the past, when the corporation was profitable, bonus was distributed to the employees, Timalsina said that now a government-owned company is in loss and the entire burden should not be put on the head of the consumer.

“From production to transportation of gas, everything is done by the private sector, the corporation will only give a blank paper (PDO), but why should the people bear the burden of the unproductive expenses of the corporation, which buys billions of land because of losses?” he asked.

Telling the people to walk, the minister and the boss alone in the car?

Timalsina strongly objected to the corporation’s appeal to consumers to use less fuel through a statement.

‘People are told not to drive, to use less oil, but the secretaries of the ministries and the bosses of the corporation will ride alone in a car? Within the corporation, 20 directors need 20 vehicles,’ Timalsina expressed anger, ‘Do employees who go on the same route lose the practice of using one vehicle (car pooling) or taking public transport? Can they abuse billions of cars and oil and kill vulnerable people?’

He said that during the crisis, instead of implementing a strict system, encouraging electric vehicles and organizing public transport, the government chose the easy way by directly increasing prices.

Timalsina alleges that the Secretary of the Ministry of Industry, Commerce and Supply and the officials of the Competition Market Promotion Board have flouted the Consumer Protection Act and shown extreme irresponsibility towards the public.

He has also demanded that the Prime Minister’s Office should immediately intervene and withdraw this unnatural price increase.

Experts have said that even when the government gives tax exemptions, the increase in the price of petroleum products by the oil corporation shows the opaque working style of the corporation and the tendency to impose a burden on the consumers to make up for the past losses.

Former secretary and administrative expert Bimal Prasad Wagle has commented that there is a lack of clarity in the pricing process of the corporation and it always hurts the consumers.

“Normally, adjustments should be made based on the new price list that comes from the international market every 15-15 days,” he said, “but, the corporation does not always do that, there are many examples of making profit without reducing the price in the name of making up for old losses even when the price has fallen in the past.”

According to former secretary Wagle, the corporation kept the price the same or reduced the price even when the price decreased to cover the accumulated losses suffered in the past, instead of giving relief to the consumers.

‘In the past, the loss of the corporation reached 32 billion rupees,’ Wagle recalled, ‘it took one and a half to two years to make up for that loss. How was that possible? Even when the prices in the international market were reduced, the loss was made up without reducing the prices here.’

He says that the state cannot bear such a huge loss from Dhukuti. ‘Corporations are forced to meet with their own income,’ Wagle said, ‘but the direct hit is the consumer.’

Cutting government spending is the main solution

Wagle argues that increasing the price is not the only solution to reduce the consumption of petroleum products. According to him, this increases the cost of transportation, which increases the price of every commodity in the market and has a negative impact on the overall economy.

He says that the real solution should start from the government level. He said that vehicles with red number plates are being misused under the pretext of security and said that white number plates should be made mandatory for all government vehicles, which will discourage unnecessary use.

In addition, he emphasized that the system should be ended to stop the misuse of oil coupons in the ministries. “When I conducted a study, it was found that 62 vehicles were filled with oil in a ministry where only 12 people got vehicle facilities,” he said.

Suggestion to implement cross-subsidy system

Wagle emphasized on the need to adopt the ‘cross-subsidy’ principle for price management of petroleum products. According to him, by taking a little more profit on items like petrol and jet fuel, the amount raised from that can be used to give subsidies to diesel and kerosene, which are used more by the general public.

“The class that uses petrol and jet fuel are relatively well-off,” he said, “If we subsidize diesel by taking a little more from them, the cost of transportation will not increase and it will help to control the price in the market, it will also help to reduce the negative impact on the environment (deforestation).”

He said that before asking the consumers to reduce their consumption, the government agencies should set an example by adopting frugality.

Govt’s decision ‘immature and unreliable’: Economist Khanal

Economist Dr. There is a serious question about the credibility of the government’s decision to increase the price of the corporation within two days after the government decided to provide relief to the people by reducing the tax on petroleum products. Dilliraj Khanal says.

Economist Khanal termed this step of the government and the corporation as ‘immature and unreliable’ and commented that it has created a crisis on the credibility of the government.

With the contradictory steps of the government to reduce taxes and the corporation to raise prices, the overall development seems like a failure. Khanal said.

If the price was to be increased tomorrow, why did you reduce it today? This has created a serious crisis of confidence in the decision-making process of the government and its agencies,” he said. “The decision to reduce taxes was positive in itself, but the way prices were increased immediately after that made the whole process unbelievable.”

Dr. Khanal said that since Oil Corporation is a fully government-owned organization, it cannot avoid the responsibility of bearing some losses during the crisis.

“The corporation is a 100% government organization, it has to bear some losses during the crisis, distribute arbitrary dividends when there is a profit, but when there is a small loss, the tendency to immediately increase the burden on the consumers or ask for money from the government is not right,” said Dr. Khanal said, ‘This raises the question of the corporation’s social responsibility.’

However, he said that although the technical side of it is understandable that it will take some time to see the impact in Nepal as soon as the price falls in the international market, the overall decision-making process is not mature.

Overall, although the decision to reduce taxes was positive, the implementation of the same and the subsequent price increase made the government’s decision meaningless, he said.