Annual oil losses to touch Rs 8.5b

Annual oil losses to touch Rs 8.5b
eKantipur.com, 30-Apr-08
By Milan Mani Sharma

Monthly loss to hit Rs 1.5 billion NOC's import dwindles as oil loss soars At current prices, petrol costs Rs 87 a liter, gas Rs 1,500 per cylinder Maoists initiate petroleum trade study

The long-running apathy of politicians to revise the petroleum prices has inflicted a whopping oil loss worth over Rs 4 billion during the first nine months of the current fiscal year.

The figure is just an initial estimate, said Bachchu Kafle, deputy managing director of Nepal Oil Corporation, adding that it is the record loss the country has ever had to face in any year in fossil fuel trade. “It's a nightmare,” he told the Post.

But, the nightmare does not end here. Officials keeping track of the international oil prices said worse was still to come, as international oil prices for June delivery settled at US $117 a barrel on Wednesday.

“If the trend is any indication, the country is set to incur an additional oil loss of 4.5 billion over the next three months of the fiscal year, making the annual loss to around Rs 8.5 billion,” said a price expert at the corporation.

Domestic retail prices were set when crude was trading at US$ 94 per barrel in the international market. However, NOC is importing petroleum products at US$ 108 a barrel. “This difference has already cost the country and NOC, the state-owned petroleum import monopolist, a monthly loss of Rs 1.35 billion in April,” said the official. Since the crude prices have scaled upward till June and there is no sign of its easing in July, officials said the country's oil loss will only swell to an average of Rs 1.5 billion a month for the remaining three months of the fiscal year.

“The extent of the rise may vary for individual products, but at US $117 a barrel, the price of petrol will have to be raised to Rs 87 a liter, diesel to Rs 84, kerosene to Rs 69 and liquefied petroleum gas to Rs 1,500 a cylinder,” said the NOC pricing official.

In the present situation, wherein the corporation is already depending heavily on the government's loans for managing imports, further rise in losses is feared to cost to consumers heavy.

“If prices are not adjusted, the shortages will only return to stay. It will be a hopeless situation. The political leaders must make a prudent decision now,” said an official at the supplies ministry.

Failing to generate enough money, cash-strapped NOC has already fallen short on its weekly installment payments to the Indian supplier.

As a result, the Indian Oil Corporation has curtailed supplies by half to about 1,500 kiloliters a day at present. This has caused the queues to return to the refilling stations.