Prime Minister and Commerce Minister agree on heavy fuel price hike

June 6, Kathmandu. The meeting of the board of directors of Nepal Oil Corporation on Sunday evening has raised the price of petrol by Rs 21 per liter, diesel and kerosene by Rs 27 per liter. With effect from 12 noon on Sunday, petrol will now cost Rs 199 per liter and diesel and kerosene Rs 192.

The board of directors of the corporation is independent in determining the price of fuel. But at the same time, the board of directors was afraid to raise the price so much. However, they were encouraged by the Prime Minister and the Minister of Industry, Commerce and Supplies, according to the officials of the corporation.

After the Prime Minister and the Minister approved the proposal taken by the Board of Directors, there has been a high price increase in fuel despite some disagreement in the committee. Ganesh Prasad Pandey, chairman of the corporation’s board of directors and secretary for commerce and supplies, and Umesh Kumar Thani, executive director of the corporation, put pressure on the board of directors meeting on the proposal of Prime Minister Deuba and Minister Dilendra Prasad Badu, according to board of directors sources.

What happened at the board meeting?

The meeting of the Board of Directors of the corporation held at the Ministry of Commerce at 5:30 pm on Sunday lasted for two hours. Commerce Secretary Ganesh Prasad Pandey, who is also the Chairman of the Board of Directors, and Joint Secretary of the Ministry of Finance Dr. Arjun Kumar Khadka, Director General of Quality and Measurement Department Dinanath Sharma were present.

Similarly, Director General of the Commerce Department Lila Prasad Sharma, Expert Member of the Corporation Nara Bahadur Air, Executive Director of the Corporation Umesh Kumar Thani and Chairman of the Oil Corporation Employees Trade Union Madhumas Kovid were also present at the meeting. Board member and joint secretary of the Ministry of Commerce Radhika Aryal was absent from the meeting.

Initiating the meeting, Executive Director Umesh Kumar Thani said that the price should be adjusted as the financial condition of the corporation is weak. He had proposed a price hike of Rs 27 per liter on diesel and kerosene and Rs 21 per liter on petrol. It was also mentioned that the price of aviation fuel would be increased by Rs 19 on the domestic side and 100 US dollars on the external side.

The members had urged to justify the price hike. In response, Executive Director Thani said that the price hike was due to increase in prices in the international market, non-refund of VAT arrears by the Ministry of Finance and non-guarantee of payment to Oil Corporation of India.

Some members urged not to increase the price of diesel and kerosene. However, the Board of Directors said that Thani and Pandey had agreed to the proposed price (Prime Minister and Commerce Minister).

The members in the board meeting demanded that good governance should be started by reducing the operating expenses of the corporation, reducing the use of vehicles, merging the branches and not immediately increasing the price of diesel and kerosene. The members said that even though most of the members were serious about such a proposal, the executive director and chairman remained silent.

Another member of the board drew the attention of Executive Director Thani and Chairman Pandey saying that raising the price of diesel would make the market more expensive and create more problems for the general public. But Secretary Pandey and Executive Director Thani agreed that the proposal had been agreed upon. In response to a question from a member, Thani said that the prime minister and commerce minister had agreed to the meeting.

The members had urged the chairman and the executive director not to do so saying that it would be beneficial for the businessmen to increase the price as a large quantity of fuel was sold on Sunday.

In response, Commerce Secretary Pandey said, “Let’s accept this now. I will make public the information that the price has gone up at midnight.” He did not want to come in contact with the corporation chairman Pandey even after repeatedly contacting him for information.
Umesh Kumar Thani, executive director of the corporation, said it was normal to coordinate with the prime minister and ministers every time there was a price increase. “Before and now, the decision has to be taken in consultation with them,” said Thani.

Background of inflation

The Indian Oil Corporation, which buys petroleum products from Nepal, had sent a new price of fuel to Nepal on July 20. Generally, fuel price was increased in Nepal after the new price list came from India.

However, the board meeting could not be held as Minister for Industry, Commerce and Supplies Badu and Commerce and Supplies Secretary Ganesh Prasad Pandey were on a visit to Switzerland.

On 2 June, the corporation issued a statement saying that the price of fuel had increased from India. The release was aimed at informing the general public and fuel traders in advance of rising prices.

Four days after receiving the new price, the corporation has increased the prices of petrol, diesel and kerosene.