Unfair price hike

The latest petro-price hike announced by the government has once again exposed how decisions that directly affect millions of consumers are taken on an ad hoc basis. With today´s price adjustments, the Ministry of Commerce and Supplies (MoCS), which blatantly lacks a clear policy for the petroleum products business, has allowed state-owned monopolist Nepal Oil Corporation (NOC) to bag a profit of Rs 6 per liter of petrol and Rs 8.50 per liter kerosene. But surprisingly, it has left unchanged the price of liquefied petroleum gas (LPG), which alone is responsible for two-thirds of NOC’s losses.



Consumer rights groups have already decried the decision, calling it an ´unfair and unjust´ act of using petrol and even low-end kerosene to cover the losses incurred over LPG, which is by no means a popular cooking fuel for low-income sections of society. They are asking why the government is allowing an opaque and corrupt institution like NOC to use petrol and kerosene as a tool to cover losses generated by LPG. Our straight-forward question to the government is what is preventing it from revising the price of LPG, a cooking gas popular among classes that are not at all in need of a state subsidy of Rs 130 per cylinder. Still worse, Tuesday´s decision has for the first time tagged LPG as a product entitled to state subsidy.



And even more disturbing is that Commerce Secretary and Chairman of NOC Purushottam Ojha, who announced the price hike, has defended the decision not to raise the LPG price, saying that it would hurt the lowest income groups. So, a simple question that we have for the commerce secretary is, does he really believe the roughly 33 percent of Nepal’s population that has been tagged as absolutely poor command the financial capacity to use LPG for cooking? Are they in a position to pay the minimum of Rs 5,000 needed for installing LPG in the kitchen? No, Mr. Secretary, you have grossly misunderstood the characteristics of poverty in Nepal. If the government is really concerned about the poor, why is it exacting a Rs 8.50 profit from kerosene? Isn´t kerosene the poor man’s cooking fuel?



We believe that the government’s latest decision to raise petrol and kerosene prices is a faulty one. The state´s scare resources should not be wasted on providing a subsidy to LPG users and covering losses in diesel, though that is nominal. There are dozens of areas where resources can be used in far more productive ways. Even a small state support for re-hydration salts can save hundreds of children. So, we urge the government to revisit its decision and lower the subsidy on LPG so that the burden imposed on petrol and kerosene users can be reduced at least to some extent.

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