The hike in prices, which came into immediate effect, has made consumers in the Kathmandu Valley to pay Rs 116 per liter of petrol and Rs 85 each per liter of diesel and kerosene. [break]
The prices of liquefied petroleum gas (LPG) and aviation fuel have been left unchanged at Rs 1,415 per cylinder of 14.2 kgs and Rs 109 per liter (for domestic airlines companies) respectively.
The corporation said the prices were increased in an attempt to curtail loss, which was well over a billion rupees. “Following the hike, our loss has shrunk to Rs 857.50 million,” said NOC spokesman Mukunda Dhungel.
The hike has enabled NOC to earn a profit of Rs 5.52 per liter of petrol and 86 paisa per liter of kerosene. However, it continues to suffer a loss of Rs 9.97 per liter despite the Saturday´s hike.
Apart from diesel, the corporation also suffers a loss of Rs 454.28 per cylinder of cooking gas. It, however, enjoys profit of around Rs 20 per liter of aviation fuel supplied to domestic flights and Rs 25.26 per liter on supplies made to international flights.
“We decided to raise the prices although we have standby loans of around Rs 1 billion with Citizens Investment Trust (CIT) considering the price volatility in the international market,” said Dhungel, referring to tensions over Iran´s nuclear program, which caused the crude price to increase to a nine-month high on Friday.
Reuters on Friday reported Brent Crude of soaring over US$ 125 per barrel.
Though Saudi Arabia, the largest exporter, has raised the volume of its exports and the US too announced it is considering releasing crude from its strategic reserve, countries across the globe fear looming US sanctions and EU´s embargo along with potential military action against Iran, world´s fifth largest oil exporter, could disrupt supply.
US sanctions on Iran´s oil buyers and EU´s embargo are set to begin July 1 this year, but customers in Europe and Asia have already lowered their purchases from Iran.
As a result, crude prices have soared consistently over the past one week. And given that Nepal´s sole supplier -- Indian Oil Corporation (IOC) that sets its exports rate to Nepal on the 1st and 16th day of each month -- fixes the rate taking 15 days´ average, NOC anticipates its import rates to soar further in the month of March.
“We were already anticipating loss on LPG soaring to around Rs 600 per cylinder; the fresh trend has sparked fears of prices going up in case of other products as well,” said Dhungel.
As for the scarcity of LPG, which has made life difficult for general consumers, NOC said its imports have gradually improved and supply would ease in about a week. Records at NOC show Nepal has received well over 12,000 tons of cooking gas till Friday, which is almost double of what was imported in the same duration last month.
“If LPG bottlers had not circulated unmanageable level of cylinders in the market situation would have turned much comfortable by now. However, as scarcity has brought normally unused cylinders in queues, it will take some time for supply to return to normal,” said Dhungel.
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