Misleading figures

27th-Jan-2012
Involvement of the private sector is crucial to end the monopoly of Nepal Oil Corporation (NOC), and to ensure sustainable solutions. The government should privatize the NOC and create a level playing ground that would be conducive for the involvement of the private sector. The NOC is notorious for mismanagement as a result of which the price of petroleum product is on the rise, and the consumers have to pay additional costs, not to talk about the rampant irregularities taking place in the corporation. Despite these taking place, virtually no, if any, action has been taken against the corrupt officials of NOC, who are known to be taking undue advantage of the monopoly enjoyed by the corporation. Therefore, it is essential to ensure that the legal and regulatory mechanisms are in place before the restructuring and privatization of NOC is undertaken. But, if the NOC is privatized, will the existing cartel and syndicate system in the private sector appear in fuel supply too? The various reforms models need to be studied for the most efficent one for implementation. The reforms should be aimed at a fair fuel price, not an arbitrary one like it is now.

There is a constant refrain of the government that the NOC is bearing a loss every month. According to the NOC, the monthly loss as per the January 16 price stood at Rs 861 million. However, although NOC as an institution is losing, both the government and NOC officials are benefitting. The same data provided by the NOC shows that as per the January 16 cost price specified by the Indian Oil Corporation, the government would have earned a monthly revenue of Rs 1.81 billion. The government levies a tax of Rs 32.97 on a litre of petrol, Rs 14.32 for diesel, and so on. The question is whether the government should lower the tax on fuel to reduce the price rise, with positive impact on the economy, or whether it should continue to rely on the revenue collection to run a corrupt and inefficient government. In fact, the loss reading made by NOC is totally misleading.

The price of oil in the international market moved from US$10 per barrel in 1998 to over US$70 in 2005, and more than US$ 140 in 2008. The impact of fuel prices has a direct bearing on the overall economy. The rise in fuel prices raises the price of essential commodities not to talk about the hike in transport costs, among other things. As is evident from the figures, it is very clear the consumers of petroleum products are being fleeced by the NOC, the sole supplier. Still, the NOC has the nerves to fabricate the loss-making tale to hike fuel prices at will. In recent months, the price of fuel has been raised a couple of times throwing the national economy haywire. The government, and the NOC in particular, should clean up their act and adopt a suitable policy and mechanism for fixing the price of petroleum products, which should not be done on impulse. Thus, the whim-based pricing of petroleum products should be outrightly condemned as it is tantamount to hoodwinking the gullible consumers, while the government ministers and NOC officials make a fast buck illegally. Thus, the argument that the fuel price needs to be hiked holds no water.

Sweet and sour

In these gloomy times of inflation and the sharp increase in the price of petroleum products, the news that the winter harvest is encouraging makes people feel a bit relieved. What has been seen in recent years is that the price of every commodity of daily need has gone for the exponential growth. That has been quite hard on the consumers, most of whom have not seen reciprocal increase in their incomes. Therefore, making ends meet has become quite difficult for the average citizen. As for checking the market, there is no reliable mechanism to take action against profiteers, and the entrepreneurs take the liberty to raise the price of the commodities at their whims and fancies, thereby pinching on the wallet of the common man.

To learn of the good winter harvest is good news, but when it comes to the wholesalers and retailers it may not be anything to cheer about especially with the transportation costs going up with the petrol and diesel price hiked. The only thing that the consumers can do is to sit with fingers crossed in the hope that the commodity prices will dip in the coming days. The likelihood is, however, to be watched.

Himal..