Nepal government gearing up for entry of private sector into petroleum business

At the 43rd anniversary of the Nepal Oil Corp. (NOC), Nepal’s Commerce Secretary, Lalmani Joshi, announced that the government will issue new guidelines allowing private enterprises into the petroleum business in the country. This means NOC will no longer enjoy a monopoly. He explained that a committee has been formed to study ways and means to attract private business into the trade, adding that “breaking the petroleum monopoly is the need of the hour.”
 
NOC’s loan of Rs 27.51 billion (US$319 million) from the government and other financial institutions incurs an annual interest of Rs 2.04 billion (US$24 million). Joshi said that with the enforcement of color-coded dual LPG cylinders in the market, NOC’s finances can turn around, and will become profitable. The Commerce Ministry has asked the Finance Ministry to raise NOC’s capital and allocate a price stabilization fund to avert any future price shock.
 
Meanwhile, a committee formed by the National Planning Commission (NPC) under the leadership of Vice Chairman Dipendra Bahadur Kshetry has been tasked to study the feasibility of a cross-border petroleum pipeline under the Build, Own, and Operate and Transfer (BOOT) model. “We will soon submit a report to the government,” Kshetry said, adding that another committee has been formed to prepare a petroleum price mechanism policy.
 
Demand for petroleum products in Nepal has grown by 20% over the past two years, according to NOC statistics. Higher energy consumption has made petroleum products
the country’s number one import. Nepal’s gasoline imports in 2011-12 increased by 27.2% to Rs 96.38 billion (US$1.1 billion). (January 11, 2013)