NOC helpless at fuel smuggling

Traders have started smuggling petroleum products from bordering towns in India and selling them in Kathmandu, Nepal at higher rates, as Nepal Oil Corporation (NOC) remains clueless about easing the longstanding fuel shortage. Merchants based in Rangeli of this eastern city have been sneaking as much as 5,000 liters per day (lpd) of diesel into the capital. “We buy diesel at Rs67 (US$1.56) per liter in Indian marketplaces about two kilometers from the border, and sell it in Kathmandu at Rs120 (US$2.80),” said a trader. Local operators said traders were transporting some 10,000 lpd of diesel fuel and petrol to Nepal. The fuel is shipped in large vessels and jerry cans. Dealers revealed that they delivered some of the smuggled stocks to gasoline pumps. They said that petroleum products were brought in mainly from border areas like Ramchowk, Diania, Betauna, Nocha, Amgachhi, Kursiya and Kadamaha. NOC regional office Chief Pushkar Datta admitted that the wide gap existing between demand and supply was currently being fulfilled to some extent by illegal imports. According to NOC records, eastern Nepal requires 400 kiloliters of fuel daily. The available supply, however, stands at a mere 150 kiloliters, as NOC does not have the money to import more. The Nepal government has already decided to provide Rs1 billion (US$23.3 million) to NOC in mid-July. Consumers had been hit hard after NOC was unable to supply even 20% of the required demand due to lack of funds. The stock of 70,000-kiloliter capacity of NOC has also dried up. In the last fiscal year, the government had provided Rs6.67 billion (US$155.7 million) to NOC. NOC has been demanding domestic price adjustments to be at par with international market prices or greater subsidy. (July 20/August 8, 2008)