Pvt players chipping away at NOC primacy in petroleum trade

PRABHAKAR GHIMIRE KATHMANDU, May 30: The private sector involved in distribution and transportation of petroleum products seems to be chipping away at the primacy so far enjoyed by the state-owned Nepal Oil Corporation (NOC) in oil trade. Over the years, tanker operators, tanker workers, petroleum dealers and Liquefied Petroleum Gas (LPG) bottlers have made the government bow to their impractical demands by bringing petroleum supplies to halt time and again. The most recent of such incidents was the strike called by LPG bottlers who have been demanding a hefty hike in commission. Private players have become so powerful that they rule the roost in the petroleum sector. “Though NOC is a state-owned petroleum monopoly, it is the unscrupulous petroleum traders who call the shots,” says Jyoti Baniya, general secretary of the Consumers´ Rights Protection Forum. “It is a great challenge to the government that the private players have the capacity to bring the supplies of petroleum products to a complete halt whenever they want.” Though the existing laws do not allow strikes that affect distribution of petroleum products, the government has failed to effectively implement them. LPG operators have been receiving Rs 50.02 per cylinder from NOC in commission, but they have demanded a hike of Rs 15.61 in line with increased “overhead” expenses. LPG bottlers are even not willing to make public the details of overhead expenses to avoid public criticism. “There are so many expenses we have included in the overhead costs. But I don´t remember them all,” Shiva Prasad Ghimire, president of Nepal LPG Industries Association. Even NOC is ignorant about the expenses being included in overhead costs. “We have no idea about the costs included under overhead expenses,” said Suresh Agrawal, acting Executive Director of NOC. NOC has been suffering a loss of Rs 439 in the sale of each cooking gas cylinder. NOC which is suffering from over Rs 24 billion worth of accumulated losses and loan liabilities worth Rs 28 billion will have to face additional loss if the commission is increased. “The consumers will be the hardest hit though,” said Baniya. LPG bottlers have already been enjoying a profit of Rs 28 per cylinder. Profit on LPG gas for bottlers will increase to Rs 36.74 per cylinder if their demand is fulfilled. “They resort to protests as a bargaining chip to prevent the government from allowing free competition in transportation of petroleum products,” said Baniya, who has also been involved in the number of negotiations with the private players in the past. However, an official at NOC begged to differ. “LPG operators are powerful because the government is weak. The government has failed to act tough against unscrupulous transporters and dealers,” the official said. The petroleum and gas dealers have also challenged the government´s decision to introduce dual color cylinder system with different prices for industrial and household consumption. Tankers operators had already succeeded in preventing implementation of regulations that would allow private sector players to engage in import, processing and distribution of petroleum products. “They don´t want to see other private players because they have been benefiting from the inefficiency of NOC,” the NOC official said.
Published on 2013-05-30 01:00:00

ndia reimposes countervailing tax on Nepali RMG

PRABHAKAR GHIMIRE KATHMANDU, April 30: India has reimposed countervailing tax on readymade garments (RMGs) from Nepal. The move goes against the understanding between two countries to impose countervailing tax only on products on which excise duty is imposed. India has been levying additional tax on Nepal´s RMG exports for the past two weeks. According to exporters, this will further reduce Nepal´s apparel export to Asia´s third largest economy. “As per the understanding between the two countries, India cannot levy countervailing tax on branded and made-off items which are exempted from excise duty. But India has been making Nepali exporters to cough up additional tax for the past couple of weeks,” Uday Raj Pandey, president of Garment Association Nepal (GAN), told Republica on Monday. According to Pandey, Indian customs office has levied 12 percent countervailing tax on maximum retail price (MRP), making Nepali exports expensive than other products in the Indian markets. India had stopped levying countervailing tax on Nepali products after the issue was raised by then Prime Minister Madhav Kumar Nepal during his India visit in 2010. “Our RMG exports will decline further as our products will now become expensive than our competitors,” said Pandey. Data compiled by Nepal Rastra Bank shows Nepal´s apparel exports dropped by 66 percent during the first eight months of the current fiscal year compared to figures of the same period last year. During the review period, Nepal exported RMGs worth Rs 124.5 million to India. Statistics of Trade and Export Promotion Center (TEPC) shows that overall exports of Nepali apparels tumbled by 22 percent to Rs 2.34 billion during the review period. Nepal´s apparel export has come down massively since 2005 when US ended duty-free access to Nepali RMG. Deepening financial crisis in European nations has also affected RMG exports from Nepal. During the review period, Nepal´s RMG export to overseas market plunged by 36.9 percent to Rs 1.93 billion. Meanwhile, RMG entrepreneurs have requested to the Nepali officials to exert diplomatic pressure on India to remove the unlawful levying of countervailing tax. “Finance Minister Shankar Koirala has assured us that he would take up the issue with Indian officials soon,” Pandey said. Nepali RMG products are already losing competitive edge in India with the flooding of Bangladeshi products. India doesn´t impose countervailing tax on products from Bangladesh. Also, the Bangladesh government has been providing different subsidies to RMG producers.
Published on 2013-04-30 02:30:06

Trade infrastructure development Nepal's top agenda

---------------Upcoming Nepal-China high-level meeting -----------------------

PRABHAKAR GHIMIRE

KATHMANDU, May 12: Amid Nepal´s soaring trade deficit with China, the government is putting forward a host of demands with high-level Chinese officials to boost Nepal´s trade with the northern neighbor.

Nepali official team to be led by Foreign Minister Madhav Prasad Ghimire is scheduled to request to the top Chinese delegation next week for Chinese support in Nepal´s trade infrastructure development including establishment of Special Economic Zone (SEZ) near the northern border and upgrading of Bhaktapur-Tatopani section of the Araniko Highway.

Yang Jiechi, councilor of State Council China, who is also the former foreign minister, is visiting Nepal on May 18-19.

Though China has already granted duty-free access to 7,787 products from the Least Developed Countries including Nepal to its market, Nepal´s trade deficit with China has continued to soar for the last few years.

Weak supply capacity on the back of slow agricultural growth and industrial production and poor infrastructures such as ill-equipped customs, poor road access and lack of well-managed dry ports are the principal hurdles in Nepal´s trade with the Asia´s largest economy. Similarly, insufficient number of functional customs points along the northern borders and existing non-tariff barriers such as stringent quarantine rules and non-cooperation by Chinese customs officials with Nepali traders are also among the major roadblocks in Nepal´s trade with China.

“Although Nepal has the potential to benefit immensely from trade with China, we are lacking in modern trading infrastructures. So, we are requesting the Chinese officials for their support in enhancing such facilities. We will also request for minimizing existing non-tariff barriers,” an official privy to the development told Republica on Sunday.

Agenda items

Upgrading Bhaktapur-Tatopani road
Customs simplification
Upgrading custom points
Establishment of cross border economic zone in Jielong and Rasuwagadhi
Establishment of SEZ near northern border
Discussion on Nepal´s ballooning trade deficit with China

The source said Nepali officials are scheduled to request for establishment of an SEZ in any place near the northern border and upgrading of the Bhakatpur-Tatopani section of the Araniko Highway. Similarly, Nepal will also ask for forming a cross-border economic zone between Chinese town of Jielong in Tibet and Rashuwagadhi of Nepal in a bid to give a boost to economic activities in those areas.

Although there are around a dozen customs points along the Nepal-China border, the one at Tatopani is the most used, so Nepali officials are also requesting for upgrading of other customs points with necessary infrastructures and facilities. Chinese officials have already shown interest to develop a dry port at Rasuwagadhi customs, the second largest customs bordering China. Construction of Larcha dry port in Sindhupalchowk has already begun from December 20 last year under Chinese assistance.

The source also said Chinese imposition of stringent quarantine rules for Nepali goods mainly agro produces and meat products will also be discussed. “As Nepali traders have been complaining of hassles at customs points we are also requesting for simplification of customs procedures,” added the source.

Officials from both the countries are also scheduled to discuss other measures to boost bi-lateral trade and also focus on reducing the ballooning trade deficit with China. Data compiled by Trade and Exports Promotion Center shows that Nepal´s trade deficit with China increased to Rs 51.94 billion during 2011/12, up from Rs 44.89 billion recorded a year before. During the first nine months of the current fiscal year, Nepal´s exports to China was recorded at Rs 1.76 billion against imports worth Rs 51.04 billion.

 

Published on 2013-05-13 00:00:00

Nepal losing opportunity for more foreign aid sans NDF

-----------ANALYSIS----------------------

PRABHAKAR GHIMIRE

KATHMANDU, May 3: It has been nine years since Nepal last organized the Nepal Development Forum (NDF) -- a gathering of Nepal´s donors to make fresh commitments for support. That one was held on May 5-6, 2004 in Kathmandu while an earlier NDF meeting had been held in Pokhara in 2002.

In the absence of clear government policies and strategies for new development plans, frequent changes of government and an uncertainty in the Constituent Assembly (CA) elections, Nepal´s position to negotiate with donors for larger aid commitments has been weakened. The widening gap has been felt in the communications between government officials and top officials representing bi-lateral as well as multilateral donors in recent years.

Failure to hold the Nepal Development Forum (NDF) meetings, Nepal’s best opportunity to lobby for the greater external support, since 2004 has weakened its strength in securing more financial assistance from the donor community.

In 2000, the Paris Club meeting was held in Paris where different donors made commitments to support for the restoration of peace and development activities in Nepal, which was then in the midst of the bloody Maoist insurgency. The Paris Club is a group of the world´s biggest economies which provide financial services such as war funding, debt restructuring, debt relief, and debt cancellation to indebted countries. “We have been losing a great opportunity in securing support for our development strategies from our development partners in the absence of NDF meetings for more than nine years,” Madhu Kumar Marasini, joint-secretary at the Ministry of Finance (MoF) told Republica. As the political parties could not come up with a common minimum agenda and strategies for economic development, donors are not convinced to make fresh commitments to extend financial support to Nepal. “Donors are always showing their concern about the lingering political instability and lack of a common agenda from all political parties on economic issues. But, our prolonging political transition and lack of concrete commitment from political parties on economic issues has hampered our capability to secure confidence,” Rajan Khanal, another joint-secretary at the MoF, said. Khanal said Nepal, as a country passing through post-conflict transition, could have ensured more support from donors had it formulated clear strategies and programs to seek assistance from the donor community. In a bid to systematize the mobilization of foreign aid, the government is in the process of preparing a new Foreign Aid Policy which envisages securing foreign assistance in line with national needs instead of following donors´ priorities. “Nepal has to learn from Afghanistan, which organized donors meeting in Japan as a post-conflict country to drum up greater support to reconstruct war-torn the country,” Khanal added. Donors, who are skeptic about the transparency of the spending of aid by recipient countries, are demanding early elections followed by a stable government in Nepal to pave the way for their wider supports. However, in the absence of political stability, Nepal has failed to maintain proper communication about its economic agenda with international donors. “As we couldn´t communicate about our programs to our donors for last nine years, we have taken the initiative to maintain dialogue with local donors,” Marasini, who is also the chief of the International Economic Cooperation Coordination Division at the MoF, said. Rajiv Upadhyaya, External Relation Specialist at the World Bank-Nepal office, also said Nepal´s failure to call timely meetings of NDF created a vacuum in communication between donors and Nepali officials. “Donors are not clear about the exact priorities and strategies of Nepal. Frequent meetings of NDF is necessary to ensure greater support from donors,” Upadhya said. In a bid to win the confidence of donors, the government on Tuesday organized a local donors´ meet in the capital. Donors have been concerned about the uncertainty of elections, frequent changes of government, nominal level of capital expenditure and lack of the government´s development strategies. However, addressing the groups of representatives from bi-lateral and multi-lateral donor agencies, Finance Minister Shankar Koirala instead sought their long-term strategies that could fit the policies taken by the government. “In the absence of the concerned country´s policies and strategies, donors can´t make any strategies of support,” Updhyaya further said. However, we have also no dearth of people who think frequent meetings of NDF are not necessary if the country can better communicate with donors through their local representatives. “I have not felt any negative impact on donors´ commitments for aid in the absence of NDF meetings, which bring in top officials representing donors, as the government has been in regular discussion with donors’ representatives available in Nepal,” Lal Shankar Ghimire, joint-secretary at the Office of the Prime Minister and the Council of Ministers (OPMCM), said. According to the Development Cooperation Report of MoF, actual disbursement of foreign assistance during Fiscal Year 2011/12 dropped to US$ 1.04 billion from US$ 1.07 billion reported in Fiscal Year 2010/11. Ghimire, who was heading the International Economic Cooperation Coordination Division of MoF until last year, opined that Nepal should be able to propose its own priorities, agendas, programs and policies with the donors before organizing an NDF meeting. Foreign aid commitments were made through the Nepal Aid Group before it was renamed as NDF in 2002. Ghimire said Nepal has at least been engaged in discussions with local donors and in the Nepal Portfolio Performance Review (NPPR) meetings which are organized regularly in an annual basis.
Published on 2013-05-03 03:00:19