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