Oil Corporation’s losses skyrocket, fears of supply disruption

Nepal Oil

With the continuous rise in the price of petroleum products in the international market, the loss of Nepal Oil Corporation, which has a monopoly on business, has increased. The unnatural rise in the price of crude oil in the world market has skyrocketed the price of petroleum products all over the world.

Today, the price of crude oil in the international market has reached 85.58 US dollars per barrel. According to the latest price list sent by the Indian Oil Corporation (IOC) on October 16, the corporation’s losses are expected to increase further. Spokesperson Binit Mani Upadhyaya informed that the fortnightly loss of the corporation is projected to exceed Rs 2.22 billion as per the purchase price received from the IOC on October 16.

According to the new price sent by the IOC, the price of petrol has been increased by Rs 5.77 per liter and diesel and domestic and international aviation fuel by Rs 7.9 per liter. According to the new price list received on October 16, the purchase price of petrol has reached Rs 76.7 per liter, diesel Rs 78.28 per liter and domestic and international aviation fuel Rs 73.24 per liter. The price of LP gas is still Rs 1,375 per cylinder. IOC has not increased the price of LP gas in the last 15 days.

The purchase price including all government taxes and value added tax (VAT) of petrol at Rs 56.98 paisa, diesel at Rs 39.66 paisa, kerosene at Rs 19.69 paisa, domestic aviation fuel at Rs 13.11 paisa, international aviation fuel at Rs 4.68 paisa and on LP gas per cylinder an additional fee of Rs 250 81 paise is charged.

The total cost of the corporation is Rs 1.96 paisa for petrol, Rs 1.56 paisa for diesel, Rs 1.46 paisa for kerosene, Rs 1.45 paisa per liter for domestic aviation fuel, Rs 1.43 paisa per liter for aviation fuel internationally and Rs 11. 38 paisa per cylinder for LP gas.

The total cost including dealer’s profit and transportation for petrol is Rs 145 per liter, diesel Rs 127.16 per liter, kerosene Rs 93.41 per liter, domestic aviation fuel Rs 90.56 per liter and international aviation fuel Rs 82.13 per liter. And the cost price of LP gas is Rs 1,961.88 per cylinder.

The retail price of petrol in Kathmandu has been fixed at Rs 130 per liter. The price of diesel and kerosene has been fixed at Rs 113 per liter, domestic aviation fuel at Rs 86 per liter, international aviation fuel at US$ 0.770 per liter and LP gas at Rs 1,450 per cylinder.

The corporation will lose Rs 15 per liter from petrol sales, Rs 14.16 paise from diesel sales, Rs 4.56 per liter from domestic aviation fuel sales and Rs 511.88 per cylinder from LP gas sales. The corporation has a modest profit only on kerosene and international aviation fuel.

The corporation earns Rs 19.59 per liter from the sale of kerosene and Rs 10.37 per liter from the sale of international aviation fuel. In 15 days, the corporation has projected a loss of Rs 405.3 million from petrol sales, Rs 1.9 billion from diesel sales, Rs 1.1 million from domestic aviation fuel sales and Rs 757 million from LP gas sales.

In 15 days, there will be a profit of Rs. 23.3 million from the sale of kerosene and Rs. 9.5 million from the sale of aviation fuel internationally. The corporation says that there has not been much progress in covering the deficit due to low sales of kerosene and international aviation fuel.

Rising fuel prices in the global market have hampered the corporation’s efforts to reduce losses. The increase in purchase price has added a challenge to the corporation, which has been making a profit by reducing past losses. The corporation had gradually turned a profit by repaying a loan of Rs 37 billion six or seven years ago. Last year, the corporation again incurred a loss of around Rs 3 billion. Spokesperson Upadhyaya said that the corporation has incurred a loss of Rs 6 billion in the last three months.

It is feared that the supply of petroleum will be disrupted as the corporation is running at a huge loss. While the corporation is constantly running at a loss, it could also affect the supply system, said a corporation official.

Cheaper in Nepal than in India
Petroleum prices are cheaper in Nepal than in India. Compared to Raxaul in the Indian market, petrol is cheaper by Rs 48.82 per liter in Nepal, diesel by Rs 52.73 per liter, international aviation fuel by Rs 0.06 per liter and LP gas by Rs 175.65 per cylinder.

In the Indian border area, petrol is priced at Rs 177.32 per liter, diesel at Rs 164.23 per liter and LP gas at Rs 1,605.65 per cylinder. In the border area of ​​Birgunj, the retail price of petrol is Rs 128.50 per liter, diesel Rs 111.50 and LP gas Rs 1,430 per cylinder.

As the price of petroleum products has become cheaper in Nepal, the possibility of illegal smuggling of fuel from the border areas to India has increased. The corporation has issued strict instructions to the sellers to stop the smuggling of petroleum products from the border areas. Due to the efforts of the corporation and the local administration, the smuggling of petroleum products has come under control recently.

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