Oil imports in the first nine months of the fiscal year surged 34.2 percent to Rs117.29 billion due to increased demand from the construction industry and smuggling into India prompted by price differentials.
Petroleum products are the largest item in the country’s import bill. According to the Trade and Export Promotion Centre (TEPC), fuel accounts for more than 13 percent of the total import value.
“Soaring demand for fuel mainly to power heavy equipment used in road construction and smuggling into India are the main reasons behind the surge in imports,” said Birendra Kumar Goit, spokesperson for Nepal Oil Corporation (NOC).
According to him, petrol costs Rs25 less per litre in Nepal compared to India as the Indian government does not charge customs duty, excise duty or sales tax on fuel exported to Nepal.
Goit said Indian vehicles frequently cross the border into Nepal to fill up their tanks. Gasoline stations located near the Nepal-India border have also been found to be involved in smuggling fuel.
The state-owned oil monopoly said an increase in the number of small and medium industries also contributed to the rise in oil imports. Continuing load-shedding in the industrial sector in another reason, Goit said. “There is a growing trend of setting up enterprises out of the Kathmandu Valley as political stability has come to the country,” he added.
TEPC Deputy Executive Director Suyash Khanal pointed to the swelling number of four-wheelers and high global oil prices for the rise in the country’s fuel import bill. “Gasoline prices went up by almost 70 percent during the review period. That’s why the import bill has increased,” Khanal added.
According to TEPC records, iron and steel is the second largest import item. Nepal’s imports of iron and steel were worth Rs97.21 billion at the end of the third quarter of the fiscal year. Machinery and parts, transport vehicles and parts, and cereals are among the top five imports.
Likewise, woollen carpet was the top export item during the review period. Nepal exported woolen carpets worth Rs5.09 billion, followed by readymade garments, iron and steel products, cardamom and textiles.
Nepal’s import bill amounted to Rs874.87 billion, up 20.4 percent, at the end of the third quarter. In contrast, export earnings inched up 7.4 percent to Rs59.61 billion. As a result, the country’s trade deficit swelled 21.5 percent to Rs815.26 billion.
Source : The Kathmandu Post