Oil prices down; petrol at Rs 116, diesel Rs 92

KATHMANDU, DEC 20 – Nepal Oil Corporation (NOC) on Friday slashed gasoline prices by 6 percent with crude oil in freefall in international markets. This is the single largest price cut ever by the state-owned oil monopoly and the sixth downward revision since it adopted an auto pricing mechanism on September 28.

Petrol now costs Rs 116 per litre, down Rs 7; and diesel and kerosene cost Rs 92 per litre, down Rs 5.50. Likewise, NOC has priced aviation fuel sold to domestic airlines at Rs 133 per litre, a reduction of Rs 10. However, there is no change in the price of LPG (liquefied petroleum gas).

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NOC Spokesperson Mukunda Ghimire said the corporation had revised prices in line with the drop in petroleum prices in the world market.

The price of Brent crude oil has fallen below $59 a barrel for the first time since May 2009. NOC said that even with the price cuts, it would be making a monthly profit of Rs 485.9 million. Last month, the corporation raked in Rs 512.3 million in profits.

Ghimire said that debt-ridden NOC would be using the money to settle its outstanding amounts. “So far, we have paid Rs 3.22 billion to Indian Oil Corporation (IOC) and Rs 1.50 billion to the Employees Provident Fund.”

NOC owes Rs 35.16 billion in loans to the government and different financial institutions. It owes Rs 12.64 billion to the government alone. The corporation had planned to revise fuel prices on Tuesday immediately after receiving IOC’s new tariff as per the auto pricing system, but it was delayed by three days.

IOC reviews export prices of petrol, diesel and kerosene every fortnight, and of other products such aviation fuel and LPG on a monthly basis. Based on IOC’s rates, NOC revises its prices according to the auto pricing mechanism.

The working guideline on the auto pricing mechanism, which was introduced on September 28, allows the corporation to revise prices when the cost of finished products fluctuate by a minimum of 2 percent.

NOC said that it wanted to amend the guideline to allow it to cut prices by a larger percentage. But due to the absence of its chairman, Ghimire said the boardmeeting decided to revise prices without amending the guideline.

The prime ministerhad ordered the line ministry to immediately cut prices after student unions submitted a memorandum demanding that prices should be slashed as global prices had fallen.

(Source: NOC)