Committee asks gradual adjustment in prices; reform in domestic market

September 22, 2006
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A high-level petroleum study committee on Thursday recommended that the government should adjust the oil prices gradually as per the international prices and should reform the domestic oil market and review import pricing to save consumers from undue price burden.

“Reforms in Nepal Oil Corporation (NOC) can curtail the burden. But those will barely meet massive oil loss the country is suffering,” reports quoted a source as saying.

The committee constituted a month ago after the government’s attempt to hike prices to bridge the import-sales price gap drew severe protests across the country submitted the report to the Prime Minister Thursday.

“There are areas where we can work to reduce costing. We have analyzed those at length and presented numerous policy options to the government,” reports quoted former finance secretary and coordinator of the committee, Bhanu Prasad Acharya as saying.

The report has asked the government to review the components included in the IOC’s export pricing, “as those include costs which should not have been included in the pricing for Nepal.”

On domestic oil pricing, the committee has recommended the government to bring prices of kerosene and diesel at the same level, and open prices of aviation fuel, cooking gas and petrol to market immediately.

It has asked government to refrain from announcing dual pricing in kerosene, even in case it wishes to provide subsidy to consumers.

The report has further asked the government to push for complete liberalization of the petroleum sector. It has suggested constitution of an independent and authoritative Petroleum Board, adopt automatic pricing mechanism, devise necessary policies and laws, and open the sector.