Money

Fuel import bill balloons to all-time high of Rs131.93b

- Post Report, Kathmandu

Nepal’s oil import bill ballooned to a record Rs131.93 billion in the first 10 months of the fiscal year, largely due to a sharp growth in domestic consumption despite regular electricity supply.

The jump has also been attributed to a rise in crude oil prices in the international market and appreciation of the US dollar.  

Nepal Rastra Bank (NRB) statistics show that fuel imports surged 34.6 percent from mid-July to mid-May compared to the same period a year ago. The figure is almost double the 15 percent annual growth envisaged by Nepal Oil Corporation (NOC), the state-owned oil monopoly.
If current trends hold, petroleum imports are likely to cross the Rs150 billion mark by the end of this fiscal year. Fuel accounts for nearly 14 percent of the country’s total import bill.
Oil imports have swelled even though the Nepal Electricity Authority (NEA) has declared an end to load shedding which was expected to result in a sharp fall in cooking gas imports. Two months ago, the NEA had declared that industrial areas too would be free from power cuts, but this has not resulted in a drop in the import of petroleum products.

NOC said that demand had escalated due to increased road construction works and growing use of cooking gas in various parts of the country.

Oil imports hit a peak of Rs131.73 billion in 2013-14. Shipments dried up to a trickle following the Indian trade embargo in 2015. In fiscal 2015-16, fuel imports plunged to a seven-year low of Rs65.6 billion. NOC spokesperson Birendra Kumar Goit said the soaring demand for fuel was mainly due to an increase in the use of heavy equipment for road construction. “Demand could have also surged due to growing smuggling of gasoline to India as prices are lower in Nepal,” he said.   

According to NOC, petrol costs Rs22.72 less per litre in Nepal compared to India, while diesel is cheaper by Rs24.95 per litre in 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.

He added that the increased demand for cooking gas, both in urban and rural areas, might have also contributed to the rise in the import bill. “There is huge demand for cooking gas in remote areas nowadays.”

Likewise, a rise in oil prices in the international market along with a stronger US dollar resulted in a sharp rise in Nepal’s fuel import bill. With the massive rise in fuel demand, the country’s trade deficit swelled to Rs919.17 billion during the first 10 months of this fiscal year.

Published: 2018-06-12 09:08:04