No end in sight
The government was ill-prepared to deal with economic blockades of the sort Nepal is currently living through
Oct 3, 2015-Raj Kumar Kunwar, a taxi driver who hails from Sindhupalchok, has been waiting for a day and a half to fill up his cab’s tank. Kunwar, who is currently in queue at the Nepal Police-owned petrol pump in Naxal, just to receive about nine litres of petrol, says he has been operating his taxi only once in three days for the last week.
Narayan Chaudhary, a daily wage labourer originally from Sunsari and living in a rented room in Kalopool, says he has run out of his cooking-gas stock; for the past week, he has been living off his friends’ depleting larder supplies. “I am getting by on their largesse,” he says.
The ongoing fuel crisis—the results of the month-long Tarai strikes against the promulgation of the new constitution and of the undeclared Indian blockade—is taking a toll on all cross-sections of society.To ameliorate the problems faced by Nepalis, especially in the Valley, the government is rationing petroleum products. For almost a week now, that the government has been implementing the ‘even-odd’ provision for vehicles—whereby vehicles are allowed to ply the roads depending on the last digit on their license plate, a measure to save precious petrol. In addition, the government has stopped distributing fuel to private vehicles since Thursday.But coming up with a solution to the fuel crisis, barring any changes in the political climate, now seems nigh impossible. Nepalis have become so dependent on gasoline products to fuel their lifestyles that even the rural populations get hit hard when the nation runs out of essentials. According to the Economic Survey 2015, the share of petroleum use in the nation’s total energy consumption was 11.77 and 11.25 percent in 2012-13 and 2013-14, respectively. That energy need cannot be instantly filled by alternative sources.To make matters worse, the nation depends on only one source for its oil products: For the past four decades, Nepal Oil Corporation (NOC), the government authority that manages petroleum supplies in the economy, has been importing oil solely from the Indian Oil Corporation (IOC).Financial experts have time and again in the past urged the government to explore alternative energy sources and alternate import sources besides the IOC—as a long-term solution for the country; and it’s attimes like the current crisis Nepal is living through that such suggestions seem almost prescient in theirpragmatism.
Purushottam Ojha, former Commerce Secretary, says that even if Nepal can’t come up with a quick fix for the crisis now, the country can use this opportunity to recalibrate its long-term energy policies. “The government must think about allowing the private sector to get into the oil-importing business, for one. And diversifying source options, such as homing in on China, would help when the next trade embargo bubbles up,” says Ojha.That’s not to say China presents a panacea, says Ojha: importers, whether government entities or others, will need to do a cost-analysis, along with analysing other logistical factors, before they think about importing petroleum products from the northern neighbour.“Besides the economic viability and feasibility of such deals, the quality and type of petroleum to be imported from alternate source destinations need to be taken into account too,” says Ojha. The logistics pertaining to getting petrol from China is quite a bit more complicated than is the case with India. The nearest possible export points in China would be Lhasa and Shigatse, which are hundreds of kilometres away from Nepal’s borders; the IOC’s storage depots, on the other hand, lie just a stone’s throw away from Nepali territory--in Raxaul, Barauni, Gonda, Banthara and Siliguri.
“There is thus a huge difference, which will come to about Rs 10-15 per litre, when comparing shipping costs between India and China as source destinations,” says Mukunda Ghimire, a director at NOC. “That difference will add up to a lot in the long run.”Ojha is of the view that Nepal should use this crisis as an opportunity to prioritise generatinghydroelectricity as a long-termsolution to the nation’s chronic energy dependence on India.
At present, Nepal is generating 782 MW of electricity during peak-production seasons, while the actual demand is for more than 1,200 MW. As per the Economic Survey 2015, the demand, spurred on by high usage in the urban areas and industrial corridors, is estimated to be increasing at an annual rate of 9 percent. But people who want to see that overhaul in the energy sector happen soon are in for quite a wait. Bhuvan Chhetri, director at Nepal Electricity Authority, says that as of now, there are no plans, nor the capabilities in place, to enable the people to opt for electricity to help them through the current fuel shortage.
“We are, however, increasing supply from our surplus production as far as possible,” he says. “Had our plans for an additional 90 megawatts, from the many power stations that were hit by the quakes, not been derailed, things would have been easier for us today.”
But according to working-class people like taxi-driver Kunwar, the current crisis can be largely blamed on the NOC’s “ill preparedness” to deal with crises. “As usual, our government does not have contingency measures in place,” he says.
He is verbalising a truth that many in the government, and even many among the public, have known for a long time. The NOC does not have any storage plants for cooking gas, and it usually has only minimal stocks of petroleum. According to the NOC, it has a storage capacity of 8,000 kl of air transport fuel, 15,000 kl of kerosene, 37,000 kl of diesel and 4,700 kl of petrol. That stock is enough to meet the nation’s energy demand for at most two weeks.“It’s already been 12 days since the blockade kicked in,” says Kunwar.
Published: 03-10-2015 10:10