Stakeholders have said the government’s decision to scrap fuel import licenses just 12 days after their issuance “is a prime example of policy inconsistency”.

A Cabinet meeting on Wednesday scrapped Supply Minister Ganesh Man Pun’s July 10 decision to award the licences to nine companies  under the Petroleum and Gas Transaction (Regulatory) Orders 2013.

A government official said the licenses were scrapped under the influence of Indian Oil Corporation (IOC). “Nepal Oil Corporation (NOC) buys fuel only from IOC, but entry of private players could shrink its business in Nepal,” said the official, who is with the Department of Supply Management.

Birat Petroleum, National Petroleum, Petrolimex, Himalayan Enterprises, Trans-Himalayan Corporation, Sonapur Mineral Oil, DD Petroleum, Avinash Energy and Malika Petroleum were among the companies acquiring the licences. Malika Petroleum had also been allowed to import cooking gas.

Nepal Petroleum Dealers’ Association (NPDA) had also been opposing the licence issuance. The dealers, who are still able to dictate their terms while doing business with NOC, had been sceptical about their business if private sector players entered the market, stakeholders said.

NPDA President Lilendra Prasad Pradhan said the association has long been asking the government issue fuel import license to private firms, but only after the introduction of the Petroleum Act. “The decision had to be reserved within a few days as it was taken without proper study,” said Pradhan.

He urged the government issue the license only after ensuring that the private sector has maintained proper infrastructure, including laboratory, capacity building and effective monitoring mechanism. “The government has to first ascertain how many private companies are needed for smooth supply of petroleum products” said Pradhan.

Beside petroleum dealers, the NOC was also dissatisfied with decision to issue the licenses. “In the absence of proper regulation, there are chances of cartelling by private companies. They might trade in only those products with higher profit margins,” said an NOC official.

The companies receiving the licenses only to see them revoked said they were planning file a case against the government.

Parashu Ram Upreti, director of Birat Petroleum, said they were waiting for the government’s official letter of the license annulment. “We are planning to file a case in the Supreme Court asking the government to provide compensation amount,” he said. 

Meanwhile, Nepal Chamber of Commerce in a statement said allowing private companies to import fuel will help increase fuel stock, ensure consumer welfare and smooth supply, and a competitive market.