Nepal Oil Corporation (NOC) has revived plans to use cylinders painted in different colours for household and commercial customers due to mounting losses on sale of liquefied petroleum gas (LPG).

The state-owned oil monopoly says it makes a loss of Rs280.64 on every cylinder of gas sold. It has projected a loss of Rs250 million for next month. According to NOC, it suffers losses on sale of LPG and diesel. The corporation says it loses Rs2.36 on every litre of diesel sold.

NOC’s Acting Managing Director Sushil Bhattarai said projected losses on sale of diesel and LPG would exceed Rs1 billion next month. According to him, losses on sale of LPG will swell during the upcoming winter season when consumption of cooking gas rises sharply. “During the winter, we expect to suffer a loss of Rs600-700 on every cylinder of LPG sold.”

A total of 10.4 million LPG cylinders are in circulation nationwide, according to NOC. The country’s requirement of cooking gas stands at 35,000 tonnes per month. Bhattarai said NOC sent the proposal to use colour-coded cylinders to the parliamentary Industry, Commerce and Consumer Welfare Committee on Sunday. “As the working guideline on dual cylinders is still in place, we have planned to revise the guideline in the new context to enforce the system effectively,” he said.

The government’s efforts to use cylinders painted in different colours for household and commercial users fell flat due to opposition by various authorities and NOC.Six years ago, NOC had even collected Rs6.32 million from the general public to distribute consumer cards, but no decision has been made till date about what to do with the money.

NOC issued 632,000 red and blue cards to household and commercial users respectively through gas dealers, and charged Rs10 per card. The money is reportedly in the possession of the Federation of Gas Dealers’ Association.

Nepal’s fuel requirement has been rising every year. Demand for petroleum products increased by 20 percent in 2017-18, as per NOC records. Surging oil prices in the international market and a stronger US dollar has hit NOC’s financial health hard.

In September 2014, the corporation launched an automatic pricing mechanism for all fuels except LPG. Over the period, NOC was able to clear its liabilities worth more than Rs37 billion and earn high profits which strengthened its financial position. NOC has not used the automatic pricing mechanism to set LPG prices fearing public protests, NOC officials said.