Nepal Oil Corp cuts aviation fuel price

- Post Report, Kathmandu

Jul 2, 2016-

Nepal Oil Corporation (NOC) on Friday slashed the price of aviation fuel sold to international and domestic carriers in line with the directives of the Parliamentary International Relations and Labour Committee.

Jet fuel sold to international carriers has been cut by $100 per kl to $881 per kl. The fuel sold to domestic carriers has been reduced by Rs10 per litre to Rs99 per litre. The new rates will come into effect from Friday midnight. 

“The prices have been reduced in line with the directives issued by the House Committee,” said NOC Spokesperson Mukunda Ghimire. “It’s also a move to implement auto pricing mechanism on jet fuel.” 

In January, the Parliamentary Committee had directed Supplies and Tourism Ministries to set the prices of aviation turbine fuel as per the market rate.

The committee had said NOC had been selling the aviation fuel at rates much higher than the market prices. Airlines have been passing the burden of fuel price hikes on to travellers in the form of fuel surcharge, making airfares beyond the reach of a vast section of the population.

The corporation has been adopting a cross-subsidy mechanism by increasing aviation fuel prices to stabilise prices of other petroleum products. On September 28, 2014, NOC had adopted an auto-pricing mechanism for petroleum products (diesel, petrol and kerosene). However, the system has not been implemented for aviation fuel.

On February 16, NOC had reduced the price of aviation fuel sold to domestic airlines to Rs109 per litre, after it was forced to double the price to Rs232.78 per litre from Rs118 in November last year due to the extra costs of flying it in after the trade embargo by India virtually cut off shipments by surface transport. 

The price of aviation fuel sold to international airlines was slashed to $981 per kilolitre, down from $1,530. 

International airlines have been expressing concerns over the fuel price in Nepal. A.Harun Basturk, vice president of Sales (Asia & Far East) of Turkish Airlines, speaking with a group of visiting Nepali journalists in Istanbul, Turkey, said the fuel price was the single biggest challenge for airlines flying to Nepal. “Fuel price in Nepal is more than double the price other airports in Asia charge,” he said. 

Turkish Airlines has announced adding a flight, making it four weekly flights, starting October. “If the fuel price is reduced, we are ready to operate daily flights, or more in Nepal,” he said. “We see a potential in the Nepal sector and are planning to promote the Himalaya nation in Turkey.” 

Nearly 95 percent of travellers flying to and from Kathmandu with Turkish Airlines are transit passengers. 

Airlines Operators Association of Nepal said they are planning to revise the fuel surcharge after NOC reduced the price. “A technical committee of the association will hold a meeting on Sunday to decide on the fuel surcharge revision,” said Ghanshyam Acharya, spokesperson for the association. 

The government allows domestic carriers to increase or decrease the surcharge only if the jet fuel price increases or decreases by at least Rs4 per litre.

Published: 02-07-2016 09:36

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