NOC cuts jet fuel prices

- Post Report, Kathmandu
The fuel sold to int’l airlines will now cost $831 per kilolitre, while domestic airlines will pay Rs94 per litre

Sep 17, 2016-Nepal Oil Corporation (NOC) has slashed the price of aviation fuel sold to international and domestic carriers by about 5 percent. 

According to the new rates which will go into effect at midnight Friday, jet fuel sold to international airlines will cost $831 per kilolitre, down $50 per kilolitre. Likewise, domestic airlines will pay Rs94 per litre, a drop of Rs5 per litre. 

“We took the decision in a bid to provide relief to travellers in view of the upcoming Dashain, Tihar and Chhath festivals,” said Bhanu Khanal, spokesperson for NOC. 

Following these price cuts, the corporation will make a profit of Rs12.41 per litre of aviation fuel sold to domestic carriers. According to the state-owned oil monopoly, the profit on jet fuel sold to foreign airlines is Rs20 per litre.

This is the second price cut NOC has made in the last two and a half months. On July 1, the price of aviation fuel sold to international airlines was slashed by $100 per kilolitre to $881. The price for domestic carriers was reduced by Rs10 per litre to Rs99 per litre. 

“We were not in a position to reduce prices of other fuels according to the new price list sent by Indian Oil Corporation (IOC) on Friday,” he said.   

IOC reviews export prices of petrol, diesel and kerosene fortnightly and of other products such as aviation fuel and LPG on a monthly basis. According to NOC, its profits will amount to Rs180 million per month as per the new tariff. 

NOC has been charging more than the market price for aviation fuel. 

Airlines in turn have been passing the burden of fuel price hikes to travellers in the form of fuel surcharge, putting airfares beyond the reach of a vast section of the population.

Following the price revision, the Airlines Operators Association of Nepal on Sunday decided to review the fuel surcharge charged by airlines on top of the price of a ticket. 

NOC has been adopting a cross-subsidy mechanism by increasing aviation fuel prices to stabilise prices of other petroleum products.

NOC switched to an auto-pricing mechanism for diesel, petrol and kerosene in September 2014. However, the system has not been implemented for aviation fuel.

Published: 17-09-2016 11:04

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