Operators of the gasoline stations called off their protest on Friday after the Nepal Oil Corporation (NOC) agreed to increase the commission margin on the shrinkage loss. A decision has been reached to ‘temporarily’ hike compensation for the shrinkage loss to 11.25 litres from 8.75 litres per 1,000 litres in petrol and 6.75 litres from 6 litres per 1,000 litres in diesel, the NOC said.

The NOC board meeting on Thursday night decided to increase the margin of compensation on the shrinkage loss to the petroleum dealers. Following the decision, the NOC and the petroleum sellers on Friday reached a temporary agreement on condition that the state-owned enterprise would conduct a detailed study to finalise the actual shrinkage loss.

Lilendra Prasad Pradhan, president of the Nepal Petroleum Dealers’ Association, confirmed they had withdrawn the protest programme on Friday. “We have halted our protest for now on condition that NOC will conduct a further study on the issue,” he said. 

Shrinkage loss refers to gasoline lost due to shrinkage and evaporation. According to the NOC, shrinkage loss occurs in fuel shipments while being transported from locations with a high temperature to cooler places. The petroleum dealers have been demanding that the NOC increase the compensation to a minimum of 56 litres per 1,000 litres in petrol. They had halted purchasing petrol from the NOC on Thursday to press their demand.

The NOC board has based its decision on the report of a study team led by its Acting Director Deepak Baral. The panel has found the technical losses, particularly in the petrol business when the NOC distributes fuel to the gasoline stations.

According to the report, the shrinkage loss in diesel has been found to be on an average 0.693 percent (around 7 litres per 1,000 litres) and 1.542 percent (15 litres per 1,000 litres) in petrol.

Secretary at the Ministry of Supplies and NOC Board Chair Prem Kumar Rai said they had revised the shrinkage loss margin on “ad-hoc” basis. “We have targeted to conduct the study for another six months to find out the actual losses in different seasons, temperatures and topographical structures,” said Rai, adding that they would revise the shrinkage loss again after the prescribed time based on a report of further study.

Rai said they had asked the NOC management to form a technical team for the purpose. “We have asked NOC management to suggest a panel in the next board meeting.”

Meanwhile, the NOC said it will not hike the petroleum prices following the adjustment in the margin of the shrinkage loss. “We are yet to ascertain the actual financial burden on the enterprise due to the revision on the compensation for the petroleum dealers,” said NOC’s Acting Director Sitaram Pokharel.

• State-owned enterprise hikes compensation for the shrinkage loss to 11.25 litres from 8.75 litres per 1,000 litres in petrol and 6.75 litres from 6 litres in diesel 
• NOC study team has found an average shrinkage loss of 0.693 percent (around 7 litres per 1,000 litres) in diesel and 1.542 percent in petrol 
• Petroleum dealers had halted purchasing petroleum products from NOC on Thursday, demanding a minimum compensation of 56 litres per 1,000 litres in petrol. 
• Secretary at the Ministry of Supplies and NOC Board Chair Prem Kumar Rai says the shrinkage loss will be revised again after based on a report of further study 
• NOC confirms there will be no changes in the petroleum prices