The government Thursday ordered state-owned Nepal Oil Corporation to launch reforms, improve quality and end financial irregularities, indicating that it had no intention of opening up the lucrative oil business to the private sector.
The Ministry of Industry, Commerce and Supplies said that private firms would be allowed to enter the oil trade only if Nepal Oil failed to get its act together.
Nepal’s petroleum business is worth around Rs200 billion annually. It accounts for 7 percent of the Gross Domestic Product and 17 percent of its foreign trade worth Rs1,200 billion. In the last fiscal year, the government collected Rs55 billion in taxes from the oil business.
“Nepal Oil needs to improve its efficiency as it is one of big players in the economy,” said Commerce Secretary Chandra Kumar Ghimire, speaking at the corporation’s 49th anniversary celebration. “If it fails to do so, the government will be forced to open up the fuel business to the private sector.”
Ghimire, who is also chairman of the Nepal Oil board, urged the company to implement the automatic pricing system effectively and construct fuel storage tanks which has been delayed for two decades. “Without taking these steps, regular supply of fuel cannot be ensured,” he added.
Nepal Oil has been frequently criticised for failing to implement good governance in the distribution of petroleum products. Corporation officials have been found to be in cahoots with offending fuel sellers and tanker operators.
The Amlekhgunj-Motihari oil pipeline is in its final stage of completion, but it is expected to ease fuel transport only partially. According to Nepal Oil, the country’s gasoline requirement is increasing at the rate of 20 percent annually, but its storage capacity is enough to retain only a week’s supply.
For the past few years, the government has been mulling to construct storage plants that can retain at least a 90-day supply. Currently, Nepal Oil can store enough petrol for six days, diesel for 11 days and aviation fuel for 12 days. It bought land across the country in Jhapa, Siraha, Chitwan and Bhairahawa to build more tanks, but the project ran aground following controversy over the deal involving sacked managing director Gopal Bahadur Khadka.
Speaking at the 49th anniversary celebration, newly appointed Executive Director Surendra Prasad Paudel said he would introduce effective reforms to improve the company’s service. The government appointed Paudel, who is credited with improving the financial health of Udayapur Cement as its head, to the post Monday.
The kathmandu Post