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NOC’s losses expected to balloon as smuggling goes unchecked

   October 10, 2018        665        The Kathmandu Post

The rise in smuggling of petroleum products from Nepal has become a headache for the state-owned oil supplier Nepal Oil Corporation (NOC) forcing it to seek government’s help to check it.

Smuggling is rampant across the Nepal-India border as smugglers rake in huge profits by taking fuel from Nepal and reselling it in the Indian market, the corporation said. The smuggling could also create shortage of the fuel in the Nepali market, it said.

If the smuggling is not checked immediately, the corporation losses could balloon as it needs to purchase more oil which it has been selling at subsidised rates.

Last Sunday, the NOC wrote to its line ministry—Ministry of Industry, Commerce and Supplies—to take necessary initiatives to control fuel smuggling. According to the state-owned enterprise, a large number of vehicles from India come to Nepal, fill gallons and go back to India carrying cheaper petroleum products.

Apart from vehicles, people are also involved in smuggling fuel. The corporation said that intensive patrolling needs to be undertaken at places that had no check posts. It said that petrol is cheaper by Rs31.75 per litre in the Nepali market as compared to India. Likewise, diesel is cheaper by Rs30.16 in the Nepali market.

NOC Spokesperson Birendra Kumar Goit said they could not control the smuggling and sought the government’s help.

“The ministry can direct the local authority at the bordering areas to check the excessive purchase by the Indian motorists,” Goit said.

NOC said it has been incurring heavy losses as the government would not raise fuel prices during the Dashain and Tihar festivals.

According to the revised price recently sent by the Indian oil supplier, NOC’s monthly projected loss stands at Rs1.28 billion.

The corporation said it is subsidising Rs5.45 on a litre of petrol and Rs4.43 on a litre of diesel.

The NOC said that Indian vehicles are found transporting fuel frequently in a single day.

“We have estimated that up to 2,000 litres of fuel is being smuggled into India daily,” Goit said.

As per the NOC’s statistics, fuel import in the first two and a half months surged 20 percent as compared to the same period last year. “At this rate, we will have to incur heavy losses,” Goit said.

During the last fiscal year that ended in mid-July, Nepal imported 488,575 kilolitres of petrol, up from 407,270 kl in the previous fiscal year 2016-17.

Likewise, diesel import surged to 1.38 million kilolitres from 1.31 million kilolitres.

The country’s fuel imports bill ballooned to Rs170.13 billion in the last fiscal year.

The Kathmandu Post