Nepal urges India for open LPG mkt

In a move aimed at easing LPG supply, the government has urged India to adopt an open market system for LPG sold to Nepal. The Ministry of Commerce and Supply (MoCS) has taken the step to involve the private sector in the LPG business.

"MoCS sent the proposal two weeks ago," said ministry secretary Purushottam Ojha. "There is no response from India till date."

Indian government-entity Indian Oil Corporation (IOC) has been supplying LPG in the Nepali market under quota system.

The existing petroleum products agreement between Nepal and India does not allow the private sector to take up the business. The agreement clearly mentions IOC will be the sole exporter of petroleum products -- petrol, diesel, kerosene and LPG -- to Nepal. "We want changes in the agreement for the LPG sector to fulfill the growing demand," he said.

Monopoly in supply and distribution by IOC and subsequently Nepal Oil Corporation (NOC) has been hampering smooth supply of petroleum products here. Inadequate supply and frequent strikes, road blockades and disputes among line-agencies involved in the supply and distribution have been causing petroleum shortage from time to time.

NOC used to buy petroleum products from the international market and take refined oil from IOC before 2000. Now, NOC is buying refined oil directly from IOC. The government adopted a free import strategy for LPG in 2007. MoCS is planning to involve the private sector to minimise the loss. The private sector has been lukewarm to the idea because the government has fixed the price of LPG in Nepal.

NOC says it is bearing a loss of Rs 300 per LPG gas cylinder (14.4 kg) as per the rate of January 1.