NOC hikes commission for LPG traders

The commission hike has put an additional burden of Rs 25 million per month on debt-ridden NOC NEPAL Oil Corporation (NOC) has raised the commission offered to liquefied petroleum gas (LPG) dealers and transporters by 9 percent. The new rate came into effect on Monday. The commission hike has put an additional burden of Rs 19.28 per LPG cylinder (Rs 25 million per month) on debt-ridden NOC. This burden will eventually be passed on to consumers. The NOC decision follows the implementation of the colourcoded LPG cylinder system a week ago. Earlier, the NOC had been offering a commission of Rs 213.35 per cylinder to the dealers and transporters. The amount included shipping charge, local transportation charge, company overhead expenses and dealer commission. Now, the commission has increased to Rs 232.50 per cylinder. The maximum retail price of an LPG cylinder is Rs 1,470. According to NOC, LPG shipping charge from Barauni to Kathmandu has been raised to Rs 87 per cylinder from earlier Rs 80.45. Local transport charge has been increased to Rs 29 per cylinder from Rs 25.36, while overhead expenses have been raised to Rs 52 per cylinder from Rs 50. Sales commission offered to dealers and bottlers has been raised to Rs 32 and Rs 30.55 per cylinder, respectively, from Rs 28. NOC Spokesperson Shiva Prasad Pudasaini said the NOC board on Sunday took the decision as per the agreement signed between the Ministry of Commerce and Supplies and Nepal LPG Industry Association (NLPGIA) on June 3 to raise the commission. In the agreement, the ministry had agreed to raise the commission a week after LPG traders introduced colour-coded LPG cylinders. Pudasaini said LPG dealers and transporters had been demanding a hike of 18.22 percent in their commission. The petroleum business is the only business in which the government sets the profit margin for the traders. In this business, traders do not incur losses even if the NOC suffers heavily. After the government failed to introduce the colour-coded LPG cylinders amid traders’ demand for a hike in their commission, the ministry on June 3 had assured them to address their demand within a week after they formally introduced the system. Subsequently on June 15, the traders launched colour-coded LPG cylinders. Initially, the government and NLPGIA had agreed to revise the commission based on the report of Puskar Bajracharya, former member of the National Planning Commission, which had recommended a 16.52 percent hike in the commission. “The rate was not raised as per the report, as it was relatively high,” Pudasaini said. According to the colour-coded cylinder scheme, households will be given red cylinders at subsidised rates, while commercial customers will have to use blue ones and pay the full rate. By implementing the system, the government plans to end subsidy given to commercial users and enable the NOC to offset its losses in its LPG business. The government plans to introduce dual pricing system of LPG from July 15. For this scheme, it has been distributing LPG consumer cards to differentiate two classes of consumers — subsidised and non-subsidised. The government will provide a cylinder a month to a household of four members. “We are doing our best to distribute the card before enforcing dual pricing of LPG,” Pudasaini said. NOC estimates 900,000 household cards will be required and among them, 600,000 households are based in the Capital. The Ministry of Commerce and Supplies on June 3 had assured LPG dealers and transport to hike the commission a week after they introduce colour-coded cylinders