Petroleum sector needs competition: FinMin

WITH ensuring smooth fuel supply becoming a big headache for the government, Finance Minister Shankar Prasad Koirala on Saturday said the stateowned Nepal Oil Corporation (NOC) needs a private sector competitor. “If it is not done now, there will be more problem in coming days,” Koirala, who also holds the Commerce and Supplies portfolio, said inaugurating the 5th General Assembly of Nepal Petroleum Transport Entrepreneurs Federation. Admitting that petroleum has always been “a political commodity”, he said successive governments have not been able to address the sector’s problems due to problems like geopolitical risks and supply disruptions. Petroleum traders also requested the government to restructure the NOC by bringing in strategic partners from the private sector. They said private players are capable of investing as strategic partners if the government allows. Responding to the petroleum traders, Koirala said the government will look into those two alternatives. The government is also planning to reintroduce the Petroleum and Gas Transaction Orders to allow private players investment in oil trade. The Orders, which was scrapped earlier, is likely to be reintroduced with some amendments favouring private firms willing to invest in the petroleum business, according to government officials. On March 13, the government had published the orders in the Nepal Gazette, but it was forced to scrap it on April 6 following a flurry of criticism from petroleum traders and experts. A number of private firms, including a few big business houses, had expressed interest to invest in petroleum trade, oil processing, and exploration after the orders were issued for the first time. Nepal imported petroleum products worth Rs 107 billion last fiscal year — up 16.1 percent year-on-year. Meanwhile, despite motorists’ queues at refuelling stations since Friday, the NOC has said the market is not facing a short-supply. A senior NOC official said the “temporary” short-supply might be due to public holiday on Wednesday and Thursday. Around 700kl petrol and 620kl diesel was supplied to the market by NOC’s Thankot depot on Friday. “The NOC has not slashed supply,” the official said, but warned a “supply problem” might occur by August-end as NOC will be unable to buy sufficient fuel due to its losses. NOC’s monthly projected loss has ballooned to Rs 106.42 billion as per the tariff sent by Indian Oil Corporation on August 16. As the state-run oil monopoly has been subsidising petroleum products, its loans to the government and different banks and financial institutions stands at Rs 28.50 billion. “We have asked the government to arrange funds to finance petroleum imports to ensure sufficient supply during the festival season,” NOC officials said.