Because of a global increase in oil prices it is only a matter of time before the government announces new rates for Nepal too. Nepal Oil Corporation sources say that diesel could cost up to Rs 30, kerosene Rs 18 and petrol Rs 50 per litre once it begins to supply oil recently imported. Selling the new consignment at existing rates would lead to huge losses, they add. In the past one month, the international price of kerosene has increased by 15 percent and that of diesel by about 24 percent. The last consignment of NOC's kerosene import, on 10 August, had cost $ 286.77 per metric ton-almost 64 percent higher than compared to a year ago. After adding transport and foreign exchange costs, that kerosene would cost Rs 17 per litre upon reaching Kathmandu.

The prices of petroleum products have remained unchanged since September last year. That was when the price of kerosene was increased from Rs 10.50 to Rs 13 and that of diesel from Rs 15.50 to Rs 23 per litre. Even at that price, kerosene was being subsidised by Rs 3.50. With Dasai just around the corner, the government may continue with the old rates in order to avoid price sending the price of other commodities spiralling upwards. But it all depends on whether India decides to revise its rates or not, for even a small price difference across the boder can trigger outflows from Nepal.