Following the increase in petrol and diesel prices in India, Nepal Oil Corporation (NOC) has revised the prices of petroleum products on 14 October. The price hike was steepest for kerosene (100%) from Rs13 to Rs26 per litre, while diesel grew by roughly 20 percent, from Rs23 to Rs27.5. The price of petrol rose 17.5 percent from Rs40 to Rs47.5 per litre and the price of liquefied petroleum gas (LPG) increased 19 percent per cylinder-from Rs465 to Rs550.
The government has made arrangements to subsidise kerosene for the poor-mainly for lighting in the villages-by keeping the price of a rationed 3 litres at Rs15.50. This kerosene is to be distributed through the local administration offices. Diesel continues to be subsidised.
The price rise was imminent following increasing global oil prices, which remain high despite an increase in production by oil producing countries and efforts of large industrialised countries to augment market supply by using their reserve stocks. The international price of oil has hovered around $35 per barrel, up from roughly $20 a barrel a year ago. NOC says diesel was available at US $195 and kerosene at $225 per metric ton last year. The prices for the same are $350 and $380 this year.
The increase in prices of petroleum products will kick start inflation, which has remained in single digits, because of increased transport costs. NOC said keeping prices at old levels could result in losses of up to Rs3.5 billion. Under the new price regime, NOC's losses per litre of diesel and rationed kerosene are Rs4.5 and Rs9.75 respectively. Likewise the loss per LPG cylinder is Rs100, down from Rs187.