The government has reduced the prices of petrol, diesel and kerosene. The government has reduced the price of petrol, diesel and kerosene by Rs 10 per liter with effect from 12 noon on Thursday. According to a press release issued by the Nepal Oil Corporation, with the new price, petrol will now cost Rs 170, diesel and kerosene Rs 153 per liter in Kathmandu Valley.
The price of LP gas is still Rs 1,800. Similarly, the price of aviation fuel (internal) is Rs 166 per liter. Only on Wednesday, the Indian Oil Corporation (IOC) sent a new price to Nepal. The corporation had stated that there would be a loss of around Rs 3.75 billion in the next 15 days as soon as the IOC sends the new price.
With the price falling in the Nepali market on Thursday, the corporation’s loss is expected to increase to Rs 3.89 billion in the next fortnight. The corporation now faces a loss of Rs 31.41 per liter on petrol and Rs 28.33 on diesel. The corporation’s petrol purchase cost is Rs 201.41 and diesel’s is Rs 181.33.
Similarly, the corporation has stated that it will incur a loss of Rs 751.14 on cooking LP gas sold at Rs 1,800 per cylinder. The purchase cost of gas is Rs 2551.15. The corporation has profit in kerosene and aviation fuel. Kerosene has a profit of Rs 5.44 per liter, aviation fuel Rs 17.46 internally and Rs 64.67 per liter externally.
At present, the purchase price of kerosene is Rs 147.46, aviation fuel is Rs 148.54 internally and Rs 127.73 externally. As the price of petroleum products increased in the Nepali market, there were protests from various quarters. Demonstrations were also taking place after the election demanding a reduction in the skyrocketing prices. The government had also announced a reduction in the price of petroleum products through this year’s budget.
On Wednesday alone, the Ministry of Finance had instructed the Ministry of Industry to remove the infrastructure tax levied on petroleum products. Finance has instructed the Ministry of Industry to remove it.
As the price of crude oil has risen, so has the price of petrol and other fuels. Oil Corporation, on the other hand, was already running at a loss. Therefore, the price of fuel in the Nepali market is increasing in a short time. Prices in the international market are expected to rise further as Russia is unable to export oil. However, it is expected to benefit other oil-producing nations and increase their production of petroleum products.
Oil Corporation does not buy crude oil from the international market itself. It has been procuring all kinds of refined petroleum products from IOC. In this way, the IOC sends the price to the Oil Corporation on fortnightly every month for the purchase of petroleum.
The price shipped by the IOC is based on the cost of crude oil it buys from the international market. The IOC sets the selling price for Nepal by adding mining costs, including its processing fee, to the cost price.
The Oil Corporation then fixes the consumer price by adding the customs duty, customs costs, transportation cost and dealer commission to the government for importing petroleum. This determines the price of petrol, diesel, kerosene and cooking LP gas we buy.
The biggest factor determining the price of petroleum in this process is the price of crude oil that the IOC buys from the international market.