Nepal Oil Corporation, on Sunday, increased the prices of diesel, kerosene and petrol by Rs 2 per litre. The NOC also issued a statement and said, “In case of normal sales, the corporation is bound to see a loss of Rs 1.1 billion on a fortnightly basis.”
But, in reality, it is not common for the corporation to incur such a loss in 15 days during the pandemic as the demand has gone down.
In just three days after the prohibitory order was put in place, on May 2, the NOC had already announced that it would incur a loss of Rs 1.1 billion. The deficit then, as per the NOC, was Rs 8.76 per litre on petrol, Rs 3.42 per litre on diesel and Rs 375.13 per cylinder on gas.
But, it had pledged to not change the price, despite the calculated loss, for the benefit of the people. After a fortnight, it broke its promise and hiked the price when the sales were nominal. Apparently, the reason it has presented for the hike is unconvincing.
It is true that the corporation’s sales have plunged due to the pandemic.
During this lockdown, the NOC increased the price of petroleum products although it had completely ignored the demand for the regular price adjustment according to the automatic price system last year. The reason it gave was that the oil prices dropped to their lowest point so far across the world.
Therefore, despite the continuous decline worldwide, oil prices in Nepal did not come down, raising questions on NOC’s “trader” trait.
As a result, during the lockdown last year, the NOC had earned a profit of Rs 22.45 per litre on petrol, Rs 25.69 per litre on diesel and Rs 55.35 per litre on kerosene. This meant a total profit of around Rs 3 billion.
After the oil prices increased in the world market, the corporation also started increasing the price accordingly. As a result, the corporation earned a net profit of Rs 12.91 billion last year, so much that it allocated a total of 174.2 million as a bonus for its employees. At present, it has accumulated a total bonus amount of around Rs 3.47 billion in its account.
Just this fiscal year, the corporation has adjusted the petroleum prices 14 times and 12 of them were hikes.