Price difference spurs petroleum smuggling from Nepal to India

Nepal | December 01, 2017

A view of Nepal Oil Corporation Limited Central Office, Babarmahal, Kathmandu, on January 4, 2017. Photo: Sureis/THT Online

Kathmandu, November 29

Lower price of petroleum products in Nepal compared to the prices in India has become a headache for Nepal Oil Corporation in areas bordering India, as this has been promoting fuel smuggling from Nepal to India.

Sushil Bhattarai, acting deputy managing director of NOC, said smuggling of petroleum products had been increasing at an alarming rate, which could pose a big challenge for NOC in maintaining effective fuel supply.  NOC officials claim that the surging demand for petroleum products in the country in recent times is directly related to the fuel price difference in the border areas. They believe that Indian vehicles and transporters carrying goods to Nepal are increasingly loading their tanks full while returning as both petrol and diesel are cheaper in Nepal.

While petrol and diesel cost Rs 98 per litre and Rs 73 per litre, respectively in Nepal, a litre of petrol costs IRs 73.61 (Rs 117) and diesel IRs 62 (Rs 99) in Bihar.

Fuel price in India is comparatively higher as the Indian government levies excise duty on petroleum products, while such taxes are not imposed on fuel in Nepal.

Bhattarai added that NOC was having a hard time maintaining fuel supply, as fuel consumption had increased during elections across the country.

However, the government does not have a mechanism to address “the whopping fuel import from the southern neighbour”.

NOC statistics show that Nepal imported 84,000 kilolitres of petrol in August, 83,000 kilolitres in September and 100,000 kilolitres in October. However, NOC had already imported 120,000 kilolitres of petrol till November 24. NOC officials said import of diesel had also increased. One way to check fuel smuggling is to limit Nepal-bound Indian vehicles from filling and carrying excessive fuel while returning to India. Binit Mani Upadhyay, chief of NOC’s oil depot at Nepalgunj, said NOC and the District Administration Office, Nepalgunj, were jointly monitoring border areas to curb fuel smuggling to India.

Though NOC officials believe that minimising fuel price gap in border areas is the only way to check fuel smuggling, NOC is not in a position to increase fuel prices, as that will add financial burden on Nepali consumers, added Bhattarai.

However, Bhattarai believes that the government should raise the price difference issue at the government-to-government bilateral talks with the Indian government.

A version of this article appears in print on November 30, 2017 of The Himalayan Times.

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