There I was contemplating a life of forced shutdowns, going to work once a week to conserve oil, cooking every third day to conserve oil, shutting down the airport and every service deemed non-essential to conserve oil. A life of roadblocks, permits and zero services. And I wondered why we stop at just a two-day strike to protest an oil price hike. We could just shut everything down for months.
Alternatively, we could put our fine minds to figuring out what the problem is really all about. It is worth asking why, when fuel isn't really subsidised anyway, the business of retailing it continues to be monopolised by the state. The Nepal Oil Corporation will never be a model state-run endeavour. If the government intends to run the corporation like a business, it is a long way from learning what any successful business knows off the bat. To do well, your product needs to be reliable and trustworthy, you need to provide uninterrupted service and you need to add value. Oil retail and distribution (even of the unadulterated stuff) are not hugely profitable by themselves anywhere in the world. Higher margins come from add-ons, value added services, the sale of related products like lubricant, maybe even convenience stores attached to gas stations.
The oil regulating bodies in India, too, have recognised this, and international and local firms are turning a trip to fill your tank into a pleasant, even an enjoyable experience. The key here is regulating this Rs 10 billion business, and that is something we need to learn. Someone, somewhere in the bowels of the NOC may understand the economics of subsidies and recognises that everything else in the oil-retailing business might be better off in the hands of people who know how to sell.
The government doesn't have to look farther than its own backyard for inspiration or lessons. Allowing private operators into the LPG sector has been a successful move. There are numerous private operators, and despite higher prices for the gas in Nepal, there's been virtually no illegal trade across the border with India. An efficient regulatory body would ensure that while oil prices in Nepal can't be divorced from the machinations of global players and the rumbles in India, lower prices here don't immediately imply that supplies start slithering over the border.
Of course, this means that the NOC would have to clean up its act and not be a source of easy money for every bureaucrat or politician who sniffs oil or jumps on the back of a tanker. The government would have to see how best the oil business could be opened up to the private sector. A regulatory body would need to be up, running and alert. Or, we could just continue the same way and have tankers disappear half an hour after a price hike in London. The upside is that you could join me every day to contemplate even more unproductive futures, since none of us will have a life anyway. FNCCI, what do you think? t
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