Oily Business

Petroleum and politics do not mix. If they do, it is volatile. Twenty years ago this week, we reported how then Supplies Minister Ishwar Pokhrel of the UML hiked petroleum prices and got party-affiliated students to protest it. Excerpts of the story published in issue #230 14 – 20 January 2005.

Politicians are known for populist grandstanding, that is what they are made for. So it’s not surprising the UML comrades want to have it both ways: Supplies Minister Ishwar Pokhrel hikes petro prices with a fishy one-week delay and his party’s student wing is out on the streets vandalising public property in protest. Even by the reckless standards of Nepali politics, the UML’s two-faced opportunism is stunning. Then Pokhrel makes the shocking admission to us (p 8) that dealers are allowed to hoard. All this doesn’t make the fuel price hike less inevitable. The 30 percent increase in global oil prices in the past year has put Nepal Oil Corporation Rs 5.12 billion in the red. The corporation’s losses are threatening to bankrupt the state as well.

The basic rule of business is you can’t sell a product for less than what you bought it for unless you are: a) stupid, b) a welfare state or c) Nepal Oil Corporation. To be able to afford subsidies, a government needs to be honest, efficient and have a revenue source. Our government is none of the three.

There is another reason for raising prices: smuggling of cheap subsidised fuel across the open border to India. This is a well-oiled business in which folks on both sides get a cut. Forty percent of the kerosene Nepal imports is either used to adulterate diesel or is smuggled into India. The Nepali state is subsidising Bihari consumers.

For archived material of Nepali Times of the past 20 years, site search: nepalitimes.com