The Ministry of Supplies (MoS) is all set to amend the directive related to auto pricing mechanism in a bid to ensure that fuel price is revised in the domestic market in accordance with the global change in petroleum price.
Though the government has implemented auto pricing mechanism in petrol, diesel and kerosene in the country from September 29, 2014, the Nepal Oil Corporation (NOC) has often been criticised for not adjusting fuel price in accordance with the change in global oil price.
Moreover, the government then had also established Price Stabilisation Fund to maintain stability in fuel price. However, the NOC has not yet utilised the fund to adjust fuel price and almost Rs five billion has remained idle in the fund.
MoS officials said that amendment in the fuel auto pricing mechanism was required to ensure that petroleum consumers are charged as per price set in the international market.
“It is true that price of petroleum products have not been adjusted in the domestic market in line with international rates. This is probably because of the limitations of different government laws, including the directive on auto pricing mechanism,” Surya Shrestha, spokesperson for MoS, said, adding that the new directive will ensure that fuel rates are adjusted regularly.
MoS is expected to present the new draft of the directive to NOC’s board for endorsement soon.
As per Shrestha, the earlier directive did not allow NOC management to utilise Price Stabilisation Fund to maintain fuel price stability in the domestic market. “The new directive will ensure that the Price Stabilisation Fund is implemented to its fullest to keep fuel price as low as possible in the market,” added Shrestha.
MoS has also provisioned in the new directive to adjust new fuel rate in the domestic market every two weeks on the basis of fuel rates sent by Indian Oil Corporation (IOC).
Similarly, the draft of the new directive has also introduce a provision to implement auto pricing in Liquefied Petroleum Gas (LPG) and Aviation Turbine Fuel (ATF), which were not incorporated in the earlier directive.
As per the new draft of the directive, fuel price will be adjusted in the domestic market every time there is change in the rate of oil price sent by IOC by at least two rupees per litre.