Views of a Nepali Economist

Petroleum shortage resurfaces as NOC fails to clear dues to IOC

According to Suresh Kumar Agrawal, officiating managing director of NOC, as corporation has dues to pay to the Indian Oil Corporation (IOC), the import has been slashed. The cash-strapped oil monopoly has a credit of worth Rs.160 billion to IOC...Agrawal also said that NOC is not in a position to supply fuel to fully meet the demands until the clearance of dues to IOC.

NOC loss is increasing to Rs. 1.26 billion in December as it is supplying the petroleum products below the cost of its purchase. However, the government had also imposed double price system in fuels to ease import and to reduce its mounting losses of NOC, later it decided to roll back its decision following the protest from the entrepreneurs and consumers, and decided to fix the rate of petroleum at same rates to all. 

Govt decides to provide 1.5 billion to cash-strapped NOC to ease petro supply 

The government on Tuesday decided to provide loan assistance of Rs 1.5 billion to Nepal Oil Corporation (NOC) to ease supply of petroleum products....A Cabinet meeting held at Singha Durbar this morning took the decision to this effect as per the December 23 agreement between Prime Minister Baburam Bhattarai, Finance Minister Barsha Man Pun, Commerce and Supplies Minister Lekh Raj Bhatta and NOC officials to support the cash strapped state-owned oil monopoly instead of readjustment in the price of fuels for the time being.

Demand for kerosene doubles 

Demand for kerosene has almost doubled after the government imposed a dual pricing system on diesel and kerosene. According to Nepal Oil Corporation’s (NOC) Amlekhgunj depot, daily demand for kerosene has soared to 50-55 kl from 30-32 kl since the government enforced dual prices on Dec 10. 

Under the dual pricing system, NOC hiked diesel and kerosene prices to Rs 94.23 and Rs 84 per litre respectively for factories, hotels, diplomatic missions, hospitals, development projects and other large consumers who buy 3,000 litres at a time. Prices for ordinary consumers remained unchanged at Rs 76 per litre. 

India cuts 70 pc fuel supply to Nepal 

India has slashed the fuel supply to Nepal by 50 percent owing to the Nepal Oil Corporation (NOC)’s failure to clear the outstanding dues, triggering a crisis of petroleum products across the country...NOC owes Rs 1.6 billion in outstanding dues to Indian Oil Corporation (IOC), the sole supplier of petroleum products to Nepal. General l public are reeling from the crisis.

FNCCI to speak on energy crisis soon 

 Federation of Nepalese Chambers of Commerce and Industry (FNCCI) — the umbrella organisation of Neapl — has said that it is developing the common opinion of private sector regarding current energy crisis. ...FNCCI will publicise its official opinion and way ahead of current fuel crisis within two weeks, it said, adding that the federation will consult with experts, governments officials, Nepal Electricity Authority (NEA) and other stakeholders before developing its opinion and plans.

Labels: crisis, petroleum

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The BIG NEWS: Baburam Bhattarai becomes the 35th (and the most educated) Prime Minister of Nepal. Here is his short profile.

1. Half of households have one member abroad

...52.8 per cent of the total households have at least one member away from home...indicating the startling rise in loss of human capital in the country

...32 per cent families have members away in foreign countries...55 per cent of the total households receive remittance from the members abroad

...Over 354,000 Nepalis left the country last fiscal year to work in foreign destinations...and...that has created dearth in agricultural and industrial labour back home

...Nepal earns about Rs 210 billion from remittance coming in from abroad annually...but...79 per cent of total remittance is spent on daily consumption...and...only a meagre 2.4 per cent of the remittance contributes to capital formation

Although there are people in Nepal that praise remittance for its role in reducing poverty and inequality (both of which have NOT been proven empirically by any studies), there are some aspects of this heavy role of remittance that do not bode well for the country in the long run, especially because:

...empirical evidences also show that the development process of the economy that is dependent on remittance is relatively slower by about 1.5 percent

2.Banks deposit growth rate slows down

...average deposit growth rate slowed down by more than two times compared to a fiscal year ago

Deposits in the commercial banks grew by:
32.25 percent in 2008/09
12.9 percent in 2009/10
10 percent in 2010/11

Deposits with Janata Bank saw surging by 300 percent...Rastriya Banijya Bank has the largest deposit base with Rs 74 billion...Nepal Investment Bank has Rs 50 billion deposits

...saving and credit cooperatives were found to be mobilising deposits worth Rs 122 billion

3. Strike cripples life in 9 eastern districts

...the demand is to make Taplejung, Panchthar, Ilam, Jhapa, Morang, Sunsari, Dhankuta, Sankhuwasabha and Terhathum districts...into the Federal autonomous Limbuwan state

4. Protesting Mustang folks warn of barring tourist entry

...unless the government allocates 60 percent of the tourist royalty for the development of the region

Upper Mustang has not received its share as provisioned by the Local Self Governance Act for the last 16 years...despite the government of Nepal collecting...Rs 770 million in revenue annually through tourism from Upper Mustang since 1993...The government only provides ...a nominal Rs 70 million to the district. As a result, the region still lacks electricity, roads, schools and hospitals. Food shortage is a perennial problem as the topography of Upper Mustang is unfavourable for crops.

2,162 tourists visited Upper Mustang in 2010, up by 30.3 percent compared to the previous year

5. Preparation for Dashain; NRB ups note circulation by 40pc

...Last Dashain saw use of notes worth Rs 20 billion...According to NRB, it is sending clean notes worth around Rs 28 billion for this year’s Dashain

6. Only 10 companies hold 56 percent of Nepal stock exchange's total market capitalization

Company// Share in total market capitalization(%)

Nepal Telecom// 19.43
Standard Chartered Bank// 8.95
Nabil Bank// 7.85
Nepal Investment Bank // 3.83
Himalayan Bank// 3.56
Nepal SBI Bank// 3.26
Everest Bank// 2.81
Bank of Kathmandu// 2.40
Butwal Power// 2.32
Chilime Hydropower// 1.85

7. NOC hikes diesel, kerosene price by Rs. 1.50 per litre

The price of the diesel and kerosene has now reached Rs. 75 per litre from Rs. 73.50 per litre....the price of petrol is constant at Rs. 102 per litre which was increased from Rs. 97 some two months ago

8. Buddha Air tops domestic carrier operations

...in the first half of 2011 with a market share of more than 40 percent

The airline recorded an increment of 21.73 percent in passenger carriage. Except for Buddha Air and Sita Air, all the domestic carriers posted a negative growth in their passenger movement in the first six months.

Buddha’s nearest competitor Yeti Airlines saw its passenger movement dip by 1.55 percent. However, the airline is still the second largest carrier in domestic aviation with 224,062 passengers flying it in the first half of 2011.

...domestic airlines carried 761,043 passengers in the first six months, up 36,160 from last year...

Rate of Growth in Passenger Movement in first-half of the year:
32.05 percent in 2009
19.82 percent in 2010
4.98 percent in 2011

9. Nepalese Internet ...some numbers

*65,000 subscribers at the end of 2009/10
*52,527 subscribers at the end of 2010/11
*Between 2009/10 and 2010/11, number of dial-up users lowered by 33 percent
*Between 2009/10 and 2010/11, number of wireless users increased by more than 70 percent
*Between 2009/10 and 2010/11, wireless users increased by 10,000

*Worldlink is the leading internet provider with 19,858 subscribers
*Broadlink is second with 11,792 subscribers
*Mercantile Communication has 9,445 users
*Subisu Cablenet has 5,276 users
*Web Surfer has 958 users

*Internet penetration of the country has reached 10. 89 percent as of mid-June 2011
*But, nearly 98 percent the total users are GPRS users

Labels: airlines, banks, cooperatives, dashain, internet, migration, mustang, NRB, petroleum, remittance, share market, shutdown