Oil Corporation’s Deficit Fund Depleting: What Will Balen-Led Government Do?

March 20, Kathmandu – The Nepal Oil Corporation has fallen into a financial crisis following the surge in fuel prices caused by the international conflict. The government led by Balendra Shah (commonly known as Balen) has yet to issue any official statement regarding this issue. As the sole authorized agency for the sale and distribution of petroleum products, the corporation faces a financial deficit, but the related ministry—Ministry of Industry, Commerce and Supplies—has not provided any clear response. The Prime Minister himself is overseeing this ministry. The ministry’s secretary, Madhusudan Burlakoti, stated that the corporation will provide a response, as he also serves as the chairman of the corporation’s board of directors.

Due to sustained increases in petroleum prices on the international market, the Nepal Oil Corporation has raised prices of petrol, diesel, and kerosene by NPR 15 per liter. Currently, the retail price of petrol in Kathmandu, Pokhara, and Dipayal has reached NPR 202 per liter, while diesel and kerosene are priced at NPR 182 per liter. During the Russia-Ukraine conflict, the petrol price peaked at NPR 199 per liter. The corporation has adjusted prices utilizing funds from the price stabilization fund.

The increased fuel prices are expected to trigger hikes in transportation and public transit fares, directly impacting consumers and potentially exacerbating inflation. Crude oil prices on the international market are projected to rise from USD 110 to as high as USD 150 per barrel. Continuous price increases throughout the month of Chaitra have led the corporation to raise petrol prices by up to NPR 45 per liter and diesel by NPR 40 per liter this month alone. According to figures released on Thursday, the corporation is incurring losses of NPR 34.37 per liter on petrol and NPR 120.54 per liter on diesel.

The corporation has formally appealed to the public to reduce fuel consumption. Spokesperson Thakur stated, “There is no possibility that the price trend will stop; therefore, cutting consumption is the only option.” Executive Director Dr. Chandika Prasad Bhatt also emphasized that reducing fuel consumption is the only effective way to mitigate the corporation’s losses. He revealed that the government has proposed implementing a rationing system in the market, closing public offices two days a week, temporarily shutting down schools and colleges, and enforcing quota measures, urging the government to take action accordingly.