Nepal Oil Corporation Faces Millions in Losses Following Leak of Fuel Price Hike Information
Nepal Oil Corporation (NOC) distributed nearly double the average daily volume of fuel to petrol pumps just before a scheduled price hike, according to recently released data. Following the March 14 increase of NPR 15 on petrol and NPR 10 on diesel, fuel sales declined, yet dealers purchased unusually large quantities. Consumer rights activist Madhav Timalsina has urged the Public Accounts Committee and the Commission for the Investigation of Abuse of Authority to probe these irregularities.
Kathmandu, April 23 — Typically, NOC sells around 20 to 25 million liters of petrol and 45 to 50 million liters of diesel daily to fuel stations. However, on March 12, NOC supplied 30.55 million liters of petrol and 83.45 million liters of diesel to pumps. The following day, diesel sales climbed further with stations withdrawing 42.52 million liters of petrol and 96.65 million liters of diesel. Sales halted on March 13 due to a Saturday holiday, but on March 14, petrol sales surged to 48.06 million liters and diesel to 90.9 million liters.
This three-day sales spike, significantly exceeding average daily sales, preceded a notable fuel price hike that night. NOC justified the price increases by citing sudden international market price surges and higher costs from Indian Oil Corporation (IOC). Yet, despite knowledge among businesspeople and NOC employees of rising global prices, dealers accumulated excess fuel prior to the hike, pointing to insider trading practices. This contributed to NOC incurring millions of rupees in losses.
After announcing the price hike on March 14, NOC revealed financial statements indicating it would still suffer a loss of NPR 393 million over 15 days despite raising prices. These figures suggest the losses were not caused solely by international market factors but also by dealers exploiting insider knowledge to stockpile cheap fuel and resell it at higher prices, thereby deepening the corporation’s financial shortfall.
NOC attributed the surge in demand on March 12–14 to typical weekend buying patterns, stating that Saturdays off cause higher fuel consumption on Fridays and Sundays. However, data shows daily fuel uptake more than doubled compared to the average before the price rise, followed by a significant drop in sales after the price adjustment. For instance, on March 15, petrol sales fell to 16.14 million liters and diesel to 55 million liters; further decreases were seen on subsequent days.
The rationale behind this pattern is straightforward: dealers purchased fuel at NPR 154 per liter before the increase and sold it at NPR 172 after, generating substantial profits at NOC’s expense. Fuel sales returned to normal levels over the following days, with March 19 and 20 showing average sales figures again.
Ordinarily, NOC adjusts prices on the 1st and 16th of each English calendar month after receiving price lists from IOC. However, this cycle was disrupted when an additional price increase was implemented on March 24, just ten days after the previous hike, apparently after early warnings to certain business stakeholders.
Diesel sales on March 23 and 24 exceeded 60 million liters each day, and on March 25, prices rose by NPR 15 for both petrol and diesel. Subsequently, sales normalized again. The usual weekend sales surge explanation did not apply during this period, as March 27 (a Friday) saw markedly reduced consumption, with petrol and diesel sales dropping sharply.
Strangely high sales resumed mid-April, notably on April 1 and 2, right before the Nepali New Year (Baisakh 1). Following holidays on April 1 and 2, suspiciously large quantities of petrol (43.72 million liters) and diesel (76.75 million liters) were purchased by dealers. After a price hike of NPR 30 per liter on diesel on April 3, fuel sales again declined sharply.
NOC’s ERP software maintains detailed records of each pump’s storage capacity and average daily sales. These records reveal that while sales remain normal on most days, demand spikes dramatically before price increases, with NOC staff seemingly allowing excess fuel distribution to dealers. Despite these patterns, NOC has not rigorously enforced average quota limits to prevent such irregularities. Consequently, the leakage of sensitive price hike information has enabled dealers to amass fuel cheaply and resell at inflated prices, resulting in sudden multi-million rupee profits for traders and massive losses for the corporation.
Consumer rights advocates accuse NOC of facilitating a cycle whereby the public bears the brunt of high fuel prices to cover corporation losses. Madhav Timalsina denounced the excessive fuel distribution as a ‘heinous crime’ and has called on Parliament’s Public Accounts Committee, subcommittees, the Anti-Corruption Commission, and the Office of the Prime Minister to launch investigations and impose strict penalties. He emphasized that allowing fuel distribution that benefits only a few at the cost of the state and consumers requires the severest punishment.
Timalsina pointed to the responsibility of the Ministry of Industry, Commerce and Supplies, including its Secretary and NOC’s Board Chairperson, urging comprehensive investigations into fuel distribution volumes before and after the price hikes versus normal demand.
Dr. Chandika Prasad Bhatt, Executive Director of NOC, initially stated he was unaware of the issue but committed to a prompt investigation, saying, “If excessive fuel was distributed ahead of the price increase, strict action will be taken against those involved.” He pledged to examine depot records and investigate thoroughly.
Dr. Bhatt noted that he did not initially suspect foul play but assured that any irregularities uncovered upon reviewing depot data would lead to sanctions. He also claimed that NOC has been exercising control over fuel distribution, cutting volumes by 20% compared with the previous fiscal year as per directives.
The NOC leadership has decided to scrutinize depot records for purchases made by dealers ahead of price hikes to ensure accountability and prevent recurrence.