Akash Shrestha, Research Officer at Samriddhi, The Prosperity foundation presented a paper, “Paralyzed Petro Trade Regime in Nepal” at Martin Chautari Discussion on 23 December, 2014.
Mr. Shrestha discussed on reasons behind the excessive corruption and politicization on Nepal Oil Corporation. “The trade of petroleum products is completely on the hands of a single organization – the government owned Nepal Oil Corporation (NOC). The sole importer of petroleum products in Nepal, Nepal Oil Corporation (NOC) operates without any Act governing itself and for the most part, sets the rules of its own game. The sheer volume of its transactions and the absence of any governing legal principle make NOC prone to excessive politicization and corruption.”
The current trade regime of petroleum products imposes severe costs upon customers such as series of domestic taxation, price control, cross-subsidy. The Memorandum of Understanding (MoU) signed between Indian Oil Corporation (IOC) and NOC, though paved way for agreements between these two enterprises, can also be established as a major contributor to the plight of NOC as there are charges like Refinery Terminal (RFT) Price, Price Adjustment Factors (PAFs) and Marketing Margins. The managerial inefficiency of NOC has also led to the downfall of the enterprise.
After the presentation, there was an interactive session where audience put their queries on privatization of NOC, lowering of oil prices, artificial scarcity, adulteration and gasline dependence on India.
The study is at final stage and report will be published shortly.