MoF asks MoCS to submit cost details

KATHMANDU, NOV 11 - 2012

The Ministry of Finance (MoF) has asked the Ministry of Commerce and Supplies (MoCS) to submit details of the cost for subsidising liquefied petroleum gas (LPG) for household users.

The government plans to enforce the much-talked-about dual cylinder system (red for general consumers and blue for commercial users) from November 16. On the same day, the government will start distributing colour-coded cards differentiating household and industrial users.

The government plans to sell blue cylinders at the cost price, while red cylinder users will be provided with a certain amount of subsidy. According to Nuta Raj Pokhrel, under-secretary at MoCS, the ministry had asked the finance ministry’s consent on the subsidy plan. “Although we have not received a formal letter, the ministry has asked for the cost estimates for the plan, he said. “The cost, however, is yet to be estimated.”

Suresh Kumar Agrawal, acting managing director of NOC, said the corporation was preparing a work plan on the subsidy regime. “The basic idea to differentiate LPG cylinders and consumers is to make the distribution system easy and provide subsidy to the targeted group only,” Agrawal said.

At present, Nepal Oil Corporation (NOC) is selling an LPG cylinder at Rs 1,470, incurring a loss of Rs 508 per cylinder. If the government plan materialises, blue card users have to pay Rs 1,978 of a cylinder.

“In the first phase, we will introduce colour-coded cylinders and consumer cards and then introduce the subsidy scheme to household users,” Agrawal said. “As it is the beginning, it could take two-four months to fully implement the system.”

As per the NOC plan, red card holders (household users) will have to purchase cylinders at the cost price and the allotted subsidy will be refunded later. Consumers can withdraw the subsidy amount from any bank or financial institution recommended by NOC by producing the purchase receipt.

However, Nepal LPG Industry Association (NLPGIA) has been opposing the government move saying the plan would expose bottlers to a heavy financial burden. With less than a week left to enforce the dual cylinder system, none of the bottling companies have painted their cylinders blue.

As per the plan, LPG bottling companies are required to paint 50 percent of their cylinders blue. “Companies have to abide by the government plan at any cost,” Agrawal said, adding enforcing the system will make supply smoother and regular and also regulate the market. Consumer rights activists, however, are sceptic about the government plan, as NOC had postponed the implementation date twice.

There are around 47 LPG bottlers in the country and an estimated 4 million LPG users across the country — 1.2 million of them in Kathmandu alone.

Source: The Kathmandu Post

Gas bottlers, govt closer to agreement

KATHMANDU, Aug 15, 2012

The government and striking Liquefied Petroleum Gas (LPG) bottlers on Tuesday agreed form a technical committee to fix the profit margin on import and distribution of gas.

According to Narayan Bidari, director general of Department of Commerce and Supplies Management (DCSM), the committee would recommend the reasonable profit margin for bottlers after studying the transport fare and overhead costs while procuring and distributing the LPG.

“We have made a draft of an agreement incorporating the points agreed on previous negotiations. Hence, we have called agitating bottlers to come to us for formal negotiation.. We are ready to increase the profit margin if the study suggests so,” said Bidari.

Bottlers have demanded the government to raise bottlers´ commission (profit margin) to at least 5 percent of the retail rates, which at the present prices will stand at around Rs 70 per cylinder. So far, they were allowed to take profit of around Rs 30 per cylinder.

Nepal LPG Industries Association (NLPGIA) has also been demanding that the government withdraw its decision to introduce dual cylinder and pricing system planned to be enforced from August 17.

Bidari, who is also the coordinator of the government negotiating team, said the government was ready to resolve the problems that may crop up during the implementation of the dual cylinder system.

However, blue colored cylinders must be supplied to commercial consumers such as hotels, restaurants, factories and automobiles so as to making such users pay as much as actual import rate. As per the new system, the government will allow LPG bottlers to continue selling gas at the existing subsidized price to the household consumers in the red colored cylinders.

After series of talks between gas bottlers and officials of Department of Commerce and Supplies Management (DoCSM) failed to yield breakthrough, chief secretary Lila Mani Poudel intervened and issued strong warning to agitators to immediately withdraw their strikes or face tough action enforced through the Essential Service Act that provides sweeping power to law enforcement agencies enabling them to use force to intervene in supplying essential commodities including gas.

However, agitating bottlers said they have not fully withdrawn their demands. “Our agitation is still continuing though we are positive on some issue,” said Shiva Ghimire, senior vice president of the association, said.

Source: Republica

NOC fails to execute its directive

KATHMANDU, APR 29, 2012

The government has remained silent even though consumers of Liquefied Petroleum Gas (LPG) have been facing hurdles for six months.

Nepal Oil Corporation (NOC) has been issuing Product Delivery Order (PDO) to import 800 metric tonnes of cooking gas on an average daily, said deputy director of the corporation Sushil Bhattarai. “The import is enough to meet the market demand since normal consumption of cooking gas is 16,500 to 17,000 metric tonnes per month.”

The corporation had imported a record high 17,500 metric tonnes of cooking gas in March and the import will be around the same figure this month too, said Bhattarai. However, what is missing is the government’s serious intervention to track imports and supply details. The government has failed to regulate the cooking gas business in spite of frequent promises from the Ministry of Commerce and Supplies, and NOC.

On March 11, NOC had published a public notice directing bottling plants and dealers not to sell cooking gas for industrial purpose. It had warned of stringent action including stopping the issuance of Product Delivery Order to those plants who fail to follow its directive.

Bottling plants and dealers are openly supplying cooking gas to industries at present but the corporation has done nothing, according to consumer rights activists. “Some 500 printing presses and other industries are openly using cooking gas as a source of energy,” consumer rights activist Prem Lal Maharjan had recently said during an interaction organised by Nepal Oil Corporation. “But, the corporation has not been able to do anything.”

In its public notice, NOC had also directed all bottling plants to submit a detailed record of import and supply on a daily basis and introduce a system of hydrostatic test of cooking gas cylinders to ensure safety.

But, both provisions are yet to be implemented. Ministry of Industry should take the initiative to regulate bottling plants since it issues operating licence to them, the corporation claimed.

“Ministry of Industry has to take the responsibility for the rampant malpractice in the cooking gas business,” said deputy managing director of NOC Sushil Bhattarai. “Nepal Oil Corporation has no legal right to scrap the licence of bottling plants,” he lamented.

“The government often blames NOC for scarcity but it is the equal duty of the Ministry of Industry, Department of Commerce and District Administration Office to curtail black-market, cartel and hoarding according to existing laws.”

Source: THT