Nepal Oil Corporation Denies Direct Impact of West Asian Conflict on Fuel Supply, Cites LPG Shortage as Artificial

Kathmandu. The Nepal Oil Corporation (NOC) has clarified that the ongoing conflict in West Asia has not directly affected the supply of petroleum products in Nepal so far.

Officials stated that the supply remains regular due to Nepal not importing crude oil and having a long-term agreement with India's Indian Oil Corporation (IOC). However, the price increase in the international market due to the war has added an economic burden on consumers.

NOC Executive Director Dr. Chandika Prasad Bhatta clarified that since Nepal does not import crude oil, the conflict in West Asia has had no direct impact. He said, 'It seems that India also imports a small amount of petroleum products from the Strait of Hormuz. We are not in a situation where we import crude. We bring finished products—petrol, diesel, kerosene, aviation fuel, and LPG—after they are directly processed in India.'

Nepal imports necessary petroleum products through an agreement with the Indian Oil Corporation (IOC) every five years. The agreement period still has one year remaining. Despite sufficient imports of all petroleum items, cooking gas is being distributed as half cylinders because the demand cannot be met.

NOC claims that although cooking gas is being imported sufficiently, an artificial shortage has been created because consumers are purchasing more than they need. Industry sources also state that while there were initial problems with imports, the situation later eased, and despite sufficient gas imports, the shortage is due to consumer stockpiling. Meanwhile, consumer rights activists claim this is an 'artificial shortage' created by industrialists for commission.

Reason for Shortage: The Commission Game

Krishna Prasad Bhandari (Marseli), Chairman of Consumer Awareness Campaign Nepal, alleged that the market chaos is due to industrialists hoarding gas to increase their 'commission.' He stated, 'The main reason for the shortage in the market, despite sufficient gas imports, is a secret understanding between the industrialists and the Nepal Oil Corporation management. The monthly demand for gas is 45 to 46 thousand metric tons, and NOC is issuing PDOs accordingly. However, industrialists are creating supply disruptions to pressure the government for a commission hike.'

He added that gas industrialists often use elections or political instability as an opportunity to pressure for an increase in commission per cylinder. He argued that finding 6,000 cylinders at once at the Shri Ram Gas depot clearly proves that gas is being hoarded.

His analysis suggests that the tendency of affluent consumers to hoard (hold) multiple cylinders as soon as a shortage rumor spreads has severely affected students, laborers, and low-income groups, disrupting the market cycle by holding 10 cylinders where only one is needed.

Bhandari alleged that the silence of monitoring bodies during the market shortage is due to a 'conflict of interest.' He claimed that since the Director General of the Department of Commerce and the Secretaries of the Ministry are members of the NOC's board of directors, they are not monitoring strictly. 'The Department of Commerce points to NOC, and NOC points to the industrialists saying the PDO has been issued,' he added, 'Responsibility is being shifted this way, putting consumers at a disadvantage.'

Although industrialists claim the gas shortage is due to the war in West Asia (Israel, Iran, Iraq), Chairman Bhandari called it a mere illusion. According to him, the impact of the war on the international market might take another 2-3 months to show, but the current shortage is due to hoarding by industrialists. Bhandari said, 'There is no reason for a price hike now, but a game is being played to raise prices and create shortages by citing the war.'

Half Cylinder Distribution: Deception in the Name of Easing Shortage

Bhandari strongly objected to NOC's decision to sell half cylinders (7.1 kg) of gas in the name of easing the shortage. He stated that consumers will be cheated in the name of half cylinders because retailers do not have reliable weighing machines. 'If the market doesn't even weigh a full cylinder properly, who will ensure the weight and quality of a half cylinder?' he questioned. 'Such a decision only causes hardship for consumers and benefits only the industrialists. This is outright fraud.'

Chairman Bhandari made it clear that consumers will not get gas cheaply and affordably until the government monitors strictly and breaks the monopoly of the industrialists. He stated that responsible administration and conscientious consumers are the main keys to solving the current problem.

What is the Daily Demand and Import Status?

According to NOC, the daily requirement is about 2,000 kiloliters (2 million liters) of petrol and 4.5 million liters of diesel. For LPG, the monthly requirement is about 50,000 metric tons, which equals about 110,000 cylinders daily. Imports are happening accordingly. There has been no problem with the volume of petroleum product imports so far.

He stated that imports are happening at the required volume, and only some impact is seen due to rising international market prices. Pralayankar Acharya, Chief of NOC's Madhesh Provincial Office in Amlekhgunj, informed that the supply of petroleum products through the pipeline is regular. According to him, there is no problem with the supply compared to before. Petroleum products are entering through the pipeline at a rate of 300 kiloliters per hour.

LPG is also being imported at a rate of 100,000 to 120,000 cylinders daily. However, NOC claims that occasionally, when loading capacity at the refinery is insufficient, there is a shortfall of 4-5 bullets or about four to five thousand cylinders, which is compensated the next day.

Currently, Nepal has enough petrol reserves to last 10 to 12 days. Diesel reserves are sufficient for about 12 to 14 days. In the case of LPG, since Nepal Oil Corporation does not have its own storage facilities, the private sector bottling plants have storage sufficient for only about a week.