Squeezing the publicIt is criminal to continue with levies that contribute to inflation and bring hardship to people’s lives.
Despite oil prices falling internationally with Brent crude now reaching close to $90 a barrel, Nepal Oil Corporation refuses to reduce the high fuel prices Nepali consumers are being charged. The state-owned monopoly says it needs to maintain prices at current levels to recoup accumulated past losses. But this rigidity, even after reporting a monthly profit of Rs790.87 million, has caused insufferable hardships to the people who are struggling to cope with sky-high inflation that pricier fuel has stoked. Yet in these desperate times, the sole focus of the incumbent government seems to be the November 20 elections. (But reducing fuel prices on election-eve would not be such a bad poll ploy for the ruling parties, would it?)
Yes, the government can do little about high gasoline prices. The Russian-Ukraine war and the economic disruption brought about by Covid-19 are out of the corporation's league. But the situation the oil monopoly finds itself in today is also the result of years of inefficiency and mismanagement. In 2017, the corporation, known for its usual near-bankrupt status, astounded the country by announcing a generous bonus for its employees, totalling some Rs2.36 billion.
Although the bonus had been set aside from a rare profit, the ensuing public outcry led a parliamentary sub-committee to halt its distribution and order the body to first repay its debts. Questions were also raised about the way in which the corporation was burdening the public with high prices by adding extra costs like contribution to environment protection, price stabilisation fund and infrastructure building. Moreover, fuel prices have been promptly increased to reflect any rise in the international market prices, but the company has been reluctant to lower them when prices abroad drop. This practice of sharing profits among employees but passing on losses to consumers in the form of ever-higher prices for petroleum produces and the overall inflation they lead to is criminal.
In recent days, thousands of people have taken to the streets in Europe to protest soaring prices. There too news of billions of dollars in profits earned by energy companies has caused widespread outrage. While the people live in desperation awaiting punishing bills, corporations and their shareholders are reaping a bonanza. The average energy bill in the UK, for instance, could rise by as much as £2,500 within a year. So, again, the problem is by no means limited to Nepal.
A rise in prices of food and other essentials caused by the oil-shortage remains the most crucial challenge for policymakers around the world as they work to revive their faltering economies. This is particularly hard on poorer countries where food costs gobble up most of household incomes. It is outrageous that Nepalis are still having to fork out extra money for ‘infrastructure building’ on every litre of fuel they buy when the government should actually be looking to cut all such non-essential levies that contribute to inflation. Even as the government is distracted, the lives and livelihoods of millions of people are on the line.