State-owned Nepal Oil Corporation (NOC) has been found to be charging excessively flouting provisions of the Black-marketing and Some Other Social Offenses and Punishment Act 1975.

The Act describes profits above 20 percent of the cost price as black-marketing, but the state-owned oil monopoly has up to 88.02 percent profit margin in the petroleum products it sells. As per the Act, taking a profit margin beyond 20 percent is black-marketing.

“A person trading any goods prescribed by Government of Nepal has taken profit in excess of Twenty percent normally or sell the goods, by receiving undue profit, taking advantage of the shortage, such a person may be punished with imprisonment for a term not exceeding five years or with a fine or with both,” the law states.

According to the NOC price list, it makes excessive profit in kerosene and air transport fuel (for both domestic and international purpose). Its profit margin in air

transport fuel sold to international airlines stands at 88.02 percent, while that in the fuel sold to domestic carriers is 50.14 percent.

In kerosene and diesel, NOC makes 40.13 percent profit, while it earns 12.73 percent profit in petrol and 15.83 percent in diesel.

NOC says it is charging high to clear its debt to the government and other financial institutions. “We are compelled to take such an abnormal profit to clear our debt of previous years,” said NOC Spokesperson Deepak Baral.

The Brent oil price has slid to near six-year lows. On Sunday, the price was $49.61 per barrel. However, the NOC has not cut the prices in the domestic market despite the adoption of the auto-pricing mechanism that calls for fuel price revision in line with the prices in the international market.

As per the revised price tariff sent by the Indian Oil Corporation on September1, NOC’s estimated profit has reached Rs874.5 million per month. It has been enjoying profits in almost all types of petroleum products.

However, the NOC seems reluctant to significantly cut the prices in the domestic market. Baral said it would make a significant reduction in the prices only after settling the dues.

When the international oil prices had reached record-high of $146.12 per barrel on June 2008, the prices of petrol and diesel were at Rs95 and Rs70 per litre, respectively, in Nepal. And now the crude oil has fallen by more than $100 per barrel, but the fuels cost Rs104 and Rs82 per litre, respectively, in the country.

NOC adopted the auto-pricing system on September 29, 2014. However, it has not followed the norms, say consumer rights activists. Madhav Timilsina, president of the Consumers Rights Investigation Forum, accused the NOC of cheating consumers. “It has been reducing the prices nominally just to create an illusion,” he said.

Jyoti Baniya, president of the Consumers’ Welfare Protection Forum, accused NOC of being involved in “black-marketing”. “The enterprise should revise the

price according to the international market price to relieve the consumers,” he said.

Diesel, kerosene price slashed

Nepal Oil Corporation (NOC) has reduced the price of diesel and kerosene by Re1 per litre each, with effect from Sunday mid night. With the revised price, the petroleum products would cost Rs81 per litre each. NOC Spokesperson Deepak Baral said they revised the price as per their plan to implement the scientific price system in petroleum products. (PR)