Oil import bill plunges 55pc due to embargoNepal’s spending on oil imports plunged 55.4 percent in the first seven months of the fiscal year as the country was in the grip of an Indian embargo for four and a half months when fuel shipments were choked off.
Nepal’s spending on oil imports plunged 55.4 percent in the first seven months of the fiscal year as the country was in the grip of an Indian embargo for four and a half months when fuel shipments were choked off.
Revenue collection from fuel imports during the period also fell 47.7 percent, the Department of Customs (DoC) said.
Nepal imported petroleum products worth Rs32.45 billion during the period mid-July to mid-February, down Rs72.76 billion year on year.
The government’s revenue collection from oil imports halved to Rs7.5 billion from Rs14.44 billion during the same period in the previous year, according to the DoC.
Imports through the Birgunj-Raxaul border point dropped sharply as a result of the unofficial blockade.
This border point is the busiest in Nepal and accounts for 70 percent of the total imports including third country imports and petroleum shipments.
At the height of the trade embargo which ended on February 5, oil imports had shrunk to 30 percent of the country’s total requirement.
Mukunda Ghimire, director at Nepal Oil Corporation (NOC), said the drop in shipments was the main reason for the lower import bill.
“During the period mid-September to mid-January, petroleum imports amounted to less than 30 percent of the supply during normal times,” he said.
According to NOC, the government charges an import tax of Rs15,200 per kilolitre of petrol while the import duty on diesel is Rs2,000 per kilolitre. NOC said that fuel imports had swelled to normal levels.
Trade expert Bijendra Man Shakya attributed the fall in import expenses to a decline in shipments as a result of the Indian trade embargo.
“With the production capacity being very low, a fall in petroleum imports has a larger impact on aggregate demand with a fall in consumption,” he said.
Meanwhile, the country’s total import expenses shrank to Rs346.13 billion from Rs444.01 billion during the review period.
Similarly, revenue collection from imported goods declined 22.5 percent to Rs79.26 billion.
Shipments of iron and steel also witnessed a big drop. Imports declined to Rs29.34 billion from Rs43.08 billion previously. Imports of boilers and machinery, glass and glassware, wooden items, plastic products, zinc related products, aircraft related products, furniture and furnishing products also fell significantly.
However, imports of pharmaceutical products, sugar and confectionery, live animals, meat and edible products, textile products and musical instruments increased.
On the export front, Nepal shipped out goods worth Rs36.76 billion. The trade deficit amounted to Rs309.36 billion. Shakya said the drop in the trade deficit would provide small comfort to Nepal.
“In fact, the slowdown in economic activities could result in a fall in the GDP,” he added.
Nepal had a trade deficit with most of its trading partners during the review period, the largest was with India amounting to Rs182.54 billion. Likewise, the country suffered trade deficits of Rs54.49 billion with China and Rs11.09 billion with the United Arab Emirates. Nepal had trade surpluses with a few countries including the US and the UK.