Prices of liquefied petroleum gas (LPG) will now be fixed on the basis of the auto pricing system as Nepal Oil Corporation (NOC) has amended the Petroleum Products Auto Pricing System Bylaw and working guideline.

The amended bylaw allows NOC to raise or reduce the price of liquefied petroleum gas (LPG) by up to Rs25 per cylinder at a time. Likewise, the state-owned enterprise can add a markup of up to 2 percent to the cost price.

NOC Spokesperson Bhanubhakta Khanal said the NOC board endorsed the bylaw last week. “The corporation can now revise cooking gas prices in line with price fluctuations in the international market,” Khanal said.

The oil monopoly has long been planning to enforce the auto pricing system for LPG. However, it has not been able to do so due to the absence of related laws. Last Wednesday, NOC raised the price of cooking gas by Rs25 per cylinder after incurring heavy losses.

According to NOC, it has been suffering a loss of Rs162.91 per cylinder as per the revised price list sent by its sole supplier Indian Oil Corporation. “The new regulation has provided the enterprise a way out to minimise losses.”

NOC receives a new price list for cooking gas on a monthly basis from the Indian oil supplier. The corporation said it would set gas prices according to the new regulation from next month.

NOC has been implementing the auto price system for diesel, petrol and kerosene since September 2014. It has been able to settle its outstanding debts totalling Rs37 billion with the profits made since then. The enterprise has also deposited Rs4 billion in its price stabilising fund.

Khanal said the Supplies Ministry had recently formed a committee to operate the fund. The panel is led by the supplies minister and includes the supplies secretary, finance secretary, joint secretary at the division of supplies management and the NOC chief as members.

With a rise in oil prices in the international market in recent days, NOC has been running up losses for the last two months.

According to the corporation, its estimated loss for February has increased to Rs478.6 million. Currently, it loses money on sales of diesel and cooking gas.