The state-owned oil monopoly last week did not review the prices of petroleum products in line with the rates in the international markets after the total failure of its auto-pricing mechanism.

On November 16, Nepal received the new tariff for petroleum products from its supplier—Indian Oil Corporation.

The price of diesel has dropped significantly, while there has been a slight drop in petrol price, according to the officials at Nepal Oil Corporation.

With this, Nepal Oil has swung back to profit again as the fortnightly profit on the oil business stands at Rs200 million, according to the officials.

“Prices have dropped but marginally,” said Birendra Goit, deputy managing director at the Nepal Oil Corporation.

What prompted the oil utility to abandon auto pricing?

There is a popular Nepali adage—a dog struck by a firebrand is startled by the sight of lightning.

Just like the adage, the oil utility, too, may have feared the prime minister’s directive may come again, insiders say.

On October 1, Prime Minister Pushpa Kamal Dahal ordered a rollback of the increased price of cooking gas. “The implementation of the auto-pricing mechanism has been halted since then,” said Manoj Kumar Thakur, deputy director of Nepal Oil Corporation.

State-owned oil monopoly revived the automatic fuel pricing system on July 17, the start of the new fiscal year. The mechanism had been defunct for nine years.

The corporation was hopeful that the public would stop criticising it as the auto pricing mechanism was finally implemented.

After three months, the prime minister made the system defunct.

“Now, the festive season is over, and fuel prices will be adjusted on December 1,” said Thakur.

But he is clueless—about how. “A meeting of the board of directors will now decide whether to adopt the auto pricing modality. Until then, there won’t be auto pricing,” said Thakur.

According to the corporation, though it has been enjoying profit on the sales of diesel and petrol, it has been incurring heavy monthly losses amounting to Rs1 billion on cooking gas.

Thakur said its cumulative loss has dropped as it has been making a profit in diesel, aviation turbine fuel, kerosene and petrol.

Our intention to remove subsidies on cooking gas was to encourage people to use electricity for cooking, said Thakur. “Despite having surplus electricity, which is a cheaper option to cooking gas, demand for cooking gas has not dropped.”

The last time the government revised petroleum prices was on November 1, when the corporation decreased the price of diesel and kerosene by Rs4 per litre to Rs164. But prices of petrol, liquefied petroleum gas and aviation turbine fuel were left unchanged.

Petrol currently costs Rs172 per litre. The price of liquefied petroleum gas is Rs1,895 per cylinder.

According to the oil utility, it has been selling aviation fuel to domestic carriers at Rs136 per litre while the rate for international carriers is $1,035 per kilolitre.

On September 30, the corporation jacked up the price of a 14.2-litre cooking gas cylinder by Rs215 per cylinder to Rs2,110 after receiving a new price list from its sole supplier Indian Oil Corporation.

However, the corporation rolled back the hiked prices of petroleum products following the prime minister’s directive in view of the festivals.

Prime Minister Dahal rolled back the decision without consulting the concerned minister and ministries saying that the oil corporation cannot independently decide to hike prices in the given context.

Consumer rights activists have been accusing the government of profiting at the expense of the Nepali people who are already struggling with near double-digit inflation.

In Nepal, every drop of fossil fuel is imported, and it is the key determinant of inflation. Food prices, transport fares, room rents and school fees have all soared to record highs as a result of high fuel prices.

Constantly rising inflation has played havoc with household budgets and caused anguish to the provider of the family. And to add to the pain, Nepal Oil does not lower prices even when its import costs drop, said experts.

Consumer rights activists say good governance is sorely lacking at Nepal Oil and other public enterprises.

According to the customs, Nepal imported petroleum products worth Rs73.52 billion in the first three months of the current fiscal year.

International news reports say Brent crude oil price reached $81.60 per barrel on Monday—a drop by almost 20 percent since September.