I am one of thousands of bikers in Kathmandu. I need around 10 litres of petrol every two weeks. I cannot easily spend around Rs 2,500 rupees a month just for petrol. I am well aware of it but given the fact that the public transportation and traffic of the Valley is so troublesome, a motorbike has been my most convenient means of travel. So, I was stunned when a friend of mine informed me that the government had decided to hike the price of petrol by Rs 10. After massive protests from student groups, the government has now revised the price hike to an increase of Rs 4.50. My instant response to the initial increase was that it is not fair to raise the cost of petrol as that would hit thousands of vehicle owners in the Valley and across the country.  I began worrying about the increase in my daily expenditure since the market price of commodities would also skyrocket in a few days.

Market forces

However, rationally, I feel that there is no alternative to increasing the price of petroleum products when the price has gone up internationally. As Nepal does not produce any petroleum, and we depend on the Indian Oil Corporation for petrol, the Nepal Oil Corporation (NOC) has to pay the price that they label. Hence, it is apparent that the price of petrol should be hiked when its price goes up internationally and lowered similarly. Otherwise, the government has to make up the incurred loss and in doing so, the government is often forced to curtail its budget for different programmes.  

Nonetheless, there are certain things that the concerned authorities should do before deciding to raise the price. First, it should address the reported problem of corruption in the NOC. The government needs to intervene and decide the salary (and other allowances) of NOC officials in line with that of other civil servants. Second, the NOC could be unbundled and handed over to independent, private organisation while instituting a governmental system for monitoring and supervising. The import of petroleum products, thus, could become a private business. This would make the market more competitive and reduce prices.

Alternatives to oil

I am arguing for privatisation because the subsidies currently provided on petroleum products are largely utilised by the middle and upper class. They do not benefit the 70 percent of the people who live in villages and the rural areas of the country. More than 90 percent of household villages in Nepal, who subsist on farming, depend on biogas or firewood. So, instead of supporting the NOC, the government would be better off investing in developmental works that benefit the lower-middle or lower class. For example, if the government had spent the billions of rupees that it gave to the NOC to keep it running on hydropower instead, the problem of loadshedding that we now face could have been minimised.

There are also solutions to our dependence on petroleum. One is to promote the use bio-petrol. Young Nepali scientists have already tested and proven that bio-petrol can be used to run vehicles engines. The government should invest in refinement plants and increase the use of bio-fuel. Next, Nepal can invest more in hydroelectricity, so that we can increase the number of electric bikes and motor cars, which are also environment friendly. Third, the government has to think of increasing the means of mass transport and make traffic in the Valley and other urban areas smooth so that bike owners like me will switch to public transport. Furthermore, the government can promote the use of bicycles and create more bicycle tracks on roads. This will also help in reducing air pollution in Kathmandu and will make people healthier.

Laudari is a lecturer at Ace Institute of Management