Home Economy Protests erupt in Nepal after fuel price hike

Protests erupt in Nepal after fuel price hike

By Sudeshna Sarkar, IANS,

Kathmandu : Violent protests erupted across Nepal Tuesday as the government hiked fuel prices from midnight in a desperate measure to keep parity with increased oil prices in India.

Students, who had played a decisive role in toppling King Gyanendra’s government two years ago, spearheaded the protests that started in major college and university campuses and spilled over to the districts.

Burning tyres to block roads in the capital, students also shut down the East-West highway, Nepal’s lifeline, connecting the landlocked nation with India and providing the major route for supplies.

Demonstrations were reported from Chitwan district in the Terai plains as well as Makwanpur in central Nepal with indications that the protests could snowball.

The new disruption came after Nepal Oil Corporation (NOC), the state agency that is the sole importer of petro-products, decided to hike prices from Monday midnight in a frantic bid to stem its losses following a price rise in India, from where Nepal gets its supplies.

The price rise, ranging from nine to 28 percent, will hit the common man hard, leading to an escalation in the price of essential commodities and transport. The country is already grappling with high rates of inflation and unemployment.

Petrol is now Nepali Rs.100 ($1.5) per litre against the old price of Rs.80, diesel Rs.70 instead of Rs.56, kerosene Rs.65 instead of Rs.51 and cooking gas Rs.1,200 per cylinder from the previous Rs.1,100.

Earlier this month, following the decision by India’s federal government to increase fuel prices, Nepal had already upped aviation fuel by 12 percent, causing protests in its remote Karnali region, where lack of bad roads makes traders heavily dependent on air transport.

In a bid to revamp the oil distribution system that is in a shambles, the government also decided to open the sector to private players.

Purushottam Ojha, NOC chairman, said now private companies will be allowed to import fuel “from any part of the world”.

The decision will also lead to renewed attempts to import oil from Nepal’s northern neighbour China and third countries, ending India’s monopoly as oil exporter to Nepal.

Though the government also announced a reduction in oil taxes – ranging from five to 31 percent, it is not likely to mollify the protesters who say the NOC has been incurring losses due to corruption, mismanagement and pilferage.

With the third largest party in Nepal, the Communist Party of Nepal-Unified Marxist Leninist, having withdrawn from the ruling coalition, the party’s student union was the first to take to the streets in protest.

Similar enraged demonstrations had shaken Nepal on the eve of the April election after the government of Girija Prasad Koirala tried to increase fuel prices in an attempt to stem NOC’s losses.

The protests forced the government to roll back prices and contributed to the humiliating defeat of Koirala’s Nepali Congress party in the election.

However, the midnight hike is not going to redress Nepal’s oil woes overnight. NOC will still incur a monthly loss of Rs.1.5 billion.

Soon after the April 10 election, for which India had agreed to keep up the normal flow of supplies, the sole Indian exporter to Nepal, Indian Oil Corporation (IOC), slashed the quota for Nepal due to mounting arrears.

In the past week, oil exports were reduced by almost 80 percent, causing a crisis in Nepal.

The finance ministry finally stepped in Monday to bail out the near-bankrupt NOC, announcing it would provide Rs.1 billion to pay the Indian oil major and normalise supplies.