Madhab Raj Ghimire*
Recent decision of Government of Nepal to provide state aid/subsidy to consumers by Rs. 125 on Gas Cylinder/month, Kerosene Rs. 10/Liter and other petroleum products will have Rs. 10 state subsidy to farmers as per referring an agitation by students and consumer associations.
Providing state aid to the vulnerable group is good to those affected from high inflation. It is state responsibility to provide basic need to their people. To provide state aid to the consumers much easier while importing petroleum products in Nepal has single authority, Nepal Oil Corporation (NoC). Therefore, there is no need to make worry about anti-competitive effects causing through state aid to consumers.
But there is concern for the irregularities within NOC, citing state aid, petroleum products to certain individuals. We are still not sure, whether NoC handle effectively to regulate the situation to provide subsidy to the consumers. Therefore, using state money thorough those institutions might not be easy task while colleges, Metro office or VDC will play to provide subsidy to the consumers; we verily reserved the doubt.
Why we reserved the doubt for the distribution? The answer is very obvious. The corrupt officials and institutionalizes corrupt practice with in institution.
It is very unfortunate that while in world scenario, petroleum product distributers or producers are in running highly profitable business. On other hand, our NoC is running in loss and incompetence manner too. Consumers might consider that despite running into loss, it should have operated effectively to service of supply the petroleum product without mingling in corrupt practice. But it’s never happened. It’s contributed to keep long line enough to the consumers to get product while there is product shortage in the market. Very surprisingly, consumers want to pay whatever the cost, but, NoC incapables to provide so called expensive products. In this case how can we assure ourselves that our institution can flourish while consumers ready to pay extra for the products but incapable to do so?
Thus, to achieve alocative efficiency of the petroleum product in Nepal, the monopoly situation of the NoC needs to be demarking to take off the right of management of petroleum products. Specially, importing petroleum product to Nepal needs to be given to the private sectors following by competitive bidding procedures. Finally, performance of NoC needs to remain as regulatory agency for regulating on quality of product, pricing issue, effective competition and to discouraging collusive practices of importing petroleum products need to remain with NoC to achieve institutional efficiency and effective competition.
mrghimire@hotmail.com
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