Nepal: Bharat Petroleum Looks at Nepal's Fuel Market

Currently, the Indian government has allowed only IOC to export petroleum products to Nepal without any payment of duty.
The company has argued that continuation of this rule, which was framed during the already-dismantled administered pricing mechanism when IOC was the only canalizing agency, has blocked all public sector oil companies from carrying out import and export of petroleum products freely.

“This gives an unfair advantage to IOC in the Nepali market. This notification has to be amended accordingly,” the company has said in a statement posted on its website.  It has suggested that all pubic sector OMCs should be authorized to export petroleum products to Nepal without payment of duty.

BPCL has strongly advocated the government to do away with notification that presently seeks oil exports to be routed through Nepal Oil Corporation (NOC).  “Since Nepal is also opening its economy to international companies, the requirement to deal only with the NOC should be terminated and the company must be free to carry out trade with any party of Nepal,” it has stated.

Increased urbanization, modern lifestyle and protracted power cut have already bloated Nepal´s petroleum market to a size of about Rs 48 billion. NOC projects it to grow to Rs 60 billion by mid-July 2010, when this fiscal year ends.

With market size already of substantial size and its rate of expansion rapid, Nepal´s petroleum sector has already started to draw international players. Essar Group, the operator of largest refinery in India, had approached the Nepal government to open up imports(see petrolworld archives).

BPCL has approached its government to open exports to Nepal. If any of those companies come here, Nepali consumers could witness dramatic changes in the way they are catered with fuel and services.  “Competition among exporters can instantly trigger competition in price, efficiency in supply logistics, enhance quality of supply and introduce wide array of efficient product line to serve the needs of different consumer groups,” admits Digambhar Jha, NOC chief.

As for deregulating the supplier is concerned, MoCS has already notified the Indian government that Nepal has opened liquefied petroleum gas (LPG) trade to private sector and requested it to end IOC´s monopoly on it. 

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