NOC to introduce dual cylinder in LPG trade from Oct 17
KATHMANDU, Sept 16: Nepal Oil Corporation (NOC) has initiated fresh efforts to introduce dual cylinder in liquefied petroleum gas (LPG) trade, something which it has been pushing hard since the past one year, in a bid to separate supply chain for household and commercial ventures.
“Dual cylinder should come into effect from October 17, 2012. We have already issued a public notice to the LPG bottlers to introduce cylinders (of 14.2 kgs) in red and blue colors,” said Suresh Kumar Agrawal, acting chief of the NOC.
Going by the notice, the bottlers should circulate red colored cylinder to supply gas to the household consumers, which is no different than the existing practice. However, commercial consumers such as hotels, restaurants, party palaces, factories and automobiles should be supplied gas in blue colored cylinders.
Though the ultimate goal of the program is to lay down a system, whereby NOC could make commercial consumers pay more for the supply even while pledging some subsidy to household consumers, it has, however, refrained from citing such purpose in the notice.
“Our present attempt focuses just at separating cylinders for household and commercial supplies. We are not enforcing dual pricing with dual cylinders this time round,” said Agrawal.
The NOC decided to defer the enforcement of dual pricing mainly to evade LPG bottlers´ resistance, something which the Ministry of Commerce and Supplies (MoCS) faced when it made similar effort in the recent past.
In July, MoCS had declared it was introducing dual cylinders and pricing on LPG trade from August 17, 2012. But the bottlers vehemently protested the decision. They even launched a strike and went to the extent of stopping imports, following which the ministry retracted its decision in mid-August.
NOC officials expressed the hope their new effort will not draw similar reaction from the bottlers. “We are not introducing dual pricing as MoCS announced in the past. Hence, there is no reason for the bottlers to protest,” Agrawal told Republica.
However, bottlers clearly understand the motive behind the NOC´s decision. They even vented ire against NOC for reinitiating the process of introducing dual LPG cylinder.
“The decision of NOC has far-reaching impact. It should have consulted us and taken us in confidence. Sadly, it again has preferred to work unilaterally,” said Kush Kumar Malli, general secretary of Nepal LPG Industries Association (NLPGIA).
He said the bottlers, who were in talks with the MoCS and NOC officials over settling numerous demands they placed during their strike in August, would discuss the NOC´s fresh decision with the concerned officials.
The bottlers have been resisting the dual cylinder arguing that differentiating the cylinders would inflict them a cost of some Rs 500 million.
However, NOC has been pushing for it mainly because introduction of dual cylinder would enable it to introduce dual pricing, thereby slashing losses on LPG trade by whopping 40 percent. In 2011/12, the corporation had suffered a loss of Rs 5.5 billion on LPG business as the government refrained from adjusting its prices in line with the international trend, fearing protests from consumers.