There has been serious unrest in Kathmandu both yesterday and today. This follows the Nepal Oil Corporation (NOC) increasing the price of diesel and kerosene by 10%. There was a similar increase about a month ago and the public has this time responded with street protests, burning tyres and traffic paralysis. For this is not just a problem of fuel costs as the whole cost of living will increase dramatically as well, while incomes remain the same. In the past the NOC/Government have backed down following similar protests and I expect these will now continue until that happens. Otherwise the general public has too much to lose.
The underlying issue is the fact that Nepal has been importing fuel from India and selling this at a loss to the NOC. The Government doesn't have the means to clear the NOC's debts or to subsidise fuel costs in the future. And since NOC has been running up a debt with its Indian counterpart, the Indians have not unreasonably suspended fuel exports from time to time leading to chronic fuel shortages and long queues at petrol stations. So the NOC has no alternative but to increase prices but even with these last two price hikes the Corporation will still be running at a huge loss.
