Colour-coded LPGs from today

KATHMANDU, MAR 09 - The government will enforce a mandatory provision on the sales and purchase of colour-coded liquefied petroleum gas (LPG) from Sunday onwards -red for household and blue for commercial users.

Although the colour-coded or dual LPG system was launched and implemented on June 15, 2013, under which commercial users are not allowed to use red cylinders, it has not been implemented effectively.

The Nepal Oil Corporation (NOC) has issued a public notice for all LPG traders and users to implement the dual cylinder system. “We will conduct a regular monitoring of the system from Sunday to ensure that the scheme is not misused,” said Sagar Satyal, officiating managing director of NOC.

The government had introduced the system with a view to end the subsidy given to commercial users and allow the NOC to offset its losses in the LPG business by allowing the oil corporation to sell LPG at cost price.

The price of an LPG cylinder currently stands at Rs 1,470, in which Rs 864.92 is subsidized to all users.

Based on the system, the NOC has two other plans-differentiate the price of red and blue coloured LPG cylinders and enforce LPG card systems for the two different kind of users.

“The objective of the scheme is to enforce dual pricing system-subsidized and non-subsidized,” said Satyal. However, there will be a single pricing of LPG cylinder at present. “Dual pricing will be enforced in the near future,” he added.

Under the LPG card system, Satyal claimed that the NOC has already distributed 600,000 cards in the valley. NOC estimates 900,000 household cards will be required, and among them 600,000 households are based in the capital.

The scheme will also help the NOC cut its losses and address grievances of consumers who frequently suffer from LPG shortage, said Deepak Subedi, spokesperson of the Ministry of Commerce and Supplies.

“The government will take necessary action to those who fail to abide with the dual LPG system,” said Subedi, adding that the system would enable the government to find out the quantity of LPG cylinder used.

According to a price list sent by its sole supplier Indian Oil Corporation on March 1, NOC will be incurring a monthly projected loss of Rs 1.69 billion from March onwards. The latest import tariff shows that NOC incurs a monthly loss of Rs 1.29 billion by selling 1.5 million tonnes of LPG.

The NOC recently demanded the government to arrange Rs 5 billion grants to finance petroleum import and has Rs 34. 16 billion in loans.

Consumption of LPG surged 14.12 percent to 207,038 tonnes in fiscal year 2012-13, according to NOC statistics. Per capita LPG consumption stands at 7.81 kg.

NOC statistics show LPG consumption jumping 213 percent over the last 10 years. The consumption started rising after 2007-2008 and it soared 19.59 percent to 115,813 tonnes in 2008-09 and 21.89 percent to 141,171 tonnes in 2009-2010.

NOC officials said due to the extended load-shedding hours and its cheaper price compared to other energy sources, LPG has become the fastest growing petroleum commodity. LPG import costs around Rs 20 billion annually, while Nepal imported petroleum products worth Rs 107 billion last fiscal year.