The government has reduced taxes on petroleum products by 50 percent, but consumers are unlikely to see any drop in fuel prices. Instead, the savings will go entirely to the Nepal Oil Corporation (NOC), which is grappling with heavy losses due to rising international oil prices.
A Cabinet meeting on Tuesday decided to slash customs duties and infrastructure taxes on imported fuels by up to half. The infrastructure tax on petrol and diesel has been reduced from Rs 10 per liter to Rs 5, saving Rs 5 per liter on both fuels.
Similarly, customs duties have been cut by 50 percent. Currently, petrol carries a customs duty of Rs 25 per liter, diesel Rs 12 per liter, and cooking gas Rs 90 per cylinder.
Despite these reductions, consumers still bear a significant tax burden. Taxes on petrol total Rs 66.98 per liter, while diesel is taxed at Rs 49.28 per liter, including various charges such as road maintenance, pollution fees, infrastructure tax, and VAT.
With the revised tax structure, NOC will save Rs 17.61 per liter on petrol and Rs 11 per liter on diesel. However, the benefits appear limited to the state-owned corporation rather than the general public.
NOC Managing Director Chandika Bhatta stated that while the move may help improve fuel supply, consumer prices have not yet been revised.
As of Thursday, petrol is priced at Rs 202 per liter and diesel at Rs 182 per liter. Even at these rates, NOC reports losses of Rs 34.36 per liter on petrol, Rs 120.54 on diesel, and Rs 416.37 per cylinder of cooking gas, totaling an estimated Rs 11.71 billion in losses every two weeks.
The financial strain is largely due to a surge in global oil prices, which recently hovered around $110 per barrel amid geopolitical tensions affecting supply routes.
To cope with the situation, the government has introduced measures to reduce fuel consumption, including implementing a two-day weekend for government offices and cutting fuel allowances for civil servants.
