Nepal Oil Corporation (NOC) is considering selling liquefied petroleum gas (LPG) at different prices for household and commercial users to reduce the financial burden it faces in the LPG business.
Although a similar initiative failed over a decade ago, the government is now looking to reintroduce differentiated pricing for LPG. Manoj Thakur, spokesperson for NOC, told that the public enterprise has begun preparations to implement the plan.
Subsidy for Households, Full Price for Commercial Use
According to Thakur, the government will continue subsidizing LPG for households, while the subsidy will be withdrawn for commercial users. “Households purchasing LPG at the listed price will be able to claim the subsidy amount from a designated bank,” he said.
The state-owned oil monopoly is developing special software to track household LPG users. “Consumers in this category will receive their subsidy refund from Rastriya Banijya Bank,” Thakur added.
Previous Attempts and Financial Burden
The NOC first introduced color-coded cylinders—red for households and blue for commercial use—in 2013 to reduce losses. The initiative was revived in 2018 but was abandoned due to leakage risks caused by poor monitoring mechanisms.
Currently, NOC faces a loss of Rs 322 per cylinder in the LPG business, selling both household and commercial LPG at Rs 1,910 per 14.2 kg cylinder. Under the new system, subsidies will be removed for commercial users, reducing the corporation’s financial burden.
LPG Consumption and Impact of New Pricing
According to the 2021 Population Census, 44% of Nepal’s population relies on LPG for daily cooking. NOC records indicate that Nepal consumes between 450,000 to 500,000 tons of LPG annually.
NOC currently bears a financial burden of approximately Rs 11 billion in LPG subsidies. With differentiated pricing, this burden is expected to decrease to Rs 9 billion per year.
Thakur stated that each household with four members will be eligible for eight subsidized cylinders per year. “If the required software and processes are completed on time, the new system is expected to be implemented by mid-March,” he added.
In the fiscal year 2023/24, Nepal imported 524,274 tons of LPG, a 1.9% increase from the previous year. LPG remains the primary energy source in Nepali households.
