Nepal continues to grapple with serious issues in its export sector, with recent data revealing that export revenues are insufficient to cover fuel imports, raising concerns about the sustainability of its trade balance.
According to the Department of Customs, Nepal imported petroleum products—including petrol, diesel, kerosene, aviation fuel, and liquefied petroleum gas (LPG)—worth approximately Rs. 37.47 billion from India during the first two months of the current fiscal year (mid-July to mid-August 2024). This figure is about 50 percent higher than the country’s total exports of Rs. 25.09 billion during the same period, marking a 5.12 percent decline in exports compared to the previous year. Meanwhile, imports increased by 1.08 percent to Rs. 262.54 billion, resulting in a trade deficit that has widened by 1.78 percent to Rs. 237.44 billion.
Petroleum products accounted for 14.27 percent of total imports, indicating that Nepal is spending heavily on these essential resources. Experts attribute these ongoing challenges to several factors, including limited industrial capacity, dependence on a narrow range of export products, and intensified competition in regional markets.
To address these issues, experts emphasize the need for strategic initiatives aimed at boosting exports. Recommendations include improving product quality, diversifying export goods, and enhancing trade relationships with neighboring countries. However, progress in these areas has been slow.
Notably, while the total import of petroleum products has slightly increased compared to the same period last fiscal year—Rs. 37.26 billion in the first two months of 2023—specific categories have seen fluctuations. The import of petrol, diesel, and aviation fuel decreased, while LPG imports surged by about 29 percent, amounting to Rs. 9.42 billion for 88,538 tonnes.
The spokesperson for Nepal Oil Corporation, Purna Prasad Rijal, noted a decrease in the growth rate of petroleum consumption due to rising electric vehicle use and electric stoves. As development and construction activities accelerate in the country, diesel consumption is expected to increase, though it has recently declined due to heavy rains affecting construction timelines.
Rijal emphasized the importance of promoting electric vehicles and stoves to reduce reliance on fossil fuel imports, suggesting that this could lead to significant savings for the country. The trend toward electric alternatives has been gaining traction over the past three years, which may help mitigate some of the pressures on Nepal’s export sector moving forward.
