Oil Report

Fuel crisis looms over Nepal as stocks run low

KATHMANDU, May 23 (Reuters) - Hundreds of people queued up at petrol pumps with their cars and motorcycles in the Nepali capital on Friday, as a state-run oil company warned they were running out of fuel stocks.

The Nepal Oil Corporation (NOC), which has a monopoly on oil imports, said it would soon face a shortage unless the government gave the firm a subsidy or allowed a rise in the retail price of fuel.

The government subsidises some fuel prices for consumers. But with the rising international price of oil, the firm says it is struggling to pay for imports.

“We are able to recover only 70 percent of the cost of oil and lose the rest because we are forced to sell at a price which is less than the cost price,” NOC chief Digambar Jha told Reuters.

“The price of petrol in the international market hit $135 a barrel today. But we are selling it at a price fixed when it was just $83 a barrel.”

The fuel shortage could be a major test for any new government. Maoist former rebels are trying to forge a national coalition government after becoming the biggest party in an assembly election last month.

On Friday, many pumps displayed “no petrol” signs, worrying people in Kathmandu.

“I have to manage with this or lock up the taxi in the garage,” said Pawan Thapa, a 27-year-old taxi driver who spent six hours in a queue for fuel and got only 12 litres. (Editing by Bappa Majumdar and Alex Richardson)