Fuel Shortage and Winter Cold Bite Nepal

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As temperatures drop, tempers rise over government inaction

More than a month after the government raised gasoline prices here to $4.25 per gallon in an attempt to normalize supply, there are still long lines at the pumps, which open briefly when a tanker arrives, then close again as soon as the fuel is sold. Day-long waits are common; some drivers queue up overnight, sleeping in their vehicles.

That hardship is compounded now, as winter’s short days and cold nights drive up demand for kerosene and bottled gas for domestic space heaters. Both fuels are also in short supply and more costly after the price hike. The problem is that Nepal Oil, the government-owned fuel importer and distributor, owes its only supplier, the Indian government-owned oil company, almost $50 million. To force payment, the Indian company has sharply reduced supply.

Nepal Oil has been unable to pay the debt – it loses money every month, even after the price hikes. Nepal’s finance ministry refuses to release the funds until the company stops hemorrhaging money, and commercial banks will not extend more credit. Nepal Oil already owes the banks some $25 million, and the banks point out that the company has no prospect of repaying existing loans, let alone new ones.

In the past, the supply-squeeze tactic by India has gotten partial payment of the debt from Nepal, sometimes with a price increase. The tap was then turned back on until the mounting losses caused a new crisis. This time, even after the price hike, no payment has been made: Nepalis wait in lines and shiver in their homes, often in the dark during regular winter electricity “load shedding.”

The experience has not improved the public’s already low opinion of their leaders. Since the April 2006 people’s movement that forced King Gyanendra to reinstate parliament, development and infrastructure projects, abysmally slow before, have ceased. Most local government offices and many important civil service posts are empty. Ministers and MPs are beginning to resign in disgust at the lack of progress on any front, not least the twice-postponed elections.

The fuel problem is just one more failure, but it’s a visible and painful one. If it doesn’t get fixed soon, January could become Nepal’s winter of discontent. And if the people come out into the streets again, they will be angry with a lot more than gas lines.

John Child is The NewsBlaze Nepal Correspondent, a journalist in Kathmandu who writes about goings-on in and around Nepal and her neighbors.

John Child is The NewsBlaze Nepal Correspondent, a journalist in Kathmandu who writes about goings-on in and around Nepal and her neighbors.