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Mob fury forces fuel price slash in Kathmandu

Mob fury erupted throughout the country after the government increased the price of petroleum products by 11 to 25 per cent.

india Updated: Aug 21, 2006 11:58 IST
Indo-Asian News Service
Indo-Asian News Service

Shaken by violent protests on streets, a transport shutdown and a stinging rebuff by its own partners as well as the Maoist guerrillas, Nepal's cornered government was forced to roll back the steep hike in fuel prices announced last week and order a probe to save its face.

Ailing Prime Minister Girija Prasad Koirala, who had been resting in his ancestral home in Biratnagar city in southern Nepal, returned to the turbulent capital on Sunday to hold an emergency meeting of his cabinet which decided to revoke the hike and let the state-owned Nepal Oil Corporation (NOC) suffer losses to defuse the tense situation countrywide.

After the government increased the price of petroleum products by 11 to 25 per cent Friday to bring domestic rates on a par with international market prices, mob fury erupted throughout the country, with protesters blocking roads and highways, torching vehicles and clashing with police.

Transport was paralysed and markets and educational institutions remained closed on Sunday while visitors arriving at Kathmandu's Tribhuvan International Airport had to trudge to their destinations, carrying their luggage.

The government found itself cornered with all the seven parties in the ruling coalition, including Koirala's own Nepali Congress, condemning the hike and the House of Representatives, parliament's decision-making lower house, ordering an immediate price rollback.

The opposition Rastriya Prajatantra Party as well as the Maoist guerrillas too joined the condemnation, with the rebels warning they would support the public protests if the government did not take immediate measures.

Bowing under the collective pressure, the Koirala government finally gave in Sunday evening, forming a three-member high-level committee to report to it within a month how to adjust prices in accordance with the global rates as well as reform the graft- and mismanagement-ridden NOC.

Angry protesters have been calling for an inquiry into the assets of NOC officials as well as its privatisation.

Last year, Indian firm PricewaterhouseCoopers submitted a report on how to manage the NOC better but it was ignored by King Gyanendra's regime.

Currently, the NOC has been incurring a loss of nearly NRS 840 million every month and has been floundering to pay the money it owes to the Indian Oil Corporation, the sole agency from whom Nepal imports all its fuel requirements.

NOC owes the Indian agency over Rs 8 billion and according to Nepal's Industry, Commerce and Supplies Minister Hridayesh Tripathi, needs to make an immediate payment of Rs.1 billion or face a short supply of fuels.

The weekend drama in Nepal has stoked anti-IOC sentiments in the kingdom with at least one MP attributing the NOC's losses to the deal with the Indian agency.

Lilamani Pokhrel, a parliamentarian from People's Front Nepal which, despite being one of the smaller parties in the seven-member coalition, has a deputy prime minister in the cabinet, Sunday told parliament that Nepal should revert to its earlier policy of buying crude oil from third countries and getting it refined in India.

About nine years ago, Nepal stopped the practice and began importing refined oil from the Indian agency.

First Published: Aug 21, 2006 11:58 IST