Welcome Essar's proposal. MYREPUBLICA.com

REPUBLICA

The proposal presented by Essar Oil Limited, which has the second largest oil refinery in India, to the government of Nepal to induct it as an alternative fuel supplier for Nepal is encouraging. The government must welcome the company with open arms, because doing so will break the long-standing monopoly of Indian Oil Corporation (IOC) -- it being the sole supplier of fossil fuel to Nepal. It is true that IOC has been supporting Nepal through thick and thin, however, monopoly in any market comes at a price that may not always be in favor of the consumers. Hence, the government must end the monopoly by allowing another oil supplier to cater to the Nepali market.

Ending the monopoly of a supplier spurs competition among suppliers to supply goods at the lowest possible rates, ensuring better quality and consistency of supply. In the absence of competition, Nepali petroleum consumers have long suffered.

An overhaul of the nation’s fuel supply mechanism is also necessary if we consider the various high-level government-formed commissions formed in the past which pin-pointed that by importing crude oil Nepal can lower its import cost by 10 percent as opposed to directly purchasing refined oil from IOC.

However, we would like to stress that introduction of a new petroleum supplier alone will not straighten things out for Nepal. And this is where the issue of reforms in NOC and also the petroleum sector as a whole comes in.

While the government needs to act strongly to plug leakages at the corporation, it must also take steps to raise its level of competence level to handle international deals, local inventory management, distribution network and quality control. Enhancing its efficiency at all levels is a must. And this will not be a reality until and unless NOC is subjected to competition. The corporation’s past activities have long proven that the institution will not improve until and unless it is forced to do so. Unfortunately, a bill to end its monopoly by opening petroleum imports to the private sector has long gathered dust in the cabinet in the absence of leaders’ political will to end petty politicking on petroleum prices. This must change. The government should welcome the private sector. Likewise, the dual role that NOC is playing at present as an Oil Marketing Company (OMC) and sectoral regulatory authority should end. Its function should be confined to that of an OMC. And a separate independent, competent, well-equipped and autonomous Petroleum Authority must be set up to regulate the sector. Only will this pave way to ensure fair play in the market and protect the consumers and the country.