NOC raises fuel prices third time a month

Nepal Oil Corporation (NOC) has raised fuel prices for the third time in less than a month, citing continued increases in international oil prices.

The state-owned company has increased the price of petrol and diesel/kerosene by NRs 15 per litre, effective from midnight Friday. Following the latest adjustment, petrol now costs NRs 202 per litre in Kathmandu, while diesel is priced at NRs 182 per litre. Such sharp hikes in essential fuels are likely to have an immediate inflationary impact, particularly on transportation and goods.

The corporation maintains a tiered pricing system across the country, with slightly lower rates in other regions, but the highest prices apply to major cities such as Kathmandu, Pokhara, and Dipayal.

According to the corporation, the decision comes amid sustained pressure from rising global fuel costs. Based on recent purchase rates from Indian Oil Corporation between March 16 and March 31, it reported losses of around NRs 47 per litre on petrol, NRs 133 per litre on diesel, and NRs 416 per cylinder of liquefied petroleum gas. The scale of these losses suggests that domestic prices remain partially subsidised despite recent increases.

NOC maintains it has not fully passed on the increase to consumers, and the recent hikes have only slightly reduced financial strain. According to NOC, the corporation continues to operate at a loss, currently estimated at NRs 34 per litre on petrol, NRs 120 per litre on diesel, and NRs 416 per LPG cylinder. If prices are not adjusted, its fortnightly losses would mount to NRs 13.21 billion, says the press release by NOC, which will now be reduced to NRs 11.71 billion with the adjustment. 

In addition to petrol and diesel, the corporation recently implemented a steep increase in aviation turbine fuel (ATF). Prices for international airlines in Kathmandu surged by over 77% to $1,716 per kilolitre, with similar hikes in Pokhara and Bhairahawa. For domestic airlines, ATF prices nearly doubled, rising by about 97% to NRs 251 per litre, an unprecedented increase. This sharp rise in ATF prices could translate into higher airfares, potentially affecting tourism and domestic travel demand.