Nepal Oil Corporation (NOC), which has been selling cooking gas at a loss, is now preparing to implement a new system to sell it.

Managing Director of NOC Dr. Chandika Prasad Bhatta said that the Corporation has made preparations to sell liquefied petroleum gas (LPG) in two categories--commercial and household purposes.

The idea of dual pricing of cooking gas is, however, not new. A decade ago, the government had proposed using red and blue cylinders for domestic and commercial uses. However, the plan never came into effect.

The NOC is once again working to prepare a procedure to sell cooking gas to domestic users in a subsidised rate and to the commercial sector at the cost price.

According to Bhatta, the corporation is currently developing software in collaboration with the Rastriya Banijya Bank (RBB) for the sale of gas as per its new plan.

The corporation is currently selling gas at a loss of Rs. 296 per cylinder.

He said that the NOC has been making up the huge loss it suffers in the sale of LP gas by selling petrol, diesel, kerosene, and aviation fuel at higher rates than their cost prices.

Subsidies for only household consumers

“Currently, the RBB Bank is developing the software, and we have received information that it will be ready within two months," he said. "After that, we will make a procedure and proceed with the sale plan accordingly."

According to him, after the software is developed, the details of gas consumers across the country will be linked to the system through the gas distributors and dealers. Based on those details, the corporation will proceed with the gas sale process.

"We have a plan to implement the new system from the beginning of the next fiscal year. Before the commercial implementation, the system will be implemented as a trial in the month of Asar this fiscal year," he told The Rising Nepal.

“The software system links the citizenship and bank account of all the consumers. After purchasing gas at the cost price, arrangements will be made for refunding the subsidised amount to the consumer, while the commercial sector will be provided the gas at the cost price,” he said.

A person will be able to buy two cylinders of gas for household purposes a year at the subsidised price, i.e. less than the corporation’s cost price, he said. Each member of the household will get two cylinders a year, he added.

The Corporation is currently losing Rs. 1.14 billion monthly in the sale of cooking gas. A 14.2 litres of gas cylinder is being sold at Rs 1,910 while the cost price is about Rs. 2,200.

The NOC has been selling around 45,000 tonnes of LPG across the country monthly.

During the first nine months of the current fiscal year, around 410,593 tonnes of LPG worth Rs. 46.58 billion have been imported.

The government received Rs. 8.68 billion in revenue from the import of 410,593 tonnes of LPG during the review period.