KATHMANDU, Aug 8: The government has decided to activate Essential Service Act (new amendment) to foil liquefied petroleum gas (LPG) bottlers from disrupting the import and distribution of cooking fuel - something they have threatened to do from next week demanding more than two-fold rise in their profit margin.
“LPG is a basic cooking fuel. Any disruption in its supply will hit millions of urban consumers badly. Hence, we are formally writing to the Home Ministry on Wednesday to activate the ESA on LPG import and sales,” said Lal Mani Joshi, secretary at Ministry of Commerce and Supplies (MoCS).
Once activated, the ESA grants the government special authority to intervene in the market to foil strike by essential goods and service providers. “And in the case of LPG bottler, their demand is neither genuine nor timely,” said a senior Nepal Oil Corporation (NOC) official.
If required, Joshi said the government will mobilize the local administration to force bottlers to continue supply and take actions against those disrupting smooth and regular supply of LPG.
The government decided to activate the ESA after LPG bottlers last week unveiled a protest program, vowing to go to the extent of bringing supply (of gas) to a grinding halt to press the government to fulfill their 16-point demand.
As part of their protest, Nepal LPG Industries Association (NLPGIA) has said the bottlers will stop placing order for LPG import from August 8 and eventually halt distribution of gas in the market from August 15.
NLPGIA officials claimed their demands were genuine, something the officials of MoCS and NOC have rejected outright.
Of the major demands, the association has urged the MoCS to cancel its decision to enforce dual cylinder and pricing - something which it had planned to introduce from August 17 to halve NOC´s loss on LPG from Rs 431.6 million.
Under this plan, the MoCS has said it will allow LPG bottlers to continue selling gas at the existing subsidized price to the household consumers in the red colored cylinders. But to commercial consumers like hotels, restaurants, factories and automobiles, it has asked the bottlers to supply gas in blue colored cylinders. It has announced its intention of making commercial consumers pay price equal to the actual import rate for the supply.
But bottlers have argued they cannot go for dual cylinder. “There are around 4.5 million cylinders in circulation in the market. To separate them (by painting the existing red color cylinders blue), we will need to invest at least Rs 560 million,” said Hari Pathak, president of the NLPGIA.
The association has also demanded the government to raise bottlers´ commission (profit margin) to at least 5 percent of the retail rates, which at the present prices will stand at around Rs 70 per cylinder. So far, they were allowed to take profit of around Rs 30 per cylinder.
The bottlers have also asked the government to set aside a separate fund worth one percent of the total import cost (which at present value stands at around Rs 900 million) to raise public awareness and promote consumer safety. It has also demanded that the NOC provide third party insurance for LPG transporters, among others.