Government to Centralize LPG Subsidy for Genuine Consumers

Kathmandu

Kathmandu. The billions of rupees in subsidy that the state has been providing on cooking (LPG) gas to make the kitchens of ordinary citizens easier will now be focused on actual consumers.

Concluding that for years, the facility provided from the state treasury in the name of the poor and common citizens has been benefiting star hotels, large restaurants, and industrial establishments, the government and Nepal Oil Corporation are preparing to take a strong step of policy reform.

Now, the gas subsidy provided to profitable commercial sectors will be completely abolished, and the amount saved will be used to secure the kitchens of ordinary citizens, stabilize gas prices, and provide further concessions to the target group. For this, the corporation has brought the homework of implementing a dual pricing system in the market and separate cylinders for domestic and commercial use to the final stage.

Businesses are getting double benefits, Corporation facing billions in loss

Currently, Nepal Oil Corporation sells one cylinder of 14.2 kg capacity LPG gas to both ordinary consumers and commercial establishments at the same price of Rs 2,060. However, when the international market purchase rate, transportation, and other taxes and administrative expenses are added, the actual cost (landed cost) of one cylinder of gas for the corporation is around Rs 2,700. This means the corporation is selling gas at a loss of approximately Rs 640 per cylinder.

Ordinary citizens do not receive any financial benefit by paying Rs 2,060 to use gas. However, commercial establishments doing business worth billions not only get gas at the same subsidized price but also get Value Added Tax (VAT) refunded from the state by showing the amount spent on gas purchase as 'business expense'.

Binita Mani Upadhyay, Director of Nepal Oil Corporation, clarified that this double benefit being received by the commercial sector will now stop. 'Consumers pay the same price as ordinary citizens, large hotels and industries also buy gas at the same subsidized price. Moreover, they also get the benefit of VAT refund,' said Director Upadhyay. 'This means that profitable businesses are getting more benefits than ordinary citizens, which is a direct misuse of the subsidy. Now, gas consumed in the commercial sector will be sold at the landed cost (cost price), which will reduce the corporation's loss and make it easier to provide concessions to ordinary citizens.'

New policy to make ordinary citizens' kitchens cheaper

According to the corporation's data, a large portion of the total LPG gas imported into the country is consumed in the commercial sector. If the gas used for commercial and industrial purposes is sold at full cost price, billions of rupees of the state will be saved.