Alternative to Petroleum Crisis

I would like to share some of my articles (correspondences in forums and e-mails to the listserv) about emerging issues like petroleum crisis and loadshedding in Nepal.

Posted to Clean Air Network Nepal (CAN-N)
Date: Sun, 15 Jul 2007 02:09:52 -0700 (PDT)
Subject: Re: Alternative to Petroleum Crisis

Hi to all!

I would like to draw your attention on the issue raised by "Alternative to petroleum Crisis" (by Ganesh Regmi-Kathmandu Post-July 9, 2007, CE News Vol 7, No. 33)

Quoted here:

"Hence, the government should boldly hike the petroleum price adjusting to the international rate in order to facilitate a smooth supply of the same to the people and create a mechanism of automatic pricing so that international pricing is balanced by internal pricing in the future. If NOC comes with crystal clear pricing methodology, people will not hesitate to pay a higher price for petroleum products that would be available without any hassle."

in which the author tried to advocate price hike as the only solution in current situation. In my personal opinion, in the current situation, this bold step will have to go through a difficult resistance which we have already faced it earlier too. Current transitional government will have that courage? or it will wait till Constitutional Assembly?

We need to understand what went wrong in the past and why people were not agreeing to the price hike as the solution in the current context even though people have to queue up long for petroleum products for days and weeks. If we do not understand this and we think that the price hike as the only solution, then in my opinion it will not only invite more difficult consequences but also it is not complete solution in itself for the future of Nepal.

The author even mentioned that the crystal clear of pricing mechanism would make people pay even higher price. I do not see any strong ground on that in the current situation. But I agree that it will help people aware about the pricing mechanism but NOC has to go through the people's anger first once the price hike is carried out. Because the reason that fueled anger of the people on pricing of the petroleum products is not pricing mechanism or price of petroleum products as such. I strongly believe the government of Nepal along with Nepal Oil Corporation is not able to come up with strong reason for every price hike till date. They are not able to convince the people that the price hike is not for the bonus/revenue for the government/NOC that it used to enjoy earlier but instead it is a need in the current context. Currently I see NOC as the merchant who took high profit in the past and now going under loss and it is trying to put the loss to the head of each citizen. People are not aware of these in the past and they were compelled to get quiet in many occasions. Now the political situation is different than in the past. Every citizen can raise his/her voice on autocracy and the current transitonal government has no other option but to listen and address it. In my opinion, in the current situation, if one thinks that the people are not aware of the need of price hike and hike in international prices, and this is the single reason people protesting price hike then, in my opinion, I would say, it will be no other than a grave political mistake.

In the history of petroleum products pricing, every price hike has the following reasons:

a) To maintain the higher price from other side of the border
b) To minimize the price disparity in international price.

In the past, non of the Nepalese saw any problem with these because these were obvious reasons. But this situation did not stay long when they became aware about past deeds of NOC involved in sharing (i would say amassing) huge revenue as a consequence of price disparity in international fuel pricing. How would a citizen can digest that their hard earned money was enjoyed by handful of opportunists taking advantage of a loop hole in the policy? How can the people be assured that the past reasons for price hike will not repeat the same story in some other way?

Now the question is again, how to solve this status quo? In my opinion, if this question "How can people be assured that the price hike is for them not for government/NOC? ", then any policy on pricing of petroleum products will not have to go through difficult time as it has faced earlier if political vested interest is not considered here!

In the current context, the government should come up with strong policy which should relieve the people from the dependency of petroleum products. If this is achieved, then I think it is win and win situation for both. A number of policies has been taken in other cities to relieve them from pollution in one hand and in other stepping in energy security. To name a few, a good example can be found in neighbouring countries like India and Pakistan, where CNG vehicles are running in million with fuelling stations in thousands. Pakistan is considered as number one CNG vehicle user in the world. They are using their own resources and also relieving people from air pollution. In our context, we have hydro resources and we have already developed electric vehicles to much greater extent. Much of hydro power projects are in pipelines. So, in my opinion, the government should come up with strong policy on long term strategy on cleaner electric vehicles. The strategy should not be isolated strategy as we see in the past. The promotion of electric vehicles should be for limiting the use of petroleum products. The current policy of government is more focussed on managing the demand and supply of petroleum products and it does not consider the alternative way of limiting the petroleum demand by promoting electric vehicles in the long run. In my opinion, the government should start consider the following implementational strategy without any delay, if not else:

a) East to West Electric Train (Cross Country Train linking Mechi and Mahakali): With this train, I don't think I should write more on the advantages of the development of rural areas. In the cities, it will relieve pressure on urbanisation. People can live in Achham (Far Western region) and come for office Narayanghat in half and hour. Tourism can be boosted in other parts of the country. Expenses relevant to road maintenance, vehicle maintenance, health can be lessened to larger extent. On top of that, in my opinion, a larger rural mass can be employed. A huge population will be engaged in business activities that should reduce the political unrest to larger extent once people feel they are busy.

b) Electric Train that links India to Tibet through Nepal: This has been thought for long time as this would boost the economy of country as two asian giants will start trading with Nepal as transit point. A lot of has been already discussed on this regard for quiet some time.

c) Electric Train in Outer Ring Road: A huge relieve to city centered urbanisation to rural satellite towns. At the same time, it will reduce the vehicle activities in the Kathmandu valley and reduce the pollution.

d) Electric Vehicles like safa temp, buses: It can be used in the central city and can be used as feeding vehicles in every routes. A huge relief to the city people in air pollution.

Now the question arises how to meet the cost for the infrastructure! This is very pertinent issue in the current context when the government is in loss in petroleum products and facing a stiff resistance from people on price hike.

In my opinion, the government should come up with strong policy with a committment that the revenue generated from petroleum products will be spent for building cleaner vehicles infrastructure and for limiting petroleum product dependency in the long run. A price hike with this reason may have soft resistance from the people. Rather than the direct price hike, the government can levy certain emission tax, energy tax, congestion tax and carbon tax on these petroleum products or vehicles using it. This way, in one part, the government is limiting the petroleum product use and in other hand it will be showing the government's committment towards promoting cleaner vehicles in the country. But importantantly, these taxes need to be spent for the development of the cleaner electric vehicles in the country. I think if every citizen feels that the money he/she has been charged is for the purpose of safa tempo, electric bus and for electric train, then he/she may not be hesistant to be charged at all. They will be more assured once the development starts to take place and it should be a pride for every citizen that it is his/her contribution that has made it possible.

With this, I would rather conclude that instead of easy (so called bold step) solution, the government should take bold steps for the betterment of the country and even if the price hike is taken due to various reasons, the hike should couple with strong commitment towards the promotion of cleaner vehicles in the country that would lessen the problems each citizen is facing in the current context and this is the only win and win possible solution for all in the present context.

Comments are highly appreciated!