Kathmandu, Feb. 28: Price of petroleum products will not increase immediately despite a hike in infrastructure development tax, said Nepal Oil Corporation (NOC) on Friday.
The government has raised infrastructure development tax being levied on petroleum products—Aviation Turbine Fuel (ATF), petrol and diesel– to Rs. 10 per liter from existing Rs. 5 per litre.
With the decision, the NOC has started to collect Rs. 10 per liter on the import of ATF, petrol and diesel from now onward.
“The price of the petroleum products will not increase immediately and the tax will go from the profit made by the NOC, which is making profit from the sale of petroleum products while adjusting the fuel price based on the auto pricing system,” said Nagendra Sah, acting deputy managing director at the NOC.
The price of fuel will increase only if the price in international market goes up, he said, adding that the NOC would adjust the fuel price under the auto pricing system twice a month.
He claimed that the revision of infrastructure development tax would not put additional financial burden on the consumers.
The government started collecting the tax under the new heading from Fiscal Year 2016/17 as a source to finance the Budhigandaki Hydropower Project.
The tax on infrastructure development was first introduced by then finance minister Bishnu Poudel in 2016/17.
Started as tax for Budhigandaki Hydropower Project, the government changed the heading of the tax in the current fiscal year to infrastructure development tax.
Sah said that around Rs. 41 billion has been deposited at the government coffer as infrastructure development tax by the end of January 2020.
“The NOC is a mediator of the government to collect revenue as infrastructure tax as the NOC collects the customs while importing fuel from the Indian Oil Corporation,” he said.
The decision to double the infrastructure development will add around Rs. 1.8 billion in government revenue every month. While the NOC was collecting Rs. 900 million every month while imposing Rs. 5 per litre on diesel, petrol and aviation fuel.
Currently, the NOC is importing around 45,000 KL of petrol, 140,000 to 150,000 KL of diesel and 15,000 to 18,000 KL of aviation fuel on monthly basis for domestic consumption.
Issuing a press statement, the Ministry of Finance said the government reviewed the infrastructure tax on petroleum products— diesel, petrol and ATF at the customs points considering its necessity following the provision of the Financial Act-2019.
The government has rights to review the taxes considering not deviate the trade between the neighbouring countries, read the press statement.
The NOC is adjusting the fuel price based on the international market price and the price of diesel is cheaper by Rs. 16 per litre and diesel by Rs. 15 per litre in Nepal than in the India border.
The financial health of the NOC was good and the profit of the NOC would go in infrastructure development, and it would not add extra financial burden to the consumers, the press statement read.
– The Rising Nepal