Nepal buys all its fuel from abroad and state-run Nepal Oil Corporation (NOC) is currently the sole importer of the 21,000 barrels per day of crude oil products the country needs.
NOC, however, is plagued by insufficient storage capacity, a poor transport network and difficulties in paying its sole supplier, Indian Oil Corp, creating frequent fuel shortages and long queues at petrol stations.
"We want to open up the petroleum business to the private sector. Private firms will be able to import, store and distribute petroleum, oil and lubricants just like the NOC does," said Lal Mani Joshi, the most senior bureaucrat at the Ministry of Commerce and Supplies and chairman of NOC's board. A proposal to allow imports by the private sector has been submitted to the cabinet, Joshi said, adding that it was not immediately clear when it would be approved.
"When these guidelines are approved the private sector will be free to import POL products from India or any other country," Joshi said.
Private firms will initially be allowed to import cooking gas, followed by petrol and diesel, he added. At least two private sector firms, including Malika Petroleum Company, have already applied for import permits.
"We hope we can take 10 percent of NOC's market share in the first year, and this is expected to rise up to 50 percent in five years," said Dipak Timalsena, the company's executive chairman.