MoENR Minister Loknath Sharma

Will aim to bring down transportation charges and no new tax on lower cost fuel: Govt

The Minister for the Ministry of Energy and Natural Resources (MoENR) Loknath Sharma said the price of fuel has been increasing from 2021.

He said in 2021 the ministry changed the domestic price formula to bring down the price of fuel by around Nu 1 per liter.

Lyonpo said they saw a big difference in fuel prices from 16 March 2022 from where it really increased which was Nu 97 per liter for petrol in Thimphu and Nu 111.9 per liter for diesel.

Lyonpo said that was when they got a big shock in why the big difference in petrol and diesel as historically as the diesel price is usually a bit lower. Lyonpo said the major thing was we were being charged with bulk pricing and not ex-factory pricing and were trying to do something.

The minister also said that The Bhutanese around the time also came out with these findings and the pricing difference between Nepal and Bhutan.

The minister said though they did not want to compare with Nepal they were really worried about the increase through bulk pricing that happened at the time.

Lyonpo said the ministry started taking this up gradually and they have had a number of meetings with the Ministry of Petroleum (India) and a number of communications through the Foreign Ministry to do away with bulk pricing. He said it had an effect.

Lyonpo said that they noticed that Nepal and India had a Memorandum of Understanding (MoU) at the government to government level but in our case it was between the Department of Trade and PSUs.

So it could be difficult in the future as there is no government to government understanding as this could lead into trouble over consistent supply of fuel and pricing.

He said the ministry initiated the MoU between the GoI and the RGoB and it is not yet signed but in the last stage.

Lyonpo said things took a little different shape after he met the Petroleum and Natural Gas Minister Hardeep Singh Puri on 8th February 2023 and he also met the IOCL chairman there.

There also he presented that the bulk pricing is an issue and if he could look into it.

Thereafter, Lyonpo said things have changed and Bhutan has been getting a consistent price of fuel and today diesel 64.24 in Thimphu and petrol is 66.

The Bhutanese asked what can the government do to bring down transportation prices and if any tax is being planned on the lower cost fuel like Nepal.

Lyonpo said that within Bhutan as the price of fuel is decreasing the fares of taxis, buses and also tankers will have to decrease and he said he is sure it will decrease.

The minister said that they will not bring fuel taxes like Nepal. He said the benefits should go to the people as the economic situation is not very good.

He said the government should not take undue advantage of this.

Lyonchhen Dr Lotay Tshering said that they did not subsidize the users and consumers when the price was very high and they will not take advantage when the price is down.

He said the market force should calibrate it. He said it is not a Bhutanese commodity and the profit of lower oil prices is in the economy.

The Bhutanese also asked what measures will the government take to prevent the diversion of fuel from Bhutan so that the low priced fuel benefit is not harmed.

On preventing and potential diversion Lyonpo said that there are lot of agencies involved like Revenue and Customs and RMA is trying to install an online INR payment system called Bharat system in the border areas they can use that.

Lyonpo said the diversion of tankers when it comes from the source to the border does not happen and they will ensure it does not happen and they will do their best in terms of checks and balances that is there.

Lyonpo said if such things happen then they will address it.

Background

This paper in November 2021 pointed out to the then MoEA Minister that Bhutan maybe overpaying for fuel and sent the break up and some figures to the minister looking for a response.

The minister asked the Department of Trade to look into it and after three months of calls and letters the Indian Public Sector Undertaking (PSUs) oil companies Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation Limited (IOCL) and Hindustan Petroleum Corporation Limited (HPCL), assured that there was no overcharging, but declined to give the break up of fuel costs, including to the minister.

The Trade Department which had been used to unquestioningly accepting the price invoice sent from Indian oil companies for decades could not pursue the matter further at the time.

The Bhutanese did its own investigation into the issue and published its first article on the issue on 2nd April 2022 pointing out that more than half the price of fuel in India is due to central and state government taxes which is not applicable to Bhutan. So Bhutan should be getting the fuel cheaper by around Nu 30 to 35.

The Bhutanese did around 14 stories on the issue showing how it had been going on for decades and how even Nepal was getting cheaper fuel than Bhutan.

Based on the stories, the former Ministry of Economic Affairs took up the issue with its counterparts and also involved the Ministry of Foreign Affairs.

The then MoEA minister Loknath Sharma (currently Minister for Energy and Natural Resources) took up the issue with his counterpart in his visits to Delhi, Kolkata and Bengaluru.

A senior Indian official who confirmed the drop in prices, even before the Trade Department was aware, told this paper it was due to the follow up of the government and also due to the awareness brought about by the stories done by this paper.

Once senior Indian leaders knew about this they corrected the anomaly.

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