In a landmark decision, the Nepali government has decided to end the decades-old administrated pricing of petrol and diesel at retail level and has limited its role to fixing the wholesale pricing in two major petroleum products, an official at Nepal Oil Corporation (NOC) said Tuesday.

The decision has been taken as a first step towards liberalization of petroleum market, the NOC Chief Umesh Dahal told reporters.

NOC on Monday announced that it has brought the decision into immediate effect and disclosed a different set of ex-depot wholesale prices for petrol and diesel for dealers in different geographical zones.

"The newly unveiled wholesale price, however, will not have any impact on existing prices of petrol and diesel, as those have been fixed in such a way that retail level prices will remain unchanged, " Dahal said.

The wholesale price was announced as a constant sales price of NOC to dealers, and the dealers could add transportation and other costs over it to fix the retail prices.

The price structure will be changed in future depending on the experience, he said.

The new arrangement will free the NOC from the burden of transportation cost it otherwise shouldered for dealers indirectly, according to Dahal.

It will reduce transportation cost of NOC by about 5 percent and reduce the share of technical losses for NOC.

"Most importantly, it has set base for complete deregulation for prices," Dahal said.

According to Dahal, as existing wholesale prices do not adjust market prices in line with import cost, it has negligible impact towards curtailing NOC's burgeoning loss, which currently stands at 570 million Nepali rupees (8.1 million U.S. dollars) per month.

"The key to price deregulation lies on wholesale pricing and the government has still preferred to retain full control over it. This tendency must be corrected if the country is to address the real problem of the sector," an official at Ministry of Industry, Commerce and Supplies said on condition of anonymity.

Source: Xinhua