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Publication Date : 14-02-2013
The Nepali government had taken the sudden decision to raise the price of cooking gas on Monday. The projected increase in price was steep: a gas cyclinder costing 1,470 Nepalese rupees (US$16.8) would now cost 2,100 Nepalese rupees, an increase of 43 percent. The government did, however, appear to have recognised that such a steep increase would make cooking gas unaffordable to many households. As a result, it had decided to provide subsidies to households of 550 Nepalese rupees for one gas cylinder a month. It had also decided to have cylinders in separate colours - blue and red - for commercial and personal purposes respectively. The method of taking advantage of the subsidy was a bit complicated. People were expected to get consumer cards from gas distributors and then show these cards at Bank of Kathmandu branches to receive their rebates. However, after irate protests broke out in Kathmandu on Wednesday, Prime Minister Baburam Bhattarai, citing a “lack of necessary preparations,” suddenly decided to “withhold” the new policy through his Twitter account.
In its broad outlines, there is not much to dispute regarding the new policy. On the one hand, blanket subsidies have been causing significant losses to the state exchequer and thus need to be controlled. On the other hand, subsidies are necessary if the majority of Nepalis are going to be able to afford cooking gas. The announced policy would have been a compromise between these two points. Subsidies would be given, but only to individuals and households. There were to be no subsidies for commercial establishments. The process of collecting the subsidies appeared to have been made deliberately difficult in the hope that people who could afford to buy cooking gas at unsubsidised rates would not take advantage of the rebate.
But the sudden manner in which the government had unveiled the new policy raised suspicions. It was set to implement the decision at a time when the use of cylinders in two colours is not widespread. Most consumers also do not currently possess consumer cards. If the government does intend to implement the policy in the future, it would be best for it to inform the public about the new policy some time before it is implemented. Likewise, the policy as it stands is mired in complications, meaning that some adjustments will have to be made. For example, it is problematic that the rebates are only available from Bank of Kathmandu outlets. This bank only has 37 branches around the country. That would make it significantly difficult for many people across the country to access the bank’s branches to claim their subsidies. Additionally, the basis on which Bank of Kathmandu was chosen by the government is unclear. After all, it is a private bank and there are many other such banks that have larger operations. At the end of the day, given suspicions of malfeasance and difficulties in getting rebates, a hold in the implementing policy is for the best.