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The Nepal Oil Corporation (NOC) has slashed the prices of petroleum products. The revised rates would be effective from midnight. The state owned monopoly has reduced Rs 3 per litre in petrol, diesel and kerosene. As per the new price list, petrol would cost Rs 175 per litre. Likewise, the price of diesel and kerosene have been fixed at Rs 172 per litre. Earlier, Prime Minister Pushpa Kamal Dahal had directed the NOC to reduce the prices of petroleum products.

The price of gold has increased by Rs 1,000 per tola in the domestic market on Sunday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 103, 300 per tola today. The gold was traded at Rs 102, 300 per tola on Friday. Meanwhile, tejabi gold is being traded at Rs 102, 800 per tola. Similarly, the price of silver has increased by Rs 15 and is being traded at Rs 1,365 per tola today.

The newly established Budhi Gandaki Jalbidhyut Public Limited has failed to come into operation with the finance ministry not providing the required Rs 10 million to the company. The company established in early September last year to develop the 1200MW Budhi Gandaki Hydropower Project is awaiting a budget release by the ministry so that it would get a permit from the Office of Company Registrar to commence operations. “Citing the code of conduct implemented by the Election Commission for the recently held elections, the finance ministry denied releasing the fund immediately,” said a board member of the company under the condition of anonymity. “It is not clear when the fund will be disbursed as the new government has just been formed.” The director of the company said that the ministry should have released the budget after the November 20 elections as the implementation of the code of conduct also expired. “It is not a matter that requires the cabinet approval,” the board member said. Budhi Gandaki is a ready-to-go project as its detailed project report (DPR) has already been prepared. Compensation distribution to the residents of the project-affected areas for the acquired land has also reached close to completion, according to the officials of the company. The mega project which envisages ensuring energy security for Nepal for the next decades has been in limbo due to uncertainty over the modality of its development. The project will be Nepal's largest reservoir-type hydropower project and its development has been estimated at $2.6 billion. The project area is situated at the boundary between the districts of Gorkha and Dhading. For the government, generating resources and closing the project's budget gap will be a difficult undertaking. “As it is a ready-to-go project following the completion of DPR and almost complete compensation distribution process, the next challenge is to generate funds to develop this project,” the board member said. “Once the company comes into operation, our focus will be to complete the financial closure.” The government’s plan so far has been to develop this project with domestic resources based on the recommendation of a committee headed by former National Planning Commission Vice-chairperson Swarnim Wagle. The committee in a 2017 report had suggested that the government should develop the project on its own by providing viability gap funding, covering around one-third of the project development cost. As per the report, the government could cover the cost of land acquisition and resettlement of displaced families which could total as high as Rs 94 billion. According to the report, a significant chunk of resources can be generated from government institutions. An infrastructure tax being imposed on imported fuel could be an important source of revenue that can be used to develop the project. “Based on an average increase in petroleum consumption by 10 percent a year, as much as Rs164 billion can be collected from taxes imposed on fuel alone by the fiscal year 2026-27," reads the report. This estimated tax collection was calculated based on Rs 5 per liter infrastructure/carbon tax that the government has been imposing since 2015. In May 2015, the government decided to levy a Rs 5 tax per liter of petroleum products (barring cooking gas) on consumers to develop the Budhi Gandaki project with its own resources. From the fiscal year 2018-19, the government started charging taxes under the name of ‘infrastructure development tax.’ The tax was also raised to Rs 10 per liter of petroleum products. According to the report, the extra fund can also be generated from government-owned entities like Nepal Electricity Authority, Employees Provident Fund, Nepal Telecom, Rastriya Beema Sansthan, Hydroelectric Investment and Development Company, Upper Tamakoshi Hydropower Company, Chilime Hydropower Company, Nepal Army, Nepal Police, and the general public could be tapped for the project. The report also stated the resources could also be generated from international donor agencies or by the issuance of project-specific bonds and credits from the project’s suppliers. However, the company’s board member said that the government has not yet discussed with the donor agencies about potential funding from them. “This is the option that can be explored once the company comes into operation,” the board member said. Massive sums of money have already been spent by the government to compensate the residents of the project affected areas for the acquisition of their lands. According to the project's Environment, Compensation Distribution, Resettlement, and Rehabilitation Unit, it has already spent almost Rs 41 billion toward that end. For developing the project, an estimated 58,000 ropanis of land needs to be acquired. For this project, hardly any difficulty in acquiring land has been experienced. There is also broader political support for the development of this project. Prime Minister Puspa Kamal Dahal pledged to develop this project during his election campaigns in Gorkha before the general elections on November 20. Budhi Gandaki, which has been one of the country's most talked about projects for a long time, has been a victim of policy inconsistency despite facing hardly any problem in land acquisition and completing the DPR. In 2017, the Pushpa Kamal Dahal-led government awarded a contract to build the project without competitive bidding to China Gezhouba Group Corporation under the engineering, procurement, construction, and financing (EPCF) modality. The ruling was overturned by the Sher Bahadur Deuba-led administration in November 2017. A high-level group led by Wagle was then established by that administration, and it made the suggestion that the project could also be developed using domestic resources. Again, in September 2018, the then KP Sharma Oli administration decided in favor of the Chinese company, reversing the decision of the Deuba-led government. In April of last year, the Sher Bahadur Deuba administration once more chose to terminate the license granted to the Chinese company since it was not making any progress on the project. After construction work starts, the government anticipates finishing the project in eight years. “Even if we can develop it in 10 years, that will be a huge achievement,” the board member said, adding, “The project is vital for Nepal as it can generate enough electricity for domestic consumption in the winter.”  

With the government’s revenue insufficient even to meet the recurrent expenditure, the revenue administration and other government agencies have started to work aggressively to revive the faltering revenue collection as well as control the revenue leakages. After his appointment as the new Finance Minister Bishnu Poudel has already held two meetings with the top officials of the ministry, following which the Inland Revenue Department (IRD) has intensified market monitoring, and the Department of Revenue Investigation (DRI) has filed cases in court against revenue evaders.  On the other hand, the Department of Customs has intensified monitoring of low invoicing and customs evasion. These three key government agencies responsible for revenue administration have drawn an action plan to control revenue leakages. On Wednesday, the Department of Customs (DoC) held a meeting with the representatives of the NADA Automobiles Association of Nepal urging them to clear thousands of imported four-wheelers that have remained parked at the yards of the various customs offices across the country. “There are around 2,800 four wheelers including cars and passenger buses at the yards of customs offices. The clearance of these vehicles would help us to generate a significant amount in revenue,” said a senior DoC official. “That's why we invited the representatives of the NADA to tell them to convey a message to their members that these vehicles could not be parked at yards of customs offices indefinitely.” According to the official, these four-wheelers were imported in recent months based on the letters of credit (LCs) opened by the respective importers before the government restricted the import of vehicles in April last year. Amid depleting foreign exchange reserves due to massive imports that led to fears that the country could face the situation of Sri Lanka, the government imposed a ban on the import of different types of 'luxury' goods along with many other respective measures to control imports. But the move hit the government’s revenue hard and the country failed to make a significant improvement in the foreign exchange reserves. So, the government lifted the ban on imports starting from mid-December last year. But customs officials said that automobile importers have been refusing to take their vehicles by completing the customs clearance procedure. “They are demanding further concession such as the mandatory provision of maintaining a certain margin at the banks to open LCs to import vehicles,” said the official. For a long, the import of vehicles has been one of the biggest sources of revenue for the government as the customs duties and other taxes levied on vehicles are very high compared to other goods. The government's move to restrict imports of certain items including automobiles affected the customs revenue badly. According to the department, its target of revenue collection till mid-December in the current fiscal year 2022/23 was Rs 257 billion but it has been able to collect only Rs 157 billion, suggesting a massive hole in the revenue. Not only the customs revenue, the collection of island revenue is also lower than the target. According to the Inland Revenue Department (IRD), it has only collected Rs 150 billion as of mid-December of this fiscal year against the target of Rs 174.37 billion which accounts for nearly 87 percent of the target. “Slowing of economic activities is one of the reasons behind sluggish internal revenue collection,” said an IRD official. As a result, the government's revenue has not been enough even to meet the resources for the administrative expenditure of the government. According to the Financial Comptroller General Office (FCGO), total revenue collection as of January 3 stood at Rs 360 billion while recurrent expenditure (administrative expenditure) stood at Rs 406 billion. The government has suspected increased revenue leakages which may have contributed to dismal revenue collection. Last week, the Central Revenue Leakage Control Committee directed the bodies concerned to make maximum efforts to control revenue leakage. A meeting of the Committee held last Wednesday in the presence of Deputy Prime Minister and Finance Minister Bishnu Poudel and Deputy Prime Minister and Home Minister Rabi Lamichhane held a discussion regarding the present condition of revenue collection and controlling revenue leakage. According to the officials, Lamichhane had directed the administrations under the home ministry to actively work to control revenue leakage taking place in the checkpoints. The customs official said that based on the instruction of the Central Revenue Leakage Control Committee, the customs department has already issued orders in the name of the customs offices to coordinate with District level revenue league control committees headed by chief district officers to control revenue leakages.