Nepal sinks fuel price hike after violent protests

Kathmandu -- Two days of violent protests in Kathmandu and other parts of the Nepal forced the Nepalese government to withdraw the recent price hike in fuel. The multi-party government bowed to the angry protests and reversed the increase in fuel prices that had paralyzed the capital.

Six people were left injured in the violent clashes during the protest. Dozens of buildings had been attacked. Demonstrators had also set up road blocks along the main routes into and out of the capital, Kathmandu.

Vehicles were stoned, tyres burnt and businesses were forced to close in the city following Friday's move to raise prices of fuel.

An emergency cabinet meeting was called and the government instructed the Nepal Oil Corporation (NOC) to revoke its earlier decision to increase prices of the petroleum products and cooking gas by up to 25 per cent.

“We have withdrawn the increase in oil prices in view of the current situation,” Physical planning and Works Minister Gopal Man Shrestha said after the cabinet meeting. “The decision will come into force immediately,” he said.

After King Gyanendra restored democracy in April, an interim government was formed which brought in the rise saying it needed to cut the losses of the state-owned oil importing monopoly.

The basic retail cost of petrol has gone up by 25% at once, and by much more in some rural areas. The price of kerosene has risen by a similar amount and that of diesel has gone up by 11 per cent. These damaging price hikes are hitting one of Asia's poorest countries.

India is the sole fuel supplier to the landlocked Himalayan nation and NOC owes about $120 million to India. The government says price rises are necessary because of the debts the state oil corporation owes to its Indian counterpart but the minister for supplies has also accused the petroleum dealers' association of making the hikes too steep He says some marginal reductions will soon be announced.

Higher fuel prices would increase transport costs for food and other commodities in Nepal. The cabinet set up a three-member panel to study the financial condition of the state oil firm and suggest measures to reduce losses.