Nepal Oil Corporation Faces ₹14 Billion Fortnightly Loss Amid Global Fuel Price Surge, Warns of Supply Risk

Nepal Oil Corporation is facing a deepening financial crisis, reporting losses of nearly ₹14 billion over a fortnight, or about ₹930 million per day, as global fuel prices surge due to geopolitical tensions in West Asia, raising concerns over its ability to sustain fuel imports and maintain domestic supply.

The state-owned fuel importer warned that unless consumption is reduced and pricing adjustments continue, it may struggle to meet upcoming payment obligations, risking disruptions in the country’s fuel supply chain.

Rising Losses Despite Price Adjustments

Data covering the period from March 30 to April 8, 2026, shows that Nepal Oil Corporation’s losses have widened sharply due to continuous increases in international petroleum prices. The corporation reported a fortnightly loss of approximately ₹14 billion, even after implementing multiple price hikes.

Earlier price revisions had already been insufficient to offset rising procurement costs. Prior to the latest adjustment, the corporation was incurring losses of ₹34.36 per litre on petrol, ₹120.54 per litre on diesel, and ₹416.37 per cylinder on liquefied petroleum gas (LPG).

Following these pressures, the corporation raised fuel prices effective late March, increasing petrol by ₹17 per litre, diesel and kerosene by ₹25 per litre, LPG by ₹100 per cylinder, and aviation fuel by ₹6. However, even after these hikes, projected losses remain high at around ₹7.81–₹8 billion per fortnight.

The Government of Nepal attempted to cushion the financial strain by granting a 50% exemption on customs duty and infrastructure taxes on petroleum imports. This measure initially reduced losses to about ₹10.22 billion per fortnight, or roughly ₹680 million per day.

However, continued escalation in global crude oil prices has offset much of the benefit from these tax reductions, pushing losses back up to higher levels within days. The corporation indicated that the automatic pricing system has not kept pace with international price movements, further exacerbating financial stress.

Officials noted that the country’s complete dependence on imported petroleum products limits its ability to manage costs independently, making it highly vulnerable to global market fluctuations.

Mounting Payment Obligations and Supply Risk

Maintaining fuel supply has become increasingly challenging as payment obligations to suppliers continue to rise. Nepal Oil Corporation paid ₹26.86 billion to Indian Oil Corporation on April 8, using a combination of tax relief funds, sales revenue, and the Price Stabilization Fund.

The corporation now faces an immediate requirement to arrange ₹16.37 billion for the next instalment, which is due on April 23. Officials warned that failure to meet these payments could disrupt imports, potentially leading to fuel shortages across the country.

The financial strain has intensified concerns about liquidity management and the sustainability of the current supply model under prolonged high-price conditions.

In response to the crisis, the corporation has issued a public appeal urging consumers to reduce fuel usage as a critical measure to stabilise the situation. It highlighted that small reductions in consumption could significantly ease financial pressure.

According to its estimates, if each motorcycle and car user reduces fuel consumption by just one litre per day, the country could save approximately ₹260 million daily. Over a 15-day period, this would translate into savings of around ₹3.9 billion.

The corporation also referenced measures adopted by neighbouring countries such as Sri Lanka, Pakistan, and Bangladesh, where governments have implemented fuel rationing, vehicle restrictions, and reduced work schedules to manage energy crises.

Structural Dependence on Imports

Nepal lacks domestic refining and production capacity for petroleum products, including petrol, diesel, kerosene, aviation fuel, and LPG, making it entirely reliant on imports. This structural dependency leaves the country exposed to global price volatility and external supply shocks.

Officials emphasised that, in the current environment, demand-side management remains the only viable short-term solution. Without significant reductions in consumption or further price adjustments, Nepal Oil Corporation is likely to remain under severe strain financially.

The corporation stated that it will continue efforts to manage distribution and ensure availability but stressed that cooperation from consumers and stakeholders is critical for navigating the ongoing crisis.