Kathmandu to run out of petrol as IOC reduces supply

KATHMANDU: Thousands of cars and motorbikes formed long queues at petrol pumps Nepal's capital on Thursday after officials warned of a looming fuel shortage after a failure to their oil and gas bills.

Landlocked Nepal has no oil reserves and relies on giant southern neighbour India to truck in petrol, gas and other fuel. But supplies have been tightened after the impoverished Himalayan country failed to pay its bills.

"Over the past few weeks, the Indian Oil Corporation has cut the supplies by 40 to 60 per cent to us as we have not been able to pay overdue bills," said Iccha Bikram Shah, a spokesman at the state-run Nepal Oil Corporation.

"The stock we have now would last for just two to three days more," he told reporters.

The Nepal Oil Corporation, a monopoly, sells fuel products at a loss, and as a result has monthly loss of $3.84 million. It currently owes the IOC $45.7 million. Shah said Nepal's government "needs to provide funds to us to pay to the IOC, or they should increase the price of petroleum products," Shah said.

Last August the government tried to increase the price of petroleum products by up to 25 per cent, but backed down from the move after two days of protests at the price hike.