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Indian oil supplies to Nepal cut Nepal hit hard by India oil cuts
(about 1 hour later)
A state-run Indian energy company has cut oil supplies to Nepal by 40% after it failed to pay its debts. Parts of Nepal are experiencing fuel shortages after a state-run Indian energy company cut oil supplies to the country by 40% last week.
The Indian Oil Corporation (IOC) supplies all land-locked Nepal's oil. Many petrol stations in the kingdom are now reported to have run out of fuel. There have been scenes of panic as car drivers queue for petrol in Kathmandu.
The state-run Nepal Oil Corporation (NOC) said it had been unable to pay the IOC $90m that it owes. The Indian Oil Corporation (IOC) supplies all of land-locked Nepal's oil. It reduced supplies because of unpaid debts.
A spokesman said it would soon run out of reserves and the IOC move was causing widespread fuel shortages. The state-run Nepal Oil Corporation (NOC) says it cannot pay the $90m it owes the IOC.
Many petrol stations in the kingdom are now reported to have run out of fuel.
A spokesman for NOC said it would soon run out of reserves.
QueuesQueues
NOC spokesman Ichcha Bikram Thapa was quoted by kantipur.com as saying there was "severe disturbance in the distribution of petroleum products". The BBC's Surendra Phuyal in Kathmandu says the NOC has stopped supplies to privately-owned petrol stations but it still ensuring supplies to a number of state-run outlets.
He said the NOC, which has a monopoly on importing and distributing oil products in Nepal, was supplying fuel to only a few selected fuel stations. Hundreds of vehicles and motorcycles waited in long lines for their turn to refill their tanks at some half-a-dozen state-run stations.
The Associated Press said only "half a dozen" petrol stations were open in the Kathmandu Valley. "I waited for three hours this morning in a long line to refill my vehicle," Chakra Lama, a taxi driver told the BBC.
It reported vehicles lining up outside outlets still distributing petrol and diesel. "The government should ensure that there's enough and smooth supply of the petroleum products."
Mr Thapa said current stocks of petrol, diesel and kerosene in the Kathmandu Valley were "hardly adequate" for two days, kantipur.com reported. Sharad Bhandari, the secretary of Nepal Petroleum Dealers Association, blamed the government for the crisis. "The government should do whatever it needs to do - start a dialogue with India at the highest political level, or just hike the petrol prices here to make profits and clear all the dues," he told the BBC.
Correspondents say the NOC has been in arrears with the IOC for years. 'Crazy'
To settle unpaid bills, the pair agreed a monthly payment formula, which the NOC met in March but failed to meet in April and May. Passengers complained that taxis have already started increasing fares because of the shortages.
The IOC reduced supplies to Nepal twice last year in an attempt to secure payment, kantipur.com reported. "This is crazy, I paid 300 rupees ($4.6) for a short ride of about 5 kilometres this morning," Smriti, a woman in working in central Kathmandu complained. "What's the government doing?"
Ichchha Vikram Thapa, the spokesperson for the NOC, urged the government to raise petrol prices. "Since the new multi-party government has been in power it has shied away from readjusting petroleum prices fearing a backlash from consumers."
Mr Thapa said he hoped that the situation would return to normal soon.
"We will be clearing some of their dues soon and we are also expecting the government to start dialogue at the highest level to sort out the issue."