Cabinet cuts fuel taxes by half amid rising fuel prices, appoints NPC vice-chair

In a move to address rising fuel prices, the government has decided on a 50% cut in customs duty and infrastructure tax on petrol, diesel and kerosene in a Cabinet meeting on Tuesday. 

The decision, along with a notice to be published in the Nepal Gazette, was announced by Minister for Federal Affairs and General Administration Minister Pratibha Rawal. 

While presenting the Cabinet decision, Minister Rawal stated, “Adjusting the price of petroleum products is a practical necessity. There is an obligation to adjust prices, and the government will not hide this fact.”

Following the decision, the infrastructure development tax on petrol and diesel will be cut from NRs 10 to NRs 5 per liter, reducing the tax burden by NRs 5. Customs duties are also halved: petrol drops from NRs 25 to NRs 12 per liter, and diesel from NRs 12 to NRs 6 per liter.

For cooking LPG, the import tax of NRs 90 per cylinder is reduced by 50% to NRs 45. Overall, total taxes fall by NRs 17 per liter for petrol (NRs 12 customs + NRs 5 infrastructure), NRs 11 per liter for diesel (NRs 6 customs + NRs 5 infrastructure), and NRs 45 per cylinder for LPG.

Last week, Nepal Oil Corporation (NOC) raised fuel prices for the third time in less than a month. Despite this, the corporation faces mounting losses as it hasn't yet fully passed on the increase in fuel prices to consumers. The decision comes in addition to the government's other recent measures to curb fuel consumption, which includes Sunday as holidays, implementing odd–even vehicle schemes, curbing fuel facilities for civil servants and officials, and encouraging the use of electric vehicles (EVs) and ethanol.

Additionally, the government has appointed Dr Gunakar Bhatta as vice-chairperson of the National Planning Commission. The Cabinet also appointed Kiran Pandit, currently an executive director at the Nepal Rastra Bank, as Deputy Governor. Pandit has worked across key departments including bank supervision and financial institution regulation.

In another decision, the government agreed to accept a concessional loan of $85 million from the World Bank for the Greater Lumbini Area Development Project.

Earlier on Sunday, the Cabinet decided to recall six politically appointed ambassadors serving in key countries, including India and Australia. Those recalled are Shankar Prasad Sharma (India), Chitra Lekha Yadav (Australia), Purna Bahadur Nepali (Sri Lanka), Shiva Maya Tumbahangphe (South Korea), Sumnima Tuladhar (Denmark), and Kapil Shrestha (South Africa).

Officials said the decision was communicated through the Ministry of Foreign Affairs, with envoys asked to return within a month.

Other Cabinet decisions taken on Tuesday include approving the relocation of the Water and Energy Research Centre from Pulchowk to Godavari, while shifting the secretariat of the Water and Energy Commission to the Pulchowk premises currently occupied by the Centre.

On infrastructure, the government authorised land acquisition in Dhunibesi Municipality for the western section of the Nagdhunga tunnel road, and in Uttargaya Rural Municipality along the Betrawati–Dhunche–Syafrubesi road section of the Pasang Lhamu Highway.

The Cabinet further approved the use of 46.39 hectares of forest land for the Kathmandu–Tarai/Madhes Fast Track project and permitted the felling of 18,898 trees for the project’s construction.