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कालाबजारीया कि उद्यमी ?

– अब्यय न्यौपाने, अशेष श्रेष्ठ, दिनेश कार्की

नेपाल अहिले पेट्रोलियम पदार्थको चरम अभावबाट गुज्रिरहेको छ । नेपालको एकमात्र पेट्रोलियम पदार्थको आपूर्तिकर्ता नेपाल आयल निगमले भारतको “अघोषित नाकाबन्दी” तथा मधेश आन्दोलनका कारणले गर्दा बजारको माग अनुसार सोको आपूर्ति गर्न नसकेकाले देशको अर्थतन्त्रलाई ठुलो धक्का पुग्न गएको र आम नेपाली जनताको जीवन दिनानुदिन कष्टकर बन्दै गएको सबैमा अवगत नै छ । यस्तो अवस्थामा सबैले देशको आर्थिक लगायत अन्य सम्पूर्ण क्रियाकलापनै ठप्प हुने अनुमान गरेको भएता पनि निकै अचम्म लाग्दो तरिकाले सारा मानिसहरु आ–आफ्नो दिनचर्यामा लागिपरेका छन्, आफ्नो गन्तव्यमा पुगिरहेका छन् । “त्यसो भए यी प्रयोजनका निमित्त मानिसहरुसँग पेट्रोल र डिजल चाहिँ कहाँबाट आइरहेको छ त?” भनी तपाई–हाम्रो दिमागमा प्रश्न आउनु तसर्थ स्वाभाविक नै हो । यसको जवाफ “कालो बजार”को संज्ञा दिईएको व्यापार र “तस्कर” कहलिएका व्यापारीहरु नै हुन् । त्यसैले पनि उप–प्रधानमन्त्रीले कलोबजारीयाका कारणले गर्दा नै इन्धनको चरम अभाव हुन नपाएको भन्ने खालको वक्तव्य दिनु त्यति आश्चर्यजनक कुरो भएन ।

कानुनी रूपमा हेर्ने हो भने प्रचलित कानुन विपरित व्यापार व्यवसाय गर्नुलाई कालो बजारी भनिन्छ । त्यसो भए कानुनी दायरामा नरही व्यवसाय संचालन गर्नु पर्ने बाध्यताको किन जन्म हुन्छ त ? साधारणतया जब कानुनी दायरा बाहिर रहेर भन्दा भित्र रहेर व्यवसाय गर्दा महँगो र झन्झटिलो हुन जान्छ, तब “कालोबजारी”को जन्म हुन्छ ।

कानुनी बाटो महंगो हुने कारण कानुनी प्रावधानहरु नै हुन् । जस्तै, कुनै पनि नयाँ कम्पनी सुरुवात गर्दा व्यवसयीलाई आफ्नो व्यवसाय दर्ता गर्ने प्रकृयामै धेरै समय र पैसा खर्च लाग्छ र करको महसुल पनि उच्च छ भने उसले सकेसम्म साना व्यवसायहरु दर्ता नै नगरी चलाउन थाल्छ । नेपालमा अनौपचारिक अर्थतन्त्र फस्टाउनुको एक मुख्य कारण पनि यही हो । जब कुनै क्षेत्रमा सरकारी बाधा–अड्चनले गर्दा नयाँ व्यवसयीहरु प्रवेश गर्न सक्दैनन्, त्यहाँ गैर कानुनी रुपमा व्यापार हुने प्रवृत्तिको विकास हुँदै जान्छ । नेपालमा अनौपचारिक रुपमा पेट्रोलियम पदार्थको आपूर्तिको कहानी पनि यही नै हो । एक पटक कानुनी रुपमा एकाधिकार सम्पन्न सरकारी आपूर्तिकर्ता तय गरिसके पछि सोको अप्रभावकारिताका कारण बाजारमा माग बढ्न जाँदा बढ्दो माग र यस सँगै जोडिएर आउने उच्च प्रतिफलको सम्भावना देखेर त्यसको परिपूर्ति गर्न खोज्ने साना पेट्रोलियम आपूर्तिकर्ता स्वभाविक रुपमा नै सबै कालाबजारीया हुनेनै भए ।

कालोबजारबाट उपलब्ध हुन आउने सामानहरुमा मानिसले साधारणतया व्यक्त गर्ने प्रमुख गुनासो भनेको “कालाबजारीयाहरुले उच्च मूल्य लिए।” भन्ने हो र यसको दोष हामी सम्पूर्ण रुपमा कालाबजारीयाहरु माथी नै थोपर्ने गर्छाैं । यद्यपि यसको लुप्त तर मुख्य दोषी कालाबजारीया नभई उद्यमीलाई कालाबजारीया बन्न बाध्य पार्ने एकाधिकारमुखी नियमनहरु नै हुन् । सरकारी संस्थानले एकाधिकार कायम गरेपछि उक्त वस्तुको अन्य सबै आपूर्ति गैरकानुनी हुने भए । यसरी गैरकानुनी भएपछि स्थापित व्यवस्था छलेर व्यापार गर्न व्यापारीले जोखिम उठाउनुपर्ने हुन्छ । उदाहरणको लागि, गैर कानुनी कहलिने कुनै पनि काम गर्दा विद्यमान कानुन बमोजिम सो व्यापारी प्रहरीको फन्दामा पर्न जाने खतरा ठूलो हुन्छ । समाजबाटै पनि उसले ठूलो आलोचना/अपहेलना भोग्न पर्ने जस्ता सम्भावनाहरु हुन्छन् । यी सबैका बावजुद सो व्यवसाय गर्ने हो भने उसलाई कमसेकम यति आमदानी चाहिन्छ जसले उसको कानुनको कारवाहीमा फस्ने, सामाजिक आलोचनाको भागिदार बन्न पर्ने ईत्यादि जोखिम/अवस्थाको क्षतिपूर्ती समेत होस् । तर व्यवसायी नै भएको नाताले उसले यो सारा लागत आफैले कदापि उठाउँदैन । उसले यो लागत अन्ततः वस्तु वा सेवाको खरिदकर्तामा नै स्थानान्तरित गरिरहेको हुन्छ । बैंकहरुले पनि धेरै जोखिम व्यहोर्न पर्ने प्रकृतिका ऋणहरुमा अन्य भन्दा उच्चतम ब्याज दर तोक्ने कारण यस्तै हो । जति धेरै जोखिम, त्यति नै धेरै मूल्य । यो पछिल्लो उदाहरणको फरक यति हो कि बैंकले ऋण दिँदा उसले विद्यमान कानुन मिचिरहेको छैन तर जोखिम धेरै उठाईरहेको छ । यही “रिस्क प्रिमियमले” गर्दा मूल्य उच्च हुने हुन्छ । फर्केर पेट्रोल व्यवसायीको कुरा गर्दै गर्दा यदि नियम कानुन सहज भएको भए यसरी कानुनको दायरा भन्दा बाहिर रहेर व्यवसाय गर्नु पर्ने बाध्यता हुने थिएन र “रिस्क प्रिमियम” पनि जोड्नु पर्ने थिएन ।

अर्को गुनासो भनेको गुणस्तरको सन्दर्भमा हो । गुणस्तरको प्रत्याभूति महत्वपूर्ण विषय हो तर सरकारले मात्रै कुनै पनि कुराको गुणस्तरको प्रत्याभूति दिन सक्छ भन्ने सोच मित्था हो । सरकारी निरीक्षण हुँदाहुदै पनि मिसावटयुक्त इन्धन सरकारी लाइसेन्सप्राप्त पम्पहरुले बेचिरहेको कुरा सर्वविदितै छ । सरकारी निगरानी भन्दा पनि बजार समन्वय मार्फत नै गुणस्तरको निगरानी स्वतः हुन पनि सक्छ । जब इन्धन व्यापार–व्यवसाय प्रतिस्पर्धात्मक हुन्छ, उपभोक्ताहरु मिसावटयुक्त इन्धन बेचबिखन गर्ने ब्यवसयी सँग किन्दैनन् र यस्ता ब्यवसायिहरु क्रमशः पाखा लाग्दै जान्छन् । यसै प्रकृयाबाट जो व्यवसायीहरु उपभोक्तको माग अनुसारको गुणस्तरयुक्त इन्धन आपूर्ती गर्छन्, ती व्यवसायीहरु बजारमा टिक्छन् र बजार स्वस्फूर्त रुपमा चलिरहन्छ । यसरी उपभोक्ता आँफैले गुणस्तर र मूल्यको निगरानी गर्छन् र व्यापारीले माग अनुसारको गुणस्तर उपलब्ध गराउँछन् । तीन चार जना फरक फरक व्यवसायीसँग पेट्राल खरिद गरिसके पछि जसले उच्चतम गुणस्तरको पेट्रोल दिएको थियो उसैकोमा फर्केर उसँग मात्र पेट्रोल खरिद गर्न थाल्नेहरुको उदाहरण पाउनको लागि हामीले आफ्नै साथीभाईहरु भन्दा अन्य व्यक्तिहरुको मा धाई रहने पर्ने आवस्यकता आज छैन ।

यसैगरी हामीले कालोबजारलाई कानुनी रुपमा मात्र नभएर आर्थिक सामाजिक पाटोबाट पनि हेर्न जरुरी हुन्छ । अहिलेको अवस्थामा पेट्रोलियम पदार्थको व्यापारलाई कानुनी रुपमा अवैध भन्न मिले पनि कालोबजारकै माध्यमबाट नागरिक, कलकरखाना लगायत अरु अत्यावश्यक क्षेत्रमा इन्धनको आपूर्ति भएको छ । चिकित्सकहरु समयमै अस्पताल पुगेका छन्, शिक्षकहरु स्कुल-कलेज पुगेका छन् । कालोबजारकै साहयताले धेरै मानिसहरुले आफ्नो कर्तव्य निर्वाह गर्न सफल भएका छन्।

अहिले इन्धन ब्यापारको क्षेत्रमा अवसर देखेरै मानिसहरु यो अवसरबाट फाइदा लिनको लागि यसमा लागिपरेका छन् । यसमा उनीहरुको संलग्नताको कारणले गर्दा समाजलाई नै टेवा पुगेको छ । यस्तो अवस्थामा कालोबजारीको उपमा दिइएको यस आर्थिक गतिविधि अपराध हो कि उद्यमशीलता? नेपाल सरकार र यसको एकाधिकार सम्पन्न संस्थान नेपाल आयल निगमले झन्डै ४ महिना बितिसक्दा पनि इन्धनको सहज आपूर्ति गर्न नसकेको अवस्थामा कालोबजारीयाको उद्यमशिलताले देशमा इन्धनको माग केही हदसम्म पुरा भइरहेको छ । त्यसैले अहिलेको परीस्थितिमा कालोबजारी नियन्त्रणभन्दा यसलाई कालोबजारको घेरामा पस्न बाध्य नपारी कसरी वैधानिक व्यवसायको सीमाभित्र राख्न सकिन्छ भनेर हेर्नु उचित होला । विगत चार महिनाले इन्धन आपूर्ति गर्न सरकारैमात्र सबल छ वा आवश्यक छ भन्ने धारणालाई त गलत साबित नै गरिसक्यो । यस्तो अवस्थामा यस्तो अत्यावश्यक वस्तु आपूर्ति गर्ने आर्थिक गतिविधिलाई गैरकानूनी बनाइराख्नुको कुनै औचित्य छैन । बरु उद्यमशिलतालाई प्रवद्र्धन गर्दै इन्धनको सहज आपूर्ति कसरी गर्न सकिन्छ भन्ने कुरालाई प्राथमिकता दिनुपर्छ । यसका लागि प्रतिबन्धात्मक सरकारी सन्धि तथा नीतिलाई हटाई, इन्धन आपूर्ति खुल्ला भएको घोषणा गरी प्रवेश बाधा हटाएर उदार ढंगले प्रतिस्पर्धात्मक तथा सुरक्षित रुपमा इन्धन व्यापारलाई अगाडी बढाउनुपर्छ । यसो गर्नाले कालोबजारले निम्त्याउने महँगाई तथा मिसावटका समस्या स्वतः सम्बोधन भई सहज आपूर्तिको वातावरण सुनिश्ति गर्न मद्दत पुग्नेछ ।

 

Dinesh Karki

About Dinesh Karki

Dinesh Karki is an independent researcher. He has Economics degree from Xi'an Jiaotong-Liverpool University, Suzhou, China.

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Five answers to help you prepare in dealing with Nepali bureaucracy

Cases of people not receiving proper attention when they visit government offices are common among a lot of Nepalese. These experience range from being lost in the maze of cryptic compliances to losing all hope of getting the job done. As a researcher, I end up talking to a lot of members from the bureaucracy (on the phone or face-to-face) to gather information. Based on five different conversations I had with bureaucrats over the past couple of months, I am able to draw some common answers you will be given when you happen to cross paths with it. These answers might help you better prepare to deal with Nepalese bureaucracy next time you need to get something done out of their offices.

bureaucracy picture

1. There is more information out there. But it is not with me, right now.
Bureaucrats seem to be often lost about their role in the bigger picture, except for some vague statements about their contribution to building the nation.

A conversation with an official at Trasport Management Office, Ekantakuna:

Me: I have been trying to develop a process map for acquisition of green number plate (tourist vehicle) licenses. I have checked the Citizens’ Charter posted on the walls of your office premises. They seem to be a decade old. I’ve been told that procedures have changed. Could you…

Him: It has only been three months since I was transferred to this department. I don’t know the complete procedure as of yet. I am not sure about the exact steps.

Me: Is there anyone who you know I can talk to for this?
Him: Why don’t you check the official website and dig into related Acts and Regulations………..

2. It is not in the policy.

A conversation with an official at Nepal Oil Corporation (NOC), a Public Enterprise

Me: Ma’am, we are doing a research on the petroleum supply and the trade policy of NOC. I will need the agreement that NOC has entered into with Indian Oil Corporation Ltd. (IOC). How can I access the document?

Her: I don’t think there is a policy of availing the agreement between NOC and IOC to the ‘public’. These could be confidential agreements and not everybody can access these…

Me: But NOC is a public enterprise. How can NOC hide its operations from the public?
Her: There is no such policy of giving you the agreement.

3. The ball must be in somebody else’s court.

A telephone conversation with an official at the Ministry of Physical Infrastructure and Transport

Me: Sir, I am currently doing a research on banning of taxi registration in Bagmati Zone, Nepal. I have learned that the Ministry signed an agreement with the Federation of Transport Entrepreneurs in 2006 whereby it is agreed that one needs to take the permission of the federation to operate a transport enterprise in Bagmati. Could you give me the document?

Him: I’m sorry to inform you that we don’t have it.

Me: What do you mean?

Him: There used to be this Ministry of Labor and Transport in the past. Now we are a separate ministry and while in the process of resettlement, some papers might have got here and there. So we might not have the document you are looking for.

Me: How do I get the document then?

Him: I suggest you call the Department of Transport Management. They should have the paper.

4. The person you are looking for is out of station. Please try again later.

A telephone conversation with an official at the Department of Transport Management (August, 2014)

Me: Sir, I have learned that the Ministry has entered into an agreement with the federation … Can you give me the document?

Him: All gazetted officers are in India to attend some program and will be back in September only. All we are left here are a few non-gazetted officers and we do not have access to the kind of document you are referring to. You should call back in September.

5. The ball must be in somebody else’s court…again!

A telephone conversation with a Division head (supposed) at the Ministry of Transport

Me: hello! Is this Mr. XYZ?

Him: Yes!

Me: Namaskar Sir! My name is Akash and I am calling from Samriddhi Foundation. We are currently doing a research on …

Him: Oh wait, who did you say you wanted to talk to?

Me: Mr. XYZ!

Him: Oh, that’s not me. He is in India and will be flying back only today. Try again after a few days.

My experience in short: In the end, bureaucracy is never really about the delivery of service. It is about compliance. Furthermore, these characteristics of Nepalese bureaucracy compel one to think – is it just about creating jobs and fulfilling the posts?

Akash Shrestha

About Akash Shrestha

Akash Shrestha is Coordinator of the Research Department at Samriddhi, The Prosperity Foundation where his focus areas are petroleum trade and public enterprises. He also writes newspaper articles, blogs and radio capsules, based on the findings of the studies conducted by The Foundation.

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Your Right to Information. Or is it?

right to informationWith regards to the ‘Right to Information,’ the Interim Constitution of Nepal 2007 reads, “Every citizen shall have the right to demand or receive information on any matter of his or her interest or of public interest.”

So the law respects the fact that as a citizen of the country, you and I have the right to acquire information on anything that directly or indirectly affects us. But does writing something in the constitution guarantee that the thing actually gets translated into practice? Here is an example of how the reality makes fun of the law.

I am currently doing a research on the banning of new taxi registration in Bagmati Zone (in 2000) and its effects on consumers. This is where it all begins.

After talking to a few people that have major stakes in the transportation industry (people like the taxi entrepreneurs, consumer rights advocate, bureaucrats and taxi drivers), I learned that in the year 2007, the Ministry of Transport and Federation of Transport Entrepreneurs made a deal whereby it was agreed that,

1. No public vehicles would be allowed to ply the roads of Bagmati without prior consent of the federation

2. Transport fares would be revised following every revision in the petroleum product prices

3. At the end of every fiscal year, the transportation fares would be revised

(for the time being, we will not delve into the gravity of this agreement. If it is true, then this is a government backed cartel and it has huge implications in the consumers. But we will leave it at that for now)

Now, until I see the agreement for myself, I cannot rely on something that someone says and use it on my research, right? And so begins my endeavor to get my hands on the agreement. And the joke begins to unfold.

My first instinct then was to call the Ministry of Transport. So I dialed 197, the Nepal-telecom authorized and largest inquiry service provider of Nepal, to get the phone number of the Ministry. I was told, the number was 01 4211920. I go on and dial the number. They tell me it is Ministry of Labour instead. Here is what must have happened. Previously, there used to be a single ministry by the name Ministry of Labour and Transport and now, these are separate ministries. And I asked myself, shouldn’t the inquiry service have updated their database? Or rather, shouldn’t the ministry have notified the telecom itself?

So I went back to my computer and googled it out. I call up the right ministry this time, and talk about the agreement. They tell me, ‘there used to be this labor and transport ministry and now we are a separate ministry and while in the process of resettlement, some papers might have gotten here and there… so we might not have the document you are looking for. I suggest you call the department of transport management. They should have the paper…’ Again, not what I had expected to hear, but I was not very surprised that they said what they said.

Then I ring the Department of Transport Management. They tell me, ‘All gazetted officers are in India to attend some program and will be back in September only. All we are left here are a few non-gazetted officers and we do not have access to the kind of documents you are referring to. You should call back in September (after September 1).’ Now this took me by some surprise and I was beginning to get furious at these bureaucrats. I wanted some information and the constitution guarantees that I be given the information. But none of it was any help to me.

Then I thought of approaching it from the other end. I called one of these people from Federation of Transport Entrepreneurs. Again, I am told that these guys have their plenum and it will keep them busy for some time. Once again, I am told to call back sometime in September.

It is a shame that all these institutions put together cannot guide us to a single agreement that defines how we commute to our work places. Maybe the bureaucrats are not accountable enough to people. Maybe the document holds the key to unraveling a big fraud committed by the government with the federation as an accomplice and thus it is being kept from the public’s reach. Maybe, the bureaucrats are extremely busy to respond to a public’s inquiry. I will leave it at that and let the readers judge it for themselves.

However, this is not the only case where a public cannot find the right information when it asks for one to the bureaucracy or the government. Go to transport management office and ask for the process of acquiring a green number plate. Go to Nepal Oil Corporation and Ministry of Commerce and Supplies and ask for the documentation done when they decide to hike petroleum prices in Nepal. Go to the municipality, the Department of Commerce, Department of Cottage and Small Industry and the Inland Revenue Department and ask for the process of registering a Kirana Pasal (mom-and-pop store.) Nowhere will you get the complete information from a single resource person. The Citizen Charters (nagarik badapatra) will be a decade old and officers won’t value your time and effort one bit. And there goes your right to information!

Akash Shrestha

About Akash Shrestha

Akash Shrestha is Coordinator of the Research Department at Samriddhi, The Prosperity Foundation where his focus areas are petroleum trade and public enterprises. He also writes newspaper articles, blogs and radio capsules, based on the findings of the studies conducted by The Foundation.

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Robbing taxpayers in broad daylight!

So would you give your debtor Rs. 1000 to pay you back the Rs. 1000 it had taken from you a month ago? You wouldn’t, right? A stupid question! But trust me, you will give. Here I will try to explain what I mean by using the case of Nepal Oil Corporation (NOC), the government-owned oil monopoly of Nepal.

Petroleum is a highly political issue in Nepal and a 5% rise in the price of the products leads to huge protests in the streets all over the country. So government likes to come in and play the savior of the people. It controls prices (although the NOC board fixes prices, the political nature makes certain that the price fluctuations are consented by the ruling government). But in the international market, the petroleum product prices are not very stable. Since in Nepal, we do not practice Automatic Pricing Mechanism and instead control prices in the pretext of protecting the poor who cannot afford to pay the market prices for these basic-necessity petroleum products, NOC has to bear heavy losses in its business.

Here is what it implies to the taxpayers:

Vicious circle of petroleum supply in Nepal

Vicious circle of petroleum supply in Nepal

NOC imports petroleum products from IOC, practically on credit. It is supposed to make the payments in two installments within the next 30 days. Since NOC controls prices of its products and cannot charge market prices, it has to cross subsidize its products. The combined profits from all other products still fall short of loss made on LPG by hundreds of rupees per cylinder. As a result, NOC fails to recover its investment made in the import of products from IOC. But IOC will not sell anything to NOC, unless its dues are cleared. So, NOC approaches the government for loans. With government guarantee, it somehow gets loans to clear IOC dues from institutions like Employees Provident Fund (EPF) and Citizens’ Investment Trust (CIT), apart from government of Nepal and some commercial banks in the country. These mind you, are taxpayers’ money (mostly in form of saving, some as taxes paid to government). IOC dues are then cleared with this money. But the same business cycle continues, year in and year out. NOC continues to make losses and continues to acquire taxpayers’ money as loans. Amidst all of this, the loans acquired via CIT and EPF have never been paid. Interests are however paid duly by adding the interest payment component in the selling price of petroleum products. 

Table 1: NOC’s loan portfolio

S.N. Description                           Outstanding Loans (NRs)
1 Loan from The Government of Nepal (GoN)                                 12,64,10,00,000/-
2 Citizens’ Investment Trust (CIT)                                   8,93,00,00,000/-
3 Employees Provident Fund (EPF)                                12,35,00,00,000/-
4 Commercial Banks (CB)                                  2,74,00,00,000/-
5 Indian Oil Corporation (IOC)                                  2,50,00,00,000/-
Total                                39,16,10,00,000/-

*Source:Parliamentary Study and Recommendation Committee Report, Nepal, 2014 A.D

So let’s say, sometime in future, these creditors demand that their money be repaid. Clearly, NOC has no money to repay these loans. So what will it do? One possibility is that it will default on all the loans. Now that is plain bad. How can one default on Rs. 37 billion worth of taxpayers’ money? But this is a little unlikely. The very fact that there is government guarantee behind all these loans means that these will be paid. But would we let it be defaulted if we had the choice? – NOC does not have to pay anything; just shut down?

But hey, there are other possibilities how taxpayers might be repaid. And these kind of look like worse deals than having the loans defaulted. Since government has provided guarantees, it will pay back these loans. It will take fiscal measures to pay back these loans. Government might hike taxes through one fine fiscal budget. Its revenues will soar up and the loans will be cleared. Another possibility is that government will print money. But in doing so, it will devalue the money that we currently hold. To put it succinctly, it will compromise our wealth to pay its liabilities. Yet another mechanism can be that government takes a grant or a loan from some donor agency. Even then, if it is a loan, government will use one of these very measures that we have already discussed to pay back this loan. In case of a grant, the foreign nationals are paying through their tax money.

Now the Nepalese taxpayers have their money – but really? Who paid? To put it in a different way, they took money from us, made us pay the interests and when it was time to pay back the loans, they took equivalent sum of money from us again and acted like it paid the loans. And there is more to this! Since petroleum prices are controlled by the government/NOC, there is no guarantee that these new taxes will be slashed, once their purpose has been served. There is no competition and therefore, no incentive to think in the consumers’ best interest.

So let me rephrase my first question:

Would you allow NOC to default on this monstrous loan that it has accumulated from you, or would you use the government guarantee to retrieve your money?

Akash Shrestha

About Akash Shrestha

Akash Shrestha is Coordinator of the Research Department at Samriddhi, The Prosperity Foundation where his focus areas are petroleum trade and public enterprises. He also writes newspaper articles, blogs and radio capsules, based on the findings of the studies conducted by The Foundation.

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The Yellow Book and accounting jokes – somehow the administrative costs don’t administer!

I started my research by going through the Yellow Book produced by the Ministry of Finance. The Yellow Book is the accounting performance review of public enterprises in Nepal. If there is any doubt on financial matters or anyone wants to know how tax payers’ money is being used in the public enterprises in Nepal, this is the go-to book.

When it’s a work of the government (publishing the Yellow Book!), somehow, I had this notion of absoluteness – soon to realize most of the figures were manipulated – manipulated to the extent that there were mistakes; blunders –  some so shameless that an elementary school student could spot out! But hey, some of those could have also been human errors – we all make them. Nevertheless, if you spotted only one error in such an important document, that reason might be validated; if there are mistakes in almost every section of the book – to the extent that you could write 20 blog posts on it, now that’s a different story.

Let’s look at a few of those which are the simplest and funniest:

1. The basic Profit calculation.

This can be done by any layman. We know that Profits in the simplest form is Cost subtracted from Revenue. Profits (π) =Revenue (p (q)*q)-Cost(c(q) ).

Pic 1

This picture is from the 90th page in the Yellow Book, 2070 (2013 A.D). If you see the fourth column, it signifies the actual operating profit calculation in the year 2068/69; the profit is calculated to be negative NRs. 323 Lakh.  You do the basic math now.

Subtract NRs. 30675 Lakh (Operating Cost) from NRs. 33123 Lakh (Operating Revenue)- you must get +NRs.2448 Lakh provided you do it correctly.  The calculation published by the Ministry of Finance says this figure is a negative NRs. 323 lakh. This is a difference of NRs. 277100000!

The other years are correct, provided you do the same; you could subtract and see for yourself.

The story behind this manipulation (assuming this is not one of the hundred human errors in the Yellow Book): The above table is about Agricultural Inputs Corporation Limited (AICL). This is the government body in Nepal which distributes chemical fertilizers throughout the country, with transactions worth billions as you can see from the table itself.

During the year for which the figure was manipulated, or rather deliberately shown as a loss, there was a shortage of chemical fertilizers in the Nepalese market. During the past two consecutive years there was a shortage due to limited subsidy.This created a big black market.

I really cannot pin point why AICL wanted to show this figure as a loss on their assumption that the people were so foolish that they could not subtract and see for themselves. But one guess I have is because they wanted to show that they worked to the extent of loss. You judge it for yourself.

Pic2

You could do the same for the 95th page. All calculations here for the operational profits are erroneous.

The joke is that with the administrative staff that makes such erroneous calculations, gets paid in millions of rupees, as you can see in the above table.

Pic3

The same errors on the 110th page of the Yellow Book, the same argument for administrative costs hold!

2. Formulae given in the end – they forgot to follow themselves!

pic 4

This can be found in the last page (302nd) of the yellow book. I want you to notice the last formula conveying the debt to equity ratio.

pic 5

Notice the debt to equity given for the year 68/69 is 305:1.

pic 6

From the table above

  • Long term loans are: NRs. 247710 Lakhs ( Sn: 27)
  • Loans that exceeded the durations are: NRs. 70610 Lakhs (Sn: 29)
  • Current Liabilities are: NRs. 47321 Lakhs (Sn. 16)
  • Share holder’s funds  are: NRs. 967 Lakhs (Sn 22)

If we follow the formula, the considered loans are all the loans except for current liabilities. This amounts to NRs.318,320 Lakhs (27+29). If you follow the formulae and divide this amount by the share holders fund you should get the figure 329.18, the mentioned debt equity is 305.

These are only few of the many errors that one finds in the yellow book. Print mistake, tabulation mistake, human error has it place, but the amount of mistakes in the book baffles the reader and gives them a clear impression of carelessness and even arbitrariness in coming up with the mentioned figures. Somehow the administrative costs don’t administer when it comes to the government.

Serene Khatiwada

About Serene Khatiwada

Serene Khatiwada is a Research Intern at Samriddhi, The Prosperity Foundation. He did his Economics Honors from Hansraj College, University of Delhi.

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How you pay as much as the government wishes!

petroleum cross-subsidyWe know that government cannot give something to us unless it takes that something from somebody else. Somebody always pays the price. Reflecting upon some of the decisions made by Nepal Oil Corporation (NOC) regarding prices of petroleum products, whose NOC is the sole importer and supplier in Nepal, shows how government can completely disregard law in order to make this happen. Let us look at the case of one of the latest price hikes in petroleum products in Nepal.

March 14, 2014, Nepal Oil Corporation hiked the price of petroleum products in Nepal (reducing it again by some portion after a couple of days that followed). We will not delve into the numbers thus reached, but rather restrain ourselves to the mechanism by which this decision was made.

There are a few procedures that a Public Enterprise (PE) or the government has to follow before making a decision. The authority of decision-making must be allowed by an Act (a parliamentary legislation, setting out legal principles.) To our dismay, there is no such thing as Nepal Oil Corporation Act till date. Yes, a PE that does over Rs. 100 billion worth of business a year i.e. a fifth of the fiscal budget, is not guided by any Act.
But this is only the tip of the ice-berg. In cases like these, whenever a decision has to be made by the government or a public institution, it is done by publishing a notification in Nepal Gazette. But as it later unfolded upon digging into the archive of Government Gazettes, no such notification was published before the price hike. After some more research, it was found that the Board of Directors, under the chairmanship of the Secretary of Ministry of Commerce and Supplies forwarded a proposal to the cabinet asking for a permission to hike the prices of petroleum products. Cabinet approved! Prices rose!

Now here is the problem with that – Can the government then arbitrarily set any price for any service it provides? Of course, there was a rationale behind the move. The prices of petroleum products surged in the international market and NOC had to make some kind of adjustment. NOC bears huge loss on sale of LPGs and makes up for a portion of that loss through profits made on sale of petrol and kerosene (and sometimes, diesel.) But when a government monopoly cross subsidizes its loss to cover up for its inefficiency and lack of financial planning, it is the people that actually pay. It makes no economic sense when a government corporation controls price to run on loss worth hundreds of millions to billions of Rupees per month (see the table below). Besides, who gives the government the authority to put a fine on a person who rides to his office on a motor-cycle and cooks his food on electric cookers to pay for a hotel/restaurant or some other household’s consumption of LPGs? A few more things – when one allows the government to give it something, it also allows government to take something from the itself; who decides what is best for all? And on what basis? Wherein lies the limit of government discretion? These are some questions for ideological debate. But while the debate is on, no one can undermine the need for some reform measures.

NOC needs to adopt sound financial planning. Stealing from one to give to the other has to end. NOC should therefore switch to Automatic Pricing Mechanism in the distribution of petroleum products. Once price control is removed, there will be prospects of profit-making for the private sector as well. This will bring in competition in the industry and market will drive the prices. Then, it will be those who use a service that pay for the service. Drafting an Act that gives room for market forces to act freely would be a positive first move.

NOC’S Estimated Profit/Loss Position based on IOC Price, Effective from 01 July, 2014

NOC's monthly profit and loss position*Source: Nepal Oil Corporation

 

Akash Shrestha

About Akash Shrestha

Akash Shrestha is Coordinator of the Research Department at Samriddhi, The Prosperity Foundation where his focus areas are petroleum trade and public enterprises. He also writes newspaper articles, blogs and radio capsules, based on the findings of the studies conducted by The Foundation.

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