The import of petroleum products -- diesel, petrol, and kerosene -- declined in Nepal in the first four months of the current fiscal year, 2024/25, compared to the same period last year.

Diesel imports dropped the most, by nearly 28 percent, between mid-July and mid-November this year. The country imported diesel worth Rs 29.04 billion, compared to Rs 40.31 billion in the same period last year, Department of Customs data show.

Kerosene imports dropped by 5.88 percent, from  Rs 0.34 billion to Rs 0.32 billion, reflecting a reduction in demand.

Likewise, Petrol imports declined 5.72 percent, from Rs 22.87 billion to Rs 21.56 billion. 

In contrast, Liquefied Petroleum Gas (LPG) imports rose by 22 percent, from Rs 15.45 billion to Rs 18.85 billion in the review period.

Petroleum Product Imports: First Four Months  

This trend has, however, continued since fiscal year 2021/22 when Nepal imported petrol, diesel and kerosene worth Rs 71.38 billion, Rs 168.23 billion and Rs 1.68 billion, respectively. By the end of the last fiscal year, the imports of petrol, diesel and kerosene have dropped to Rs 68.1 billion, Rs 143.98 billion and Rs 1.33 billion, respectively, Customs Department’s statistics show.  

Manoj Thakur, Deputy Director of Nepal Oil Corporation (NOC), told NBA that the decline was a direct result of the economic slowdown.

“Factories have not been able to operate at full capacity,” said Thakur. “The slowdown in development and construction activities has also played a significant role in reducing both the import and consumption of petroleum products.”

Growing demand and use of electric vehicles in recent years following an increase in domestic electricity production have also contributed to the reduction of fossil fuel imports, Thakur added. “The rise of electric vehicles (EVs) is a significant factor in decreasing petrol consumption. Also, electricity consumption has started to increase in industries.”

The increasing popularity of EVs was evident at the NADA Auto Show 2024, where nearly 70 percent of vehicle bookings were for electric models. 

According to the department, Nepal imported electric vehicles worth Rs 8.98 billion in the first four months of this year, up from Rs 7.26 billion during the same period last year.

Thakur also emphasized the economic benefits of reduced petroleum imports. “The reduction in imports is advantageous for the Nepali economy, as the foreign exchange previously spent on petroleum imports is being saved due to higher electricity consumption". 

Additionally, Thakur pointed out the impact of fuel price difference in Nepal and India. "When the price of petrol is lower in Nepal, vehicles from India come to refuel in Nepal. Similarly, when fuel is cheaper in India, vehicles from Nepal go there," Thakur explained, adding that the lower fuel prices in India, compared to Nepal, have also affected the import dynamics.