KATHMANDU: Nepal Oil Corporation (NOC) has sharply raised aviation fuel prices with immediate effect, nearly doubling the cost of jet fuel for domestic routes and more than doubling it for international flights at Kathmandu's Tribhuvan International Airport, as the ongoing Middle East conflict continues to drive up global petroleum prices.

The new prices, approved by the NOC Board of Directors on March 31 and effective from 00:01 am on April 1, raise domestic aviation fuel from Rs 127 per litre to Rs 251 per litre — an increase of Rs 124 per litre. For international flights, the price at Kathmandu has been revised from USD 801 per kilolitre to USD 1,785 per kilolitre, an increase of USD 984. 

At Pokhara, the price moves from USD 966 to USD 1,732 per kilolitre, while at Bhairahawa it rises from USD 789 to USD 1,716 per kilolitre. Prices at Pokhara and Bhairahawa have been set at breakeven point.

Petrol, diesel, kerosene, and LPG retail prices remain unchanged for now.

The price revision comes after NOC revealed it has been absorbing massive losses due to the gap between its purchase prices from Indian Oil Corporation and the prices it charges consumers. The corporation said it incurred losses of Rs 5 billion in just the 15-day period from March 16 to March 31 alone, as the automatic price adjustment mechanism failed to keep pace with surging international prices.

According to NOC, the latest purchase prices received from Indian Oil Corporation on March 31 show increases of Rs 41.60 per litre for petrol, Rs 94.93 per litre for diesel, Rs 123.80 per litre for aviation fuel, and Rs 190.36 per cylinder for LPG. NOC's last retail price adjustment — made on March 25 — had only raised petrol and diesel prices by Rs 15 per litre each, leaving a significant gap.

At current purchase prices, without adjustment, NOC faces losses of Rs 47.12 per litre on petrol, Rs 133.45 per litre on diesel, and Rs 416.37 per cylinder on LPG. The corporation estimates fortnightly losses of Rs 13.21 billion if prices are not adjusted.

NOC also warned that its ability to make timely payments to Indian Oil Corporation is being jeopardised by the mounting losses, raising the risk of disruptions to fuel supply if the situation is not addressed. The corporation said supplies have so far continued in the required quantities but cautioned that payment delays could affect supply management.

NOC urged all consumers and stakeholders to use petroleum products economically during this difficult period, and said it would continue drawing on its price stabilisation fund to cushion the impact on consumers where possible.