Nepal backs down on fuel prices

By Charles Haviland
BBC News, Kathmandu

Shops and transport shut down in and around Kathmandu

The government of Nepal has withdrawn fuel price rises that sparked a wave of angry protests around the country.

Traffic and business in Kathmandu were brought to a virtual standstill at the weekend as hundreds protested.

The retreat by the multi-party government came just 48 hours after it announced the crippling and sudden rises in the cost of basic fuels.

These were the biggest protests since the rallies that forced King Gyanendra to give up direct rule in April.

Vandalised

The Council of Ministers has now directed the Nepal Oil Corporation, which has a monopoly on importing petroleum, to rescind the wholesale price rises.

The rises caused dealers to put up the street cost of both petrol and kerosene by some 25% and diesel by 11%.

Earlier there had been a blanket shutdown of shops and motor transport as angry protesters ordered vehicles off the roads and vandalised or burned cars and petrol pumps for the second day running.

Minor injuries were reported as police clashed with demonstrators and in one suburb deployed tear gas.

Transport shutdowns were also reported in at least five other parts of the country.

As with King Gyanendra's retreat in April, a government - though of very different political colours - has again bowed in the face of pressure in the streets.

The authorities have said fuel prices must go up to offset oil corporation debts and they have now formed a committee to work out future pricing policy.