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Last Updated: Thursday, 10 May 2007, 13:19 GMT 14:19 UK
Nepal hit hard by India oil cuts
Some people waited hours to get petrol

Parts of Nepal are experiencing fuel shortages after a state-run Indian energy company cut oil supplies to the country by 40% last week.

There have been scenes of panic as car drivers queue for petrol in Kathmandu.

The Indian Oil Corporation (IOC) supplies all of land-locked Nepal's oil. It reduced supplies because of unpaid debts.

The state-run Nepal Oil Corporation (NOC) says it cannot pay the $90m it owes the IOC.

Many petrol stations in the kingdom are now reported to have run out of fuel.

A spokesman for NOC said it would soon run out of reserves.

Queues

The BBC's Surendra Phuyal in Kathmandu says the NOC has stopped supplies to privately-owned petrol stations but it is still ensuring supplies to a number of state-run outlets.

Hundreds of vehicles and motorcycles waited in long lines for their turn to refill their tanks at some half-a-dozen state-run stations.

Vehicles line up at Kathmandu fuel station 10 May 2007
The NOC hopes the problem will be resolved soon

"I waited for three hours this morning in a long line to refill my vehicle," Chakra Lama, a taxi driver, told the BBC.

"The government should ensure that there's enough and smooth supply of the petroleum products."

Sharad Bhandari, the secretary of Nepal Petroleum Dealers Association, blamed the government for the crisis.

"The government should do whatever it needs to do - start a dialogue with India at the highest political level, or just hike the petrol prices here to make profits and clear all the dues," he told the BBC.

'Crazy'

Passengers complained that taxis have already started increasing fares because of the shortages.

"This is crazy, I paid 300 rupees ($4.6) for a short ride of about five kilometres this morning," Smriti, a woman working in central Kathmandu complained. "What's the government doing?"

Ichchha Vikram Thapa, the spokesperson for the NOC, urged the government to raise petrol prices. "Since the new multi-party government has been in power it has shied away from readjusting petroleum prices, fearing a backlash from consumers."

Mr Thapa said he hoped that the situation would return to normal soon.

"We will be clearing some of their dues soon and we are also expecting the government to start dialogue at the highest level to sort out the issue."




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