FUEL SHORTAGES AND INCREASE IN FOOD PRICES GROWING

C O N F I D E N T I A L KATHMANDU 000992 SIPDIS SIPDIS DEPT FOR SCA/INS E.O. 12958: DECL: 04/17/2016 TAGS: PGOV PTER ECON AMGT NP SUBJECT: FUEL SHORTAGES AND INCREASE IN FOOD PRICES GROWING CONCERNS REF: A. KATHMANDU 965 ¶B. 05 KATHMANDU 2952 ¶C. KATHMANDU 665 Classified By: Ambassador James F. Moriarty. Reasons 1.4 (b/d). PETROL, DIESEL AND KEROSENE SCARCE FOR CONSUMERS -------------- --- ¶1. (C) Fuel has become increasingly hard to find in Kathmandu and may reach a critical shortage within ten days due to the Maoist road closures (ref A). Ikshya Bikram Thapa, Manager of Nepal Oil Corporation's (NOC) fuel depot in Thankot (western Kathmandu Valley) explained to Emboff that no new fuel shipments had been arriving from the Indian border town of Raxaul due to Maoist blockades, but that the Royal Nepalese Army (RNA) was considering armed convoys. (Note: An unconfirmed RNA report stated the RNA began convoys on April ¶16. End Note.) Ironically, an editorial in the April 17 Himalayan Times, which has supported the pro-democracy movement, called for the government to "render the highways operational even if it meant the army personnel escorting the trucks, as had sometimes been done in the past." Thapa noted that, because of the NOC's inability to make full payment for imported fuel from the Indian Oil Corporation (IOC) over the last few months (ref B),the Thankot depot was storing fuel at only 50% of total available storage capacity. Thapa estimated that, based on current consumption patterns, the Thankot depot had stocks enough for 10 days of petrol, 15-20 days of diesel, and 20-25 days of kerosene. Kathmandu fuel wholesaler and petrol pump owner Dinesh Manandhar told Emboff that two of his three petrol stations in Kathmandu were still operating for a couple hours in the morning and early evening. On April 17, Emboffs observed that ten of the twelve gas stations they encountered between 10:00 and 11:00 am were closed. Manandhar added that kerosene users would likely be the hardest hit, since many people relied on kerosene as cooking fuel. We have heard from numerous people that they were unable to find any kerosene available on April ¶17. A local shopkeeper explained to Emboff that if he could not find kerosene soon he would have to join the pro-democracy movement. EMBASSY FACES POTENTIAL DIESEL CRISIS; PETROL STOCK SUFFICIENT -------------- -------------- ¶2. (C) Our GSO section reports that diesel is the most critical shortage facing the Embassy. At current consumption patterns, Post estimates it has enough diesel for three weeks. However, if the government re-started the five to seven hour a day load shedding (shut down of electricity) (ref C),Post would only have enough diesel for four or five days. However, if all residential generators were turned off, Post's current diesel stocks could last for two weeks. New diesel stocks have been held up at the India-Nepal border. Post has about one and a half months supply of petrol on hand. PRICES OF FOODSTUFFS RISING FAST, BUT NO PANIC BUYING YET -------------- -------------- ¶3. (SBU) The Maoist blockades of major highways in the country and the political parties' strike in Kathmandu have compounded the difficulty of delivery of food stuffs to retailers in Kathmandu. The majority of fruits and vegetables sold in Kathmandu are trucked in from neighboring districts. According to Arjun Prasad Aryal, Deputy Director of the Kalimati Fruits and Vegetable Market Development Board (KFVMDB),only 130 metric tons of fruits and vegetables entered Kathmandu's main Kalimati market on Sunday as opposed to the normal average of 450 metric tons. The price of basic foodstuffs in the valley continues to rise. Prices of onions, potatoes, and bananas have increased approximately 100 percent, while items like cauliflower, cabbage, and oranges increased roughly 30 to 50 percent. According to Emboff, the price of mutton (goat meat) has also increased 100 percent. Prices of cooking oil, flour, sugar, and salt have all increased at least 25 percent, with one report of the salt price increasing 600 percent. However, the sales manager of the Salt Trading Corporation, Bhagbati Rana, said it had a six-month supply of salt and sufficient sugar stocks. Rana speculated that the price increases were due to the lack of transportation within Kathmandu, the cost of which has also reportedly doubled, due to the Parties' enforcement of their general strike. Emboff reported that many small neighborhood shop owners had begun rationing the amount of milk they sold, selling small quantities to regular customers and refusing to sell to unknown persons. Reports indicate that Nepalis have yet to start panic buying. The surge in prices has prevented those who did not stock up on supplies before the strike started on April 7 from being able to afford to hoard goods now. COMMENT -------------- ¶4. (C) The shortage of petrol and fuel are serious, looming problems for both the average Nepali and the Embassy community. The shopkeeper's comment about joining the pro-democracy movement due to lack of kerosene highlights that more and more people are tired of the twelve-day strike and increasingly willing to take action to enact change. It is telling that they are blaming the problems on the King, and not the Parties or the Maoists, who called the strike. While food shortages appear imminent, the inability of people to cook the food they do have due to lack of fuel could be the more immediate problem. MORIARTY