A recent spike in global oil prices has forced the state-owned oil company, the Nepal Oil Corporation (NOC), to raise the domestic price of some fuel products. On March 14th the corporation's board decided to increase the wholesale price of a litre of petrol by NRs9 (13 US cents), to NRs97. It also increased the price of aviation fuel. But the board made no changes to the price of kerosene, diesel or cooking gas. The international price of oil (dated Brent Blend) has risen sharply so far in 2011, but the Nepali government's latest round of price increases has not kept pace. According to local press reports, in early April the NOC faced losses of NRs3.75 per litre of petrol, NRs21 per litre of diesel, NRs11.3 per litre of kerosene and NRs288.8 per cylinder of cooking gas.

Given that its total monthly loss was estimated at NRs1.8bn, the NOC appealed to the government to release additional loans so that the firm could pay its sole supplier, the Indian government-owned Indian Oil Corporation. However, on April 13th, after the government failed to release any additional loans, the NOC was forced to slash imports of petroleum products from India by 45%. The move has led to renewed fuel shortages and long queues outside filling stations.