All about oil (and a little gas)
Fuel imports continue to mount, amounting to 60 percent of hydropower export revenue
Despite a restriction on vehicle imports last year and the pedestrian day initiative, fossil fuel imports in 2012 grew by 13 percent, records with trade department, ministry of economic affairs, show.
Last year, the economy imported 167,523.89kl (one kl is 1,000 litres) of petroleum products, chalking up a bill of more than Nu 6B (provisional). This is 60 percent of annual hydropower export earnings.
Besides petrol and diesel, fuel imports as recorded by the trade department also include furnace oil, light diesel oil, quota items like kerosene and cooking gas, aviation fuel, grease and lubricants imported by the three petroleum product dealers in the country.
Import of diesel fuel saw the highest increase at 121,832kl, almost 18,221kl more than 2011. Diesel import has been surging in recent years, mainly fueled by the construction of the hydropower projects that engage earth moving machinery and trucks round the clock. Diesel imports alone are closing in on Nu 4B (provisional).
Rising prices also contributed to its ballooning import bill, with diesel fuel prices going up by more than Nu 5 a litre over four hikes during the year. In Thimphu, diesel costs Nu 48.9 a litre. At the start of last year, it was Nu 40.61 a litre.
Petrol imports rose to 29,094kl worth Nu 1.6B. Compared with 2011 figures, the quantitative increase is around 8.7 percent or around 2.3M litres, which is lower than previous years. In 2011, it had increased by 3.7M litres. This decrease is attributed to the restriction on vehicle imports enforced in March last year to curb the outflow of rupee.
Like diesel, petrol prices also went up during 2012 to inflate the import bill. In fact, it went up eight times and dropped twice last year. By December 2012, petrol was costlier by Nu 4 a litre all across the country, compared with January prices.
According to records with the Road Safety and Transport Authority there were more than 67,000 vehicles in the country including trucks, earth movers and tractors as February this year.
Import of quota or subsidised kerosene, however, dropped to 5,547kl from 5,607kl in 2011, but the import bill went up to Nu 72.71M, because of increase in prices. There were no imports of industrial or commercial kerosene last year.
Import of LPG cooking gas, also a quota item, increased slightly to 7,469 metric tonnes (MT) from 7,410MT in 2011. How much it cost is still to be worked out. According to the arrangement with the government of India, Bhutan can lift a maximum of 700MT a month or 8,400MT a year of subsidised cooking gas.
The import of aviation fuel, which is liberalised, also increased to 2,070kl from 1,455kl, which cost around Nu 121M.
Lubricants, worth around Nu 200M, were also imported last year.
Import of furnace oil used by steel, cement and carbide industries along the southern belt dropped to 12kl, from 2,757kl, which was worth Nu 580,000. It is not clear whether import of furnace oil has been liberalized, and industries are importing on their own.
Import of bitumen also fell drastically to 75kl (worth Nu 3.2M) from 1,166kl in 2011. This is because imports are now done through other dealers besides the petroleum distributors.
As in the previous years, import of high-grade diesel and petrol, such as Speed, Hi Speed, Xtra premium and Xtramile, continued to fall in 2012. Import of Hi-speed diesel dropped to 197kl last year from 268 kl in 2011. The import was worth Nu 8.60M. Likewise, import of Speed dropped to 132kl from 175kl.
Bhutan Oil distributors, Druk Petroleum Corporation limited and Damchen Petroleum distributors are the three dealers that import fuel from the Indian Oil Corporation and the Bharat Petroleum Corporation Limited. In total, they have 50 fuel stations across the country.
In 2012, Damchen’s imports dropped by more than 50 percent for both diesel and petrol. Its market share went down to less than eight percent last year from near 15 percent in 2011.
As of December last year, 80 percent of the petroleum distribution business was with Tashi’s Bhutan Oil distributors and Bhutan Oil corporation. Druk Petroleum corporation limited had 11 percent of the market.
By Phuntsho Wangdi
One Comment to “All about oil (and a little gas)”
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It was a noble initiative on the part of the government to restrict import of vehicles and introduce pedestrian day, wasn’t it? The Rupee shortage could have been much more with much more increase in import of goods as well as import of skilled workers. Refocusing the purposes of education should be the next move, so that Bhutan does not have to import workers and the country will never have unemployment problems at all.