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A decade-old plan of the Nepal Oil Corporation (NOC) to build infrastructure ensuring a 90-day strategic fuel reserve has remained unimplemented, a failure now magnified by panic buying in Kathmandu as Middle East tensions spark fears of supply disruptions.

The plan was first conceived after the unofficial Indian blockade in 2015, which exposed the nation's vulnerability to fuel shortages. The aim was to align with international norms by expanding storage capacity to guarantee supply during crises, a goal reiterated in the government's budget for fiscal year 2021/22. However, progress has been virtually nonexistent.

Despite earning substantial profits for nearly a decade - including Rs 13 billion in FY 2019/20 and Rs 9.55 billion in the last fiscal year - the state-owned monopoly has failed to materialize these plans. In 2017, the NOC earmarked Rs 117 billion from its annual profits for new storage plants. However, the initiative stalled following a controversial land deal involving the then Managing Director, Gopal Bahadur Khadka, who faced allegations of fund misappropriation in the land acquisition process for the facilities.

Consequently, the NOC's current storage capacity stands at just over 71,000 kiloliters - enough to meet the national demand for petrol (2,000 kl daily) and diesel (4,000 kl daily) for a maximum of 13 days. While the corporation has acquired land in Jhapa, Sarlahi, Kailali, and Chitwan for new facilities, a high-ranking official confirmed that "the work progress is at a snail's pace."

This chronic infrastructure deficit has now collided with immediate geopolitical fears. Following recent hostilities in the Middle East, long queues of vehicles have appeared at fuel stations across the capital since Sunday morning. The panic buying is driven by public anxiety over a potential surge in global prices and supply shortages due to the conflict.

“Long queues of vehicles have cropped up since Sunday morning,” an attendant of Panipokhari-based Trilochan Petrol Pump told Republica. “The panic buying has taken place due to the possibility of a surge in fuel prices and shortage in the international market due to wars.”

NOC Spokesperson Manoj Thakur sought to reassure the public, stating that the corporation currently has an adequate amount of fuel in stock. He did, however, acknowledge the immediate impact of the public's reaction, noting that "the trend of hoarding fuels has increased the demand by a significant amount."

By Rajesh Khanal