Nepal Keeps Petrol and Diesel Cheaper Than India—Here's Why

Nepal faces a severe fuel crisis due to political unrest and border closures. Fuel smuggling is also a growing concern.

Nepal fuel prices

Political unrest is escalating in neighboring Nepal. Heavily reliant on India for many essential needs, Nepal now faces a severe crisis due to border closures. This has completely disrupted transportation and trade between the two countries. Nepal, which imports essential goods like petrol, diesel, medicines, and electricity from India, is now facing economic challenges.

India-dependent Nepal economy

Over 60% of Nepal's total trade is with India. Oil, medicines, machinery, and electronic devices are major imports from India. As of 2024, Nepal imported $2.19 billion worth of petroleum products from India. The Indian Oil Corporation (IOC) is the primary fuel supplier to Nepal.

Why Nepal's fuel is cheaper

Despite buying oil from India, Nepalese people get petrol and diesel at lower prices. This is due to lower taxes imposed by the Nepal government and cheaper distribution costs. While high taxes in India have pushed up prices, fuel in Nepal is about Rs.20-Rs.25 cheaper per liter. This leads even Indians living in border areas to buy fuel in Nepal.

Smuggling fears rise

People in Indian border areas like Uttar Pradesh and Bihar travel to Nepal to buy cheaper fuel. There are reports of fuel smuggling in some areas. The presence of many Indian vehicles at Nepal petrol pumps is evidence of this. Despite the Border Security Force taking action, the open borders allow this problem to persist.

Anti-corruption protests

Meanwhile, protests have erupted in Nepal against corruption, mismanagement, and the ban on 26 social media platforms. Violent riots led by young people targeted the parliament, presidential office, and prime minister's residence. Due to mounting pressure, Prime Minister K.P. Sharma Oli has resigned, further destabilizing Nepal's political landscape.