Nepal tightens rules against artificial fuel shortages, Violators face up to Rs 1 million fine and 15-day supply suspension

KATHMANDU: The Government of Nepal has introduced stricter penalties against petroleum dealers that deliberately create artificial fuel shortages by shutting down fuel stations without valid reasons, following recent disruptions in the country’s fuel distribution system.

The Ministry of Industry, Commerce and Supplies has amended the Nepal Oil Corporation (NOC) Petroleum Products Dealers Regulation, 2075 (2018), empowering authorities to impose hefty fines and temporarily suspend fuel supplies to petrol pumps found intentionally restricting sales.

Under the revised regulation, fuel station operators that create artificial shortages by keeping their pumps closed or deliberately leaving their dispensing nozzles dry despite having access to fuel supplies will face penalties ranging from Rs 300,000 to Rs 1 million, along with suspension of petroleum supplies for five to 15 days, according to Nepal Oil Corporation.

Action follows nationwide fuel supply disruption

The regulatory amendment comes after fuel distribution across Nepal was disrupted on Wednesday when several petroleum dealers reportedly refrained from lifting fuel from NOC depots on Tuesday, anticipating a reduction in fuel prices.

The resulting shortage affected consumers in various parts of the country, raising concerns over the deliberate disruption of the supply of an essential commodity.

Following the incident, Minister for Industry, Commerce and Supplies Gauri Kumari Yadav directed Nepal Oil Corporation to take immediate measures to prevent businesses from intentionally disrupting fuel distribution and creating unnecessary shortages in the market.

Progressive penalties for repeat offenders

Acting on the minister’s directive, the NOC Board of Directors approved amendments to the dealers’ regulation by introducing a new provision prohibiting fuel stations from intentionally keeping their dispensing nozzles “dry” to create artificial scarcity.

The revised rules establish a graduated penalty system based on the number of violations.

Under the new framework:

• First offence: A fine of Rs 300,000 and suspension of fuel supply for five days.
• Second offence: A fine of Rs 600,000 and suspension of fuel supply for 10 days.
• Third offence: A fine of Rs 1 million and a complete suspension of petroleum supply for 15 days.

Authorities said the tougher enforcement mechanism is intended to discourage market manipulation, ensure uninterrupted fuel availability, and protect consumers from unnecessary shortages.

Ensuring stable fuel distribution

Nepal Oil Corporation stated that petroleum products are classified as essential commodities, and any intentional obstruction in their distribution undermines public interest and market stability.

The corporation expects the amended regulation to improve discipline among fuel dealers, strengthen supply chain management, and prevent speculative practices linked to anticipated fuel price adjustments.

The move is also expected to enhance consumer confidence by ensuring that petrol pumps continue normal operations regardless of fluctuations in international oil prices or domestic pricing decisions.