In the third quarter of the current fiscal year, Nepal’s edible oil imports surpassed Rs100 billion. However, this does not imply that Nepalis are oil guzzlers in the kitchen. Less than 20% of Nepal’s edible oil imports are consumed in the nation, with the remainder being re-exported virtually entirely to India.
Experts say that since Nepali traders import crude edible oil by paying for it in US dollars and re-export it to India for Indian rupees, this could be one of the reasons behind the depleting dollar reserves. According to the latest statistics of the Department of Customs, Nepal imported crude edible oil (vegetable oil and animal fats) worth Rs99.51 billion in the first nine months of the current fiscal year. The product is mostly re-exported to India by Nepali refineries.
The boom in imports—and then export—is due to the zero-tariff privilege that Nepal enjoys being a least developed country, insiders say. Oil imports have nearly doubled compared to imports of Rs51.78 billion in the same period of the last fiscal year.
The government earned Rs10.87 billion in tax revenue by allowing traders to exploit the trade privilege which experts say is a rent-seeking business. Exports of edible oil jumped 177.65 percent to Rs83.74 billion in the first nine months of the current fiscal year.
