26 November 2015

The politics behind Nepal’s devastating fuel crisis

By Sarita Sapkota

Barely six months since the devastating earthquake in April, another major crisis has hit Nepal. The economy is in ruins as the existence of millions of productive enterprises is thwarted in light of acute fuel scarcity and shortage of basic goods such as cooking gas, food, and medicine. If this continues for a longer period of time, Nepal might be facing a severe humanitarian crisis.

In response to the new constitution that was promulgated about a month ago, political groups in Nepal’s southern belt called Terai have been holding protests, which have claimed at least 40 lives over the past two months. The protests are mainly regarding the demarcation of state boundaries and political representation of the people of Terai in a new Federal Nepal. Intensifying their protests at the end of last month, agitating groups decided to cut off supplies to the capital by blocking the highways and custom points from where goods enter the country and eventually Kathmandu Valley.

The crisis became more severe when India got onboard with the agitating groups and imposed an unofficial economic blockade a month ago. Nepal is almost entirely dependent on imports from India for all basic things. India is not only Nepal’s largest trading partner and the sole supplier of oil and cooking gas to the state owned monopoly importer Nepal Oil Corporation, but also the point of access for almost all imports to a landlocked Nepal. Denying publicly that this is an economic blockade, India has technically maintained the custom clearance at the border points on paper, saying it will send the goods over once the protests cease and security is better. Thus, fuel has become a luxury and soon food might too.

Homes, offices, hotels and restaurants have run out of cooking gas in the past month. Nepalese were supposed to be celebrating two of their biggest Hindu festival Dashain and Tihar few weeks ago, but many people could not get to their kith and kin because buses were not operating and even if they were, ticket prices had skyrocketed because the buses had to buy fuel from the black market at four times the earlier price. Power cuts are expected to increase shortly (it reaches up to 16 hours a day during dry season) owing to perennial inefficiencies in Nepal’s electricity regulatory regime.

The problem is the new constitution. Two Constituent Assemblies were at work for eight years preparing this document, which was expected to usher in a new era of democracy and prosperity following the decade long civil war from 1996 to 2006. Unfortunately, when the constitution came out last month, it did not give much reason to celebrate. Stating that Nepal is a socialism oriented democracy, expanding welfare rights beyond the nation’s capacity to deliver, giving exclusive rights to trade unions, failing to fully protect property rights by creating a huge room for state expropriation, not truly decentralizing and devolving power to the new states (this is the major issue of contention for various minority groups), etc. are some of the main issues that stand out in the constitution. Minority rights are also a major issue, although the new Speaker of the House is  female and from a minority ethnic group. The new President of the country, appointed recently, is also a female.

Meanwhile, even for those keeping a close watch on Nepal’s political economy, the current situation is deeply perplexing because it is difficult to figure out what is really protracting this impasse. After rounds of talks with the agitating groups, a compromise is far from sight. Even by Nepal’s standards, the dilly-dally of the new ruling government (United Marxist Lenninst along with its alliance) in dealing with the situation and resolving it is baffling. Many suspect a hidden agenda at play behind this tacit reluctance to solve the crisis. On the other hand, it is hard to pinpoint clear geo-political interest from the Indian side because no argument or theory is compelling enough. Of course, conspiracy theories are rife at the moment. People are suffering every second. Schools are shut and businesses are rapidly closing down. Local businesses are moving out and are looking for safer and predictable places with lower cost of doing business. It is turning out to be a really bad year for Nepal.

Nepal’s economy never got wings under the multiple political transitions that have taken place in the past twenty years. It’s being speculated that this latest series of protests including the blockade has already caused Nepal more loss than the April earthquake. However, one cannot give up hope. The constitution is certainly a document of compromise at most but that does not mean there are no opportunities for amendments. The current need is of holding dialogues, bringing disgruntled groups on board and making necessary amendments to the constitution in a democratic way.

Sarita Sapkota is the Communication & Development Coordinator at Samriddhi.