Petrol, Diesel & LPG Price in Nepal: Structure, History & Regional Slabs

Every litre of petrol and diesel and every cooking-gas cylinder sold in Nepal is priced by the Nepal Oil Corporation (NOC), a fully state-owned trading enterprise established in 2027 BS (1970 AD) under the Company Act. NOC is the sole importer, storer and distributor of petroleum products in the country: no private company is permitted to import petrol, diesel, kerosene, aviation fuel or liquefied petroleum gas (LPG). The Government of Nepal owns roughly 99.5 percent of NOC, with the small remainder held by four other public entities including Rastriya Beema Sansthan and Rastriya Banijya Bank.

Because NOC has no domestic refining capacity, it does not extract or process crude oil. Instead it buys finished, ready-to-sell products from a single supplier across the border, the Indian Oil Corporation (IOC), under a long-standing government-to-government supply agreement. This makes Nepal's retail fuel price fundamentally an imported price: it is whatever IOC charges NOC at the border, converted into rupees, plus taxes, transport and NOC's margin. Understanding that chain explains why 'petrol price in Nepal' rarely tracks the crude-oil headlines you see abroad and instead follows IOC's export invoice.

NOC operates a network of depots and provincial offices, feeding fuel to licensed private dealers who run the pumps. The cross-border Motihari-Amlekhgunj pipeline, commissioned in 2019 and operated by IOC, now carries diesel and petrol directly into the Amlekhgunj depot in Bara district, reducing reliance on tanker convoys for the central corridor. Retail prices are published on NOC's official website and enforced within a fixed radius of each depot.

Nepal uses an Automatic Pricing Mechanism (APM) for liquid fuels. Under this system, IOC reviews and issues fresh export prices for petrol, diesel and kerosene twice a month, on the 1st and the 16th of the English calendar month; other products such as aviation fuel and LPG are reviewed monthly. NOC receives this invoice and is expected to pass the change through to consumers on a roughly fortnightly (about 15-day) cycle, adjusting the retail board up or down accordingly. This is why fuel prices in Nepal typically move in small steps every couple of weeks rather than staying frozen for months.

Two variables drive each revision: the invoice amount IOC charges (which reflects the Singapore refinery benchmark, refining margin and freight) and the US dollar to Nepali rupee (USD/NPR) exchange rate at which NOC must pay. Because NOC pays IOC in convertible currency, a weaker rupee raises the landed cost even when the underlying product price is flat. On top of the landed cost, the government adds excise duty, value added tax (VAT), a road-maintenance and pollution levy, an infrastructure charge and NOC's own dealer and corporate margins to arrive at the pump price.

The APM was first adopted on 29 September 2014 to depoliticise pricing, but it was effectively suspended for about nine years once cross-subsidies distorted the maths. NOC formally revived automatic pricing from 17 July 2023 (the start of the Nepali fiscal year), so that petrol and diesel once again move with the IOC invoice. A companion Price Stabilization Fund, financed by a small levy on sales, is meant to cushion consumers on volatile days: when costs spike sharply the fund can absorb part of the rise, and when costs fall it is topped up. In practice the fund has often been thin, so most invoice swings still reach the pump.

Unlike many countries where one national price applies, NOC publishes liquid-fuel prices in a small number of regional slabs, reflecting the extra cost of moving fuel from the Indian border depots to distant regional stockyards. The current structure groups the country around four benchmark depot regions: Kathmandu, Biratnagar, Surkhet and Dipayal. Broadly, the eastern and central Terai region (Charali, Biratnagar, Birgunj, Amlekhgunj, Nepalgunj, Dhangadhi and similar) forms the lowest slab; Surkhet and Dang sit slightly higher; and Kathmandu, Pokhara and Dipayal form the top slab because fuel must be hauled furthest, often uphill.

The differences between slabs are deliberately small, typically only a couple of rupees per litre. For example, in a mid-2026 NOC notice, petrol in the Terai slab was priced a few rupees below the Kathmandu, Pokhara and Dipayal slab, with diesel and kerosene following the same pattern. The point of the slab system is to reflect genuine transport cost without penalising remote consumers too heavily; NOC absorbs part of the haulage cost so that a driver in the far west does not pay dramatically more than one in Birgunj.

One important caveat printed on every NOC price notice is that the listed price applies only within 15 kilometres of the relevant depot. Beyond that radius, dealers may legitimately add a small transport surcharge, so the price you actually pay at a remote hill pump can be a little higher than the published slab rate. This is a common source of confusion when people compare the official rate with what they were charged in a distant district.

Liquefied petroleum gas (LPG) is priced differently from liquid fuels in two key ways. First, the standard domestic cylinder contains 14.2 kilograms of gas and is sold at a single uniform price nationwide, with no regional slabs. This is a deliberate social policy: keeping cooking-gas prices identical from Kathmandu to Humla prevents cooking fuel from becoming regionally regressive for poorer, remote households. Second, LPG is not fully covered by the Automatic Pricing Mechanism and is instead held below cost as a de facto subsidy.

Because the government keeps the cylinder price below what NOC pays to import it, NOC loses money on every cylinder sold. NOC has repeatedly reported per-cylinder losses running into the hundreds of rupees, and an annual LPG subsidy burden that at times has been estimated near Rs 9-11 billion. These losses are covered by a cross-subsidy: the margins NOC earns on petrol, diesel and aviation fuel are used to plug the LPG gap. In effect, motorists and airline passengers help pay for cheaper household cooking gas.

This cross-subsidy is structurally fragile. When petrol margins shrink, the hidden diesel and LPG losses surface immediately, and NOC has at times warned that it is running at a loss corporation-wide. To fix this, NOC has repeatedly floated a 'dual pricing' plan that would charge commercial users (hotels, restaurants) a higher, cost-reflective rate while protecting genuine households with capped subsidised quotas and refunds tied to national ID. Versions of this idea date back to colour-coded consumer cards introduced in 2012, and were revived again in 2025, but repeated attempts have stalled on enforcement and industry pushback.

The pump price you pay is only partly the cost of the fuel itself. A large share is government revenue. On petrol and diesel, the layered charges include the IOC landed cost (the invoice plus freight, converted at the USD/NPR rate), central excise duty, VAT at 13 percent, a road construction and maintenance levy, a pollution control fee, an infrastructure tax, and finally NOC's dealer commission and corporate margin. Taxes and levies together can make up a substantial portion of the retail price, which is why domestic pump prices do not fall as fast as global crude when oil markets drop.

This tax structure also explains the direction of cross-subsidy. Petrol is taxed and margined more heavily than diesel because diesel is treated as a productive-sector fuel (transport, agriculture, industry) that the state prefers to keep cheaper; historically diesel has been cross-subsidised by petrol. LPG sits at the bottom, deliberately sold below cost. So within a single NOC price notice, petrol effectively props up diesel, and both prop up LPG.

For readers trying to reconcile numbers, remember that the retail price is a policy outcome, not a pure market outcome. Two revisions can look small at the pump even when the underlying dollar cost moved a lot, because NOC may adjust its margin, dip into the stabilization fund, or ask the Finance Ministry for temporary tax relief to smooth the change. This is exactly why an explainer of the mechanism is more durable than any single day's ticker.

The table below is a manually maintained snapshot of recent NOC retail price notices for the Kathmandu / Pokhara / Dipayal slab, included to illustrate the direction and size of revisions rather than to serve as a live price feed. Fuel prices in Nepal change roughly every fortnight, so any specific figure here may be superseded by a newer NOC notice. Always confirm the current rate on NOC's official Retail Selling Price page before relying on a number.

Two patterns are visible across recent revisions. First, petrol and diesel move in small, frequent steps that broadly track the IOC invoice and the rupee, while the four regional slabs stay a few rupees apart from one another. Second, LPG has stayed at a single uniform national figure for long stretches because it is a policy-set, subsidised price rather than a market-tracking one; when it does move, it moves in larger, less frequent jumps decided at government level.

For a genuinely current figure, the authoritative source is always the NOC notice for your slab, effective on its stated date in the Nepali (Bikram Sambat) calendar. The snapshot values in the facts table below are labelled with an effective date and should be read as historical reference points.

The single most reliable place to check the current petrol, diesel and LPG price in Nepal is NOC's own website, noc.org.np, which publishes the effective Retail Selling Price notice for each regional slab along with its effective date. Because NOC is the legal price-setter, its notice is definitive; third-party 'live' price pages simply mirror it and can lag behind a revision by a day or two.

When comparing prices, first identify which slab you are in (Terai, Surkhet/Dang, or Kathmandu/Pokhara/Dipayal), because a few rupees of the difference you see between two cities is just the slab structure, not a pricing error. Then check whether you are within 15 kilometres of the depot; if not, a modest, legitimate transport surcharge may apply. Finally, note the effective date on the notice so you know whether a fresh fortnightly revision may already be due.

For LPG specifically, remember the price is uniform nationwide and set below cost, so it will not vary city to city and may stay unchanged for months. If you ever see two different household LPG prices being discussed, that is almost always about a proposed dual-pricing (household vs commercial) reform rather than a change already in force.