Nepal Oil Corporation Announces New Fuel Prices from September 1, 2025 – Complete Details on Petrol, Diesel, and Kerosene Rates

Introduction

The Nepal Oil Corporation (NOC), the state-owned entity responsible for petroleum imports and distribution in Nepal, has officially announced a revision in fuel prices effective from September 1, 2025 (Bhadra 15, 2082). The latest price adjustment comes in response to the updated international market rates received from the Indian Oil Corporation (IOC) on August 31, 2025.

As a landlocked country, Nepal imports all of its petroleum products from India through IOC. Therefore, every price adjustment at the international level directly impacts Nepali consumers. Fuel prices in Nepal are revised regularly based on international market fluctuations, import costs, and supply chain factors.

In this latest revision, petrol, diesel, and kerosene have seen notable changes. The NOC has also provided detailed figures related to import costs, selling prices, and government subsidies. Let us explore the complete details of this price revision and what it means for the Nepali public, industries, and overall economy.

Key Highlights of the New Fuel Prices (Effective September 1, 2025)

According to the new price list:

• Petrol (Gasoline):
  • Previous price per liter: NPR 173.56
  • New price per liter: NPR 179.04
• Diesel & Kerosene:
  • Previous price per liter: NPR 155.85
  • New price per liter: NPR 160.45
• Aviation Turbine Fuel (ATF):
  • Domestic airlines: NPR 126.10 per liter
  • International airlines: USD 0.676 per liter

These prices will remain in effect from September 1, 2025, until further notice or adjustments based on international market updates.

Detailed Explanation of the Price Revision

1. Petrol (Gasoline)

Petrol is one of the most widely consumed fuels in Nepal, especially in urban centers like Kathmandu, Pokhara, Biratnagar, and other major cities. With the increase of NPR 5.48 per liter, motorists and two-wheeler riders will now be paying NPR 179.04 per liter.

This rise is mainly due to global crude oil price fluctuations and refined product costs. Since Nepal heavily depends on imports, even minor changes in the international market immediately influence domestic rates.

2. Diesel & Kerosene

Diesel and kerosene are lifelines for Nepal’s transportation, industrial, and agricultural sectors. Diesel is the primary fuel for buses, trucks, tractors, and heavy machinery, while kerosene is widely used in rural areas for cooking and lighting.

The latest adjustment raises the price by NPR 4.60 per liter, bringing the new selling price to NPR 160.45 per liter. Although the increase may seem modest, it will have a cascading effect on transportation costs, goods delivery, and overall market inflation.

3. Aviation Fuel

Fuel for aviation has also seen adjustments. Domestic airlines will now pay NPR 126.10 per liter, while international airlines will pay USD 0.676 per liter. This change may affect airfares, especially in domestic travel where fuel costs are a major portion of operational expenses.

Reasons Behind the Price Hike

The revision is based on the price list received from Indian Oil Corporation (IOC), Nepal’s only petroleum supplier. Several factors contribute to these frequent changes:

1. Global Crude Oil Prices – The cost of crude oil in international markets has been volatile due to supply-demand imbalances, geopolitical issues, and OPEC production decisions.
2. Refining & Transportation Costs – Since Nepal does not have its own refinery, refined fuel is imported directly from India, making costs dependent on IOC’s pricing.
3. Exchange Rate Fluctuations – The Nepalese Rupee (NPR) is directly linked to the Indian Rupee (INR), which in turn is affected by U.S. Dollar exchange rates. Any devaluation leads to higher import costs.
4. Government Taxation – A significant portion of the fuel price includes customs duty, VAT, infrastructure tax, and other levies imposed by the government.

Economic Impact of the Fuel Price Hike

1. Transportation Sector

The first and most visible impact will be on public transportation fares and logistics costs. Buses, trucks, and taxis running on diesel will see higher operating expenses. This will likely result in increased fares for passengers and higher delivery costs for goods.

2. Inflation in Goods and Commodities

Since fuel plays a central role in supply chains, even a small increase can push up the price of essential commodities such as food, vegetables, construction materials, and daily necessities.

3. Aviation & Tourism

Airlines, particularly domestic carriers, will feel the burden of higher ATF prices. As a result, airfare hikes may discourage budget travelers, indirectly affecting Nepal’s tourism sector.

4. Household Expenses

Motorcycle and car users will directly feel the pinch of higher petrol prices. Likewise, families in rural areas that rely on kerosene will experience increased expenses, further straining household budgets.

Government and NOC’s Perspective

The Nepal Oil Corporation has clarified that despite the increase, the prices are still below the actual import costs. In fact, NOC is incurring losses due to the policy of price stabilization. For example, the breakeven price of petrol and diesel is higher than the selling price, which means the corporation is absorbing the losses temporarily.

This subsidy-like approach is often criticized because it burdens NOC with huge debts, but the government adopts it as a measure to control inflation and protect the general public.

Historical Trend of Fuel Prices in Nepal

Fuel prices in Nepal have been on a roller-coaster ride for decades:

• In 2014, petrol had reached as high as NPR 150 per liter due to global crude price hikes.
• In 2020, during the COVID-19 pandemic, petrol prices had dropped to NPR 96 per liter because of collapsed demand worldwide.
• In 2022-23, the Russia-Ukraine war triggered another spike, pushing petrol close to NPR 200 per liter.

These fluctuations highlight Nepal’s vulnerability as a fully import-dependent country.

Future Outlook

Analysts believe that petroleum prices will remain volatile in the coming months due to global market uncertainties. Rising demand in Asia, production cuts by OPEC+, and geopolitical tensions in the Middle East are expected to keep oil prices high.

Nepal is therefore exploring long-term alternatives such as:

• Renewable Energy Promotion – Encouraging solar and hydropower-based transportation.
• Electric Vehicles (EVs) – Policies to promote EVs to reduce petroleum dependency.
• Energy Efficiency Programs – Awareness campaigns to minimize fuel wastage and promote efficient usage.

Conclusion

The latest revision of petroleum prices by Nepal Oil Corporation has once again reminded the nation of its dependence on imported fuel and the challenges of maintaining economic stability amid global uncertainties. With petrol now at NPR 179.04 and diesel/kerosene at NPR 160.45, the burden on consumers and businesses is set to rise.

While the government tries to balance between international prices and domestic affordability, the long-term solution lies in reducing dependence on fossil fuels through sustainable energy adoption. Until then, every revision from IOC will continue to affect the wallets of Nepali citizens.