Nepal rolls back oil price rise after protests

KATHMANDU: Nepal's multi-party government reversed an increase in fuel prices on Sunday, bowing to angry protests that had paralysed the capital for two days, a minister said.   

Activists had torched dozens of vehicles, burned tyres, stopped traffic and forced businesses to close in the city following Friday's move to raise prices by up to 38 per cent.   

"We have withdrawn the increase in oil prices in view of the current situation," Physical Planning and Works Minister Gopal Man Shrestha said after an emergency cabinet meeting.   

"The decision will come into force immediately," he said.   

The interim government, formed after King Gyanendra restored democracy in April, had brought in the rise saying it needed to cut the losses of the Nepal Oil Corporation (NOC), the state-owned oil importing monopoly.   

NOC owes about $120 million to India, the sole fuel supplier to the landlocked Himalayan nation.   

Critics said higher fuel prices would increase transport costs for food and other commodities in the mountainous nation.    The cabinet set up a three-member panel to study the financial condition of the state oil firm and suggest measures to reduce losses, Shrestha said.