The 10-day country: The need to legislate the energy crisis
Every time the price of fuel rises in Nepal, the country performs a familiar ritual. Taxes are cut. Allowances are slashed. Officials speak of austerity. The nation tightens its belt, waits for the global market to settle, and then quietly returns to exactly the position it occupied before: exposed, dependent, and holding barely ten days of petroleum in reserve.
This is not crisis management. It is a crisis theater. And we have been performing it, with minor variations, from time immemorial. The current shock, crude prices surging past a hundred dollars a barrel amid conflict in West Asia, fuel prices in Kathmandu hitting record highs four times in a single month, is being spoken of as an external catastrophe, something visited upon Nepal from the outside. That framing may be comforting, but it is also dishonest. What is being experienced now is not the cruelty of circumstance. It is the harvest of a structural negligence so deeply embedded that successive governments have learned to mistake it for normalcy.
A decade ago, Nepal's economy was brought to its knees when fuel supply through the southern border was disrupted for nearly five months. Nepal Rastra Bank put the damage at Rs 202.5bn, roughly a quarter of the national budget, and estimated that eight lakh people were pushed into poverty that winter. When it was over, the promise was absolute: Nepal would build strategic petroleum reserves sufficient to last 90 days.
Today, a decade later, Nepal holds 10-13 days of fuel reserves.
The economics are blunt: Nepal spends Rs 300bn annually on petroleum, double the value of all merchandise exports combined. One in every seven rupees spent on imports goes to fuel. Nepal Rastra Bank research confirms it is the velocity of the price shock, not just the level, that destabilises the economy; spikes ripple through freight and agriculture faster than wages can adjust. For the three in four households reliant on remittances, every diesel hike is a silent tax on the money sent home from the Gulf, devaluing the hard-earned rupee before it ever reaches the kitchen.
The damage is already visible in the data. As reported by Nepal Rastra Bank, based on eight months’ data ending mid-March of fiscal year 2025-26, Nepal’s year-on-year consumer price index (CPI) rose to 3.62 percent, a 2.5 percentage-point increase in just four months, even before the full impact of the current oil shock had passed through the economy. Vegetable prices increased by 11.49 percent. In Madhesh province, where households are especially exposed to border-price volatility, inflation reached 4.95 per cent, nearing the central bank’s policy ceiling. The rupee has hit a record low of
Rs 150.24 to the dollar. If crude holds above a hundred dollars for long, historical pass-through patterns from 2015 and 2022 suggest headline CPI will breach five per cent by monsoon, the trade deficit will widen further, and the NRB’s accommodative monetary stance will become untenable. And because Nepal has no buffer stock to draw down, no mechanism to smooth supply disruptions, and no protocol to ration strategically, the full weight of any further escalation will land, unmediated, on households least equipped to carry it.
What makes this difficult to defend is not the vulnerability itself. Nepal is landlocked, import-dependent and subject to geopolitical pressures it cannot fully control. The tragedy is that the vulnerability is entirely knowable in advance and has been for years. Strategic petroleum reserves are the most elementary form of national insurance. The International Energy Agency sets ninety days as the global standard.
Nepal, with the full knowledge of what 10 days means, holds 10 days.
There is no technical explanation for this. The argument has never been that reserves are impossible to build. It is that they have never been made a legislative obligation, never written into law with a deadline, a penalty and a mechanism for enforcement. Every government has treated it as a target rather than a threshold. Targets, in the history of Nepali governance, have an unhappy tendency to drift.
The reason they drift is written into the statute books, or rather, written out of them entirely. Nepal’s petroleum sector, a business worth over 3bn rupees annually and the country’s single greatest strategic vulnerability, operates without a governing law. The Nepal Petroleum Act, 2040 (1983) deals exclusively with upstream exploration; it says nothing about imports, storage, pricing, or emergencies. The Nepal Oil Corporation operates under its own internal procedures, not statutes. No Energy Security Act has ever been drafted, let alone tabled in parliament.
The contrast with our neighbours is instructive. India’s strategic reserves, backed by dedicated legislation, buy New Delhi the time Nepal lacks. Sri Lanka and Bangladesh offer a harsher warning: laws without teeth are useless. Sri Lanka’s 2007 mandate went unenforced, leading to its 2022 collapse, while Bangladesh’s energy fund was raided for routine costs. The lesson is clear: legislation without ring-fenced funding and accountability is merely decorative. Nepal’s law must be designed to survive what theirs could not.
The new government has come to power on a genuinely different kind of mandate and, within 48 hours, published a hundred-point governance roadmap. It is, in many places, remarkably specific. There are timelines for electricity export strategy (30 days), power purchase agreements (six months), digital file tracking, blue bus services for women, free wi-fi in public spaces, and a mandatory 25-day payment window for agricultural produce.
But there is no timeline for building petroleum reserves. There is not even a mention of petroleum reserves. A government that is trying to build an identity on delivery-based governance has produced a hundred measurable commitments and left out the country’s single largest import, its single greatest vulnerability, the single most consequential oversight of the past.
That omission can still be corrected. Political capital of this magnitude does not last. Building 60 days of strategic reserves would cost Nepal roughly two per cent of GDP, less than the country lost in a single month of the 2015 blockade, and within reach of a dedicated import levy, a ring-fenced reserve fund that parliament cannot raid, and bilateral partnerships already on the table. What has been missing is not the money. It is the statute. Nepal needs an Energy Security Act: a minimum 60-day reserve within three years, an independent monitoring body, ring-fenced funding, and ministerial accountability for non-compliance.
Not a target. A floor. Not a policy. A law.
Nepal will face another crisis that is not its own, another border disruption, another geopolitical tremor that sends fuel prices to record highs and brings queues back to petrol stations. The question is not whether that day will come. It is whether the country will have 10 days, or whether it will finally have built itself a margin of survival. This government can settle it. Or it can perform the ritual again and leave the debt for the next.
