In the Indian city of Kolkata, you can still have a cup of tea for five cents and a meal for 20. The place thrives on the philosophy of competition, quality and service. Even at the bottom of the pyramid, if you try to rent seek on the canteen you own because of your relationship with the nephew of the councilor who is the friend of the local legislator’s son, you may have to shut down as customers will not come to you. The hundreds of thousands of street vendors and the thousands of mid-range to high-end restaurants follow the same maxim—customer is king. It is not supply but demand that determines the market prices and customers; it is truly the buyer’s market in the classical sense.
Nepal, by contrast, has always been a supplier’s market. Even when people are buying fuel at 200-300 percent premium, they are forced to act as if Lord Pashupatinath himself has done a big favour to them. In Nepal, cabbies tell you where you should go, bus drivers will tell you which stop you should get down at, pharmacists will tell you which brand of medicine you should take, mobile phone dealers will tell you why you have to buy the only model he has, vegetable vendors insist that you buy a particular vegetable at an exorbitant price. At eateries along the highway you have to believe that the piece of meat in your plate for which you are paying a premium is mutton and grocers will sell you cooking oils of unknown brands at a price that is much higher than premium products. At a restaurant, the brand of bottled water served out of the 350 plus brands depends on how much additional commission you are paying and the relationship between the bottled water vendor and the restaurant staff. If you have booked an apartment and is delivered two years late, you should blame your karma and not the developer.
Nepali businesses were monopolised earlier by state agencies that shared close ties with the royals and their kins, then by political cartels (not necessarily affiliated to political parties) and syndicates which are, most of the times, at the mercy of black marketers. Since the blockade, Kathmandu has only gottena glimpse of what happens in the rest of the country where people have to beg for goods, especially during shortages, even if they are paying very high prices.
Learning from Momos
The market in Nepal is never left to itself to determine the supply and to fix prices. The government does not see any conflict of interest in being involved in business and being a regulator both. To protect its dual roles, it has instead allowed businesses to be on board of regulators, which is completely unacceptable. The mess in of private medical colleges, for instance, is not because the model is wrong, but with regulators and businesses both on the same side, they have been able to get away with all sorts of violations.
The question is why we cannot we leave everything in Nepal to function like the way our favorite food, momos, sells? There are neither momo associations to determine prices nor government momo outlets. Customers are free to choose which stall or outlet they want to go to. They determine whether the price for a plate of momo is high or low and if they are satisfied with it or not. Some people sell premium flavours at premium prices and customers still go there because they like it. Why can we not replicate this for petroleum and other products? The black marketers are doing just that. They are letting consumers decide on the product and offtake quantity based on the quality, the distance of transporting the product and the price. Some people in the business are doing very well compared to others.
Why can we not replicate this formally: create a situation where the government just regulates and allows private operators with international technical support to sell varied quality of petrol at different prices? Let the customer decide which pump to choose. Nepali private businesses need to realise that they have little credibility when it comes to delivering petroleum products without short changing on quality and quantity. Therefore, Nepalis continue to flock to Sajha, police and Army petrol stations even when there is no blockade.
The blockade has taught us many lessons, but one of the most important ones is that Nepalis are willing to pay and let the market decide the price. If this has already been tested in the black market, why can we not replicate this in the formal market? Why can our market not decide on the price of a unit of electricity that Nepalis are willing to pay? The price of one cylinder of cooking gas Rs 6,000 draws up to Rs 30 equivalent of unit of electricity. Using diesel brought in black market for generating electricity amount to around Rs 50 to Rs 60 per unit. Nepalis will be more than happy to pay Rs 20 or for electricity if they get uninterrupted supply. This is also the price in most of the emerging African markets. Power producers will be more than happy to sign power purchase agreements that will sell electricity for Rs 15 per unit. There is good Nepali money available to fund power projects demonstrated by the great response to the Hydropower Corporation initial public offering.
Every disaster brings its share of positive lessons. After the April earthquake,Nepali youths challenged the status quo and introduced a new paradigm in volunteerism. The ongoing human-induced calamity has taught us that Nepalis are willing to spend if they are provided with uninterrupted supply. By converting these learnings into policies, we will surely be better equipped when another calamity strikes.