The student wings of two of the leading parties in the coalition government, including Prime Minister Girija Prasad Koirala's Nepali Congress party and the youth wing of the Maoist guerrillas brought transport to a standstill in over a dozen places in the capital. They were joined by protesting taxi drivers who blocked roads in two areas.
Former deputy prime minister Madhav Kumar Nepal, who heads the Communist Party of Nepal - Unified Marxist Leninist, the second largest party in Nepal, had his house pelted with stones by an angry mob in the afternoon.
Protests were also reported from key towns of Pokhara, Biratnagar in eastern Nepal, Kavre and Baglung. There were also demands for the resignation of Hridayesh Tripathi, minister for industry, commerce and supplies.
The hike was defended by Finance Minister Ram Sharan Mahat, who said Saturday Nepal has been losing millions of rupees every month due to the disparity between domestic and global oil prices.
"No government likes to impose hardships on people," Mahat said. "But there was no other way."
The state-owned Nepal Oil Corporation (NOC) announced Friday that fuel prices would go up from midnight after the government gave its go-ahead in a desperate bid to stem whopping losses.
The NOC has been losing almost NRS 840 million (about $11 million) every month. The agency was unable to pay its dues to India's Indian Oil Corporation (IOC), from which it imports fuels, making the tab run into nearly NRS 9 billion.
From Saturday, petrol will cost NRS 84.25 per litre, up by NRS 15 or nearly 25 percent, diesel NRS 59, an increase of 11 percent. The kerosene will now cost NRS 59, which is an increase by 23 percent. The cooking gas will be priced NRS 1,000 a cylinder, dearer by NRS 100.
Aviation fuel has been hiked to NRS 76 from NRS 55, leading to fears of escalation in domestic flight fares.
An IOC team was in Kathmandu earlier this month to thrash out with NOC officials a new schedule for payment of dues but the talks remained deadlocked with NOC asking for a lower interest rate on the unpaid amount and the IOC expressing its inability to do so on the ground that it too has to pay interest to Indian banks.
The resulting pressure as well as continuous persuasion by the World Bank and International Monetary Fund finally made the government give in, despite fears of public protests by student organisations, consumers and even its own coalition partners.
With the hike, the NOC's losses would now come down to NRS 210 million.
With the cabinet authorising its ministry of industry, commerce and supplies last week to take an appropriate decision, fuel sellers, anticipating a price hike, began hoarding their stocks, creating an artificial crisis.
There have been long queues at petrol stations while shops selling cooking gas have been pleading short supply. The hikes come on the eve of a succession of Nepali festivals, starting with Teej, the festival of women Sunday.
Fuel price hikes have always been a contentious issue in Nepal, one of the poorest countries in the world. About three years ago, a similar hike resulted in widespread student unrest and the death of a student leader in police firing. The incident forced at least two ministers to quit.
There were indications the protests would snowball with one member of the seven-party government flaying the hike.
The Nepal Workers and Peasants Party, that is supporting the Koirala government without joining the cabinet, said the government should control corruption and over employment at the NOC to cut down losses instead of increasing prices.
Source: Indo-Asian News Service