Nepal revokes fuel price hike after angry protests

"The cabinet meeting decided to roll back the price to the previous rate after days of protests by people and MPs' criticism," Hridayesh Tripathi, minister for commerce, industry and supplies, told AFP.

At Sunday's parliamentary sitting MPs demanded the immediate withdrawal of the price increases which they called an "anti-people" move.

"The government has formed a three-member committee which will submit its report within a month in order to hike the price of petroleum products," Tripathi said.

"The committee will recommend to the government how to adjust the petroleum prices as per the international market and suggest reforms needed in the management of the Nepal Oil Corp before announcing the price hike next time."

Demonstrations broke out throughout the city of 1.5 million Saturday and Sunday as hundreds burned tyres and shouted slogans calling on the government to revoke the increeases.

Two government-owned motorcycles were torched and six vehicles were vandalised on Sunday, police said. Businesses in the city shut on both days.

The government late Friday raised the price of petrol, diesel, kerosene and cooking gas by as much as 25 per cent to offset the impact of soaring global oil prices on the Nepal Oil Corp, which sells fuel at subsidised prices in the impoverished kingdom.

The minister earlier said that the corporation, a monopoly importer and distributor of petroleum products, owes 161.16 million dollars to financial institutions -- including 121.12 million dollars to its sole supplier Indian Oil Corp.

The government increased petrol prices by 25 percent a litre to 84.28 rupees (1.13 dollars). Kerosene was raised by 23 percent, diesel by 11 percent and cooking gas by 11 percent.

The new government came to power in April, after King Gyanendra gave up his absolute rule in the face of mass street protests.