Fresh protests and unrest over yet another hike in the price of petroleum products in Nepal erupted on the streets of Kathmandu Tuesday, with students blocking roads and clashing with security forces demanding a roll back in prices.

The protests started Monday evening after the government of Prime Minister Sher Bahadur Deuba announced a substantial hike in the prices of petrol, diesel, cooking gas and kerosene, ranging from a 10 to 25 percent rise.

This is the third time in its five-month tenure that the cash-strapped Deuba government has raised fuel prices, each time triggering violent protests by student groups.

College campuses and prominent public roads were blocked by protesting students from the morning, who burnt tyres, clashed with security forces and threatened to spread their agitation countrywide unless the government rolled back the price hike or resigned.

The road blocks, which would culminate in rallies and mass meetings in the capital Wednesday, are led by the All Nepal Free Students' Union, the student wing of the largest communist party in the country, the Communist Party of Nepal-Unified Marxist Leninist (UML).

The UML is a leading partner in the coalition government and Ishwor Pokhrel, the minister for industry, commerce and supplies, belongs to the UML.

The government has been compelled to go on increasing fuel prices to ease out its earlier policy of subsidising the Nepal Oil Corporation (NOC), the state-owned sole fuel distributing agency in the country, that led to losses running into billions of rupees.

Petrol will now cost Nepali Rs.62 against Nepali Rs.56 earlier, diesel Nepali Rs.41 against Nepali Rs.35, cooking gas Nepali Rs.850 against Nepali Rs.750, and subsidized kerosene Nepali Rs.30 against Nepali Rs.24.

Before the hikes started, fuel prices in Nepal were considerably less than world market prices. This resulted in traders smuggling out fuel to India, where it cost more, resulting in an artificial scarcity in the border areas. Even with Monday's hike, petroleum products in Nepal still cost less than in India, the NOC said.

For several years, the World Bank and the International Monetary Fund had been pressuring the Nepalese government to ease its fuel subsidy. Bowing to the pressure, the government last year set up a seven-member committee to study market prices and recommend adjustments in the local market prices.

The NOC says it will adjust prices every two months from now to be in harmony with world market prices.

However, the announcement is likely to fail to mollify the average Nepalese. Nepal is one of the poorest nations in Asia with government as well as private sector employees receiving one of the lowest salaries.

Tuesday's student unrest will add to the woes of the Deuba government that came to power in June with the mandate of resuming peace talks with the Maoist insurgents and holding general elections.

Though Deuba said he was giving the communist rebels till Jan 13 to resume negotiations, his overtures have been consistently rejected by the underground guerrillas.