Nepal and India to sign oil pipe deal in May

Nepal and India are scheduled to sign an agreement to implement the long-delayed Amlekhgunj-Raxaul oil pipeline project by the first week of May, Minister of Commerce and Supplies Sunil Thapa said last week.

Thapa, who is on a personal visit to New Delhi, said that Indian Petroleum Minister Dharmendra Pradhan would arrive in Kathmandu to sign the accord.“The Indian government will be injecting IRs 2.75 billion into the project while Nepal will contribute IRs 750 million,” said Thapa. “The construction of the pipeline is expected to be completed within 30 months.”

Nepal’s contribution will be spent on automating Nepal Oil Corporation’s (NOC) Amlekhgunj depot and upgrading its capacity and building a pumping station. The government plans to construct the pipeline along the Amlekhgunj-Pathlaiya-Simara-Raxaul highway.

Earlier, the planned agreement on laying an oil pipeline between Nepal and India had snagged on differences over the period of the supply contract. Indian Oil Corporation (IOC) had said that Nepal should pledge to buy petroleum products from it for 15 years, but NOC wants to continue with the present five yearly pact.The two countries review the supply agreement every five years. NOC and IOC have signed a new petroleum supply pact, which is valid till 31 March 2017. The deal confirms IOC as the sole exporter of petroleum products to Nepal for the next five years.

The 41 km cross-border pipeline to Amlekhgunj is the first phase of the project. Under the second phase, the pipeline will be extended to Kathmandu as agreed during Indian Prime Minister Narendra Modi’s visit to Nepal last August.The pipeline, which was first proposed by IOC in 1995, is expected to reduce fuel transportation costs by over 50%.

Suresh Kumar Agrawal, Acting Managing Director of the Nepal Oil Corporation (NOC), said the company presented a revised proposal to the government's National Planning Commission (NPC) Tuesday that recommends having the Indian Oil Corporation build the pipeline first and then transfer operation responsibilities to Nepalese operators once it is paid for.

The company also said it's begun the land acquisition process necessary to start building the cross-border oil pipeline.

The project has been proposed and debated and revised since 1995 and was finally green-lighted for development in January 2013.

Edited from various sources by Elizabeth Corner

Sources: EKantipur, IB Times

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