Nepal and India on Monday signed a memorandum of understanding for the construction of an Amlekhgunj-Raxaul oil pipeline.
The pipeline, 41 km long and 20 years in the planning, is expected to ensure regular fuel supplies in Nepal which are known to be disrupted by recurring road blocks and strikes.
Minister for Commerce and Supply Sunil Bahadur Thapa and and Dharmendra Pradhan, India’s Minister of State (with Independent charge) for Petroleum and Natural Gas, signed the agreement on behalf of their respective countries in Kathmandu.
The exact date when the construction will start is yet to be fixed. Before that, state-owned oil monopoly Nepal Oil Corporation will sign two separate agreements with its sole supplier India Oil Corporation (IOC).
The Rs4.40-billion project is expected to be completed within 30 months after work begins. IOC will be injecting Rs3.20 billion into the project as a grant while NOC will invest the rest of the amount for the upgradation of its Amlekhgunj depot.
The pipeline will transport petrol, diesel and kerosene. Under the first phase of the project, a pipeline will be laid from Raxaul to Amlekhgunj. In the second phase, it will be extended to Kathmandu.
“Nepal’s plan to bring fuel through a pipeline has materialized after two decades,” said Thapa after signing the agreement. “We expect that the project construction will commence as soon as possible.”
The pipeline is expected to save around Rs700 million annually in transportation costs. Nepal’s petroleum import bill amounted to Rs110 billion in the fiscal year 2014-15, down from Rs130 billion in 2013-14.
The pipeline is expected to ease transportation of fuel and eliminate the country’s dependence on oil tankers. Strikes and bandas won’t have an impact on petroleum imports once India starts pumping fuel through the pipeline.
Naindra Prasad Upadhyay,
secretary at the Commerce Ministry, said the pipeline project would remove hassles that have been occurring in Nepal and India’s bilateral trade. “Besides reducing costs, the pipeline will ensure the quality of petroleum products,” he said.
The pipeline, 41 km long and 20 years in the planning, is expected to ensure regular fuel supplies in Nepal which are known to be disrupted by recurring road blocks and strikes.
Minister for Commerce and Supply Sunil Bahadur Thapa and and Dharmendra Pradhan, India’s Minister of State (with Independent charge) for Petroleum and Natural Gas, signed the agreement on behalf of their respective countries in Kathmandu.
The exact date when the construction will start is yet to be fixed. Before that, state-owned oil monopoly Nepal Oil Corporation will sign two separate agreements with its sole supplier India Oil Corporation (IOC).
The Rs4.40-billion project is expected to be completed within 30 months after work begins. IOC will be injecting Rs3.20 billion into the project as a grant while NOC will invest the rest of the amount for the upgradation of its Amlekhgunj depot.
“Nepal’s plan to bring fuel through a pipeline has materialized after two decades,” said Thapa after signing the agreement. “We expect that the project construction will commence as soon as possible.”
The pipeline is expected to save around Rs700 million annually in transportation costs. Nepal’s petroleum import bill amounted to Rs110 billion in the fiscal year 2014-15, down from Rs130 billion in 2013-14.
The pipeline is expected to ease transportation of fuel and eliminate the country’s dependence on oil tankers. Strikes and bandas won’t have an impact on petroleum imports once India starts pumping fuel through the pipeline.
Naindra Prasad Upadhyay,
secretary at the Commerce Ministry, said the pipeline project would remove hassles that have been occurring in Nepal and India’s bilateral trade. “Besides reducing costs, the pipeline will ensure the quality of petroleum products,” he said.
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