Nepal | June 03, 2020

Cost of building cross-border pipeline soars

Construction of Motihari-Amlekhgunj project expected to top Rs 5 billion due to delays

Sujan Dhungana
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The cost of building the Motihari-Amlekhgunj oil pipeline has gone up by at least 15 per cent compared to earlier projection
following delay in construction of the project.

Owing to inflation of construction materials required for the project like pipes, rods, cement and labour costs, among others, in the past couple of years, the cost of the cross-border petroleum pipeline has climbed much higher today, informed a highly placed source at Nepal Oil Corporation (NOC).

“Execution of the Motihari-Amlekhgunj fuel pipeline project is taking longer than anticipated. The project cost today has already risen a lot and is bound to increase further if the project construction work is not started soon,” said the NOC official, adding that both Indian and Nepali authorities should coordinate to execute the project as soon as possible.

The two governments (Nepal and India) had signed an agreement of the pipeline project on August 2015 and the overall cost of the 36-kilometre-long project was estimated at Rs 4.40 billion. One of the provisions in the deal was to complete the project within 30 months.

However, two-and-a-half years have passed since Nepal and India signed the project agreement while the construction works of pipeline project is yet to commence.

According to the NOC official, the cost of the Motihari-Amlekhgunj oil project has increased by over Rs 600 million over the last two-and-a-half years. This means that constructing the pipeline project today will cost more than Rs five billion.

As per the agreement that the two countries had inked earlier, India would contribute Rs 3.2 billion in the project, while Nepal would inject the remaining cost. Thus, it is for sure that the increased project cost of the cross-border oil pipeline will also add financial burden on the government here.

Meanwhile, the project has gained momentum in the recent months and NOC officials are optimistic that construction of the project will start soon. The Indian Oil Corporation (IOC) and other agencies appointed by IOC for the project have already started unloading the pipes along the finalised route.

“As IOC had stated it could start construction works of the petroleum pipeline project once at least 10 kilometres of the project’s route was fully ready, we are expecting IOC to start the pipe laying process from the Parwanipur-Pathlaiya section (stretching almost 20 km), as issues related to encroachments along this part of the planned project route have been settled,” said Sushil Bhattarai, acting deputy managing director at NOC.

As the project was inked between the governments of the two countries, high-level government officials from both Nepal and India are likely to jointly inaugurate the construction of the project in the near future.

A version of this article appears in print on March 06, 2018 of The Himalayan Times.

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