Nepal | June 03, 2020

Fuel trade with China in doubt as govt shuts NTL

Himalayan News Service
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Fuel tanker petroleum supply from Kyirong; fuel from china

A tanker of the Nepal Oil Corporation (NOC) enters Kyirong via Rasuwagadhi border point to receive the petrol provided as a grant by the Government of China in Rasuwa on Saturday, October 31, 2015. Photo: RSS/ File

Kathmandu, January 31

Along with the decision made by the government to shut down National Trading Ltd (NTL), the country’s plan to start fuel trade with China is likely to be affected further.

This is because the government had earlier planned to allow NTL to enter into petroleum trading with China by making NTL a subsidiary company of state-owned Nepal Oil Corporation (NOC).

However, the government’s decision to shut down NTL has not only ended the age-long legacy of NTL but has also deferred the country’s plan to enter into fuel trade with the northern neighbour.

The Cabinet meeting on Monday had given a nod to a proposal of the Ministry of Supplies (MoS) to shut down NTL citing that the government enterprise was not performing as expected.

MoS had tabled a proposal to this effect under the recommendation of the Ministry of Finance (MoF).

Following acute shortage of petroleum products in the country in 2015-16 following trade disruptions caused by the border blockade in the southern plains of the country, the then government had initiated the process to start fuel trading with China and diversify the country’s petroleum industry.

As government-to-government talks between Nepal and China concluded with the possibility of starting fuel trade, the government had started the process to allow NTL, which had been incurring heavy losses since many years, to begin fuel trading with China.

Moreover, MoS had then sought permission from MoF to allow NTL to import petroleum products from China. However, the Finance Ministry recently recommended MoS to shut down NTL instead of reoperating it.

Meanwhile, Supplies Secretary Anil Kumar Thakur said that the government’s decision to shut down NTL and the government’s plan to enter into petroleum trading with China should be viewed through separate lens.

“Allowing NTL to start fuel trade with China was one of the many options to revive NTL. NTL’s closure does not mean that the government is against diversifying the country’s petroleum industry,” stated Thakur.

He further said that though making China the country’s second fuel trading partner is in the government’s plan, both the countries have to work on developing new infrastructure and upgrading existing infrastructure accordingly for the plan to materialise.

“The government can assign the responsibility to any other state enterprise, including NOC itself, to start fuel trade with China. However, fuel trade with China is not possible with the current infrastructure,” he said, adding that there should be emphasis on connecting to Chinese fuel industry through petroleum pipeline like that with India.

A version of this article appears in print on February 01, 2018 of The Himalayan Times.

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