Kathmandu, March 26

A high-level government team, led by Minister for Supplies Deepak Bohara, today left for India to renew the fuel supply agreement between Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC).

The petroleum supply agreement between the two companies expires this Friday (March 31). The new agreement will come into effect from Saturday (April 1).

The visiting team also comprises of Joint Secretary of Ministry of Supplies (MoS) Surya Shrestha, Managing Director of NOC Gopal Bahadur Khadka, Deputy Managing Director Sushil Bhattarai and Director Nagendra Jha.

Possibly, the heads of the two fuel companies will ink the new agreement amid a signature signing ceremony on Monday after a final discussion on the draft of the new supply agreement, MoS Joint Secretary Shrestha informed.

Though the new agreement could be signed between the heads of NOC and IOC, Minister Bohara is leading the Nepali delegation on a special request from Indian Minister of State for Petroleum and Natural Gas Dharmendra Pradhan, MoS sources said. The two ministers are also scheduled to hold discussions on key issues relating to Nepal-India commercial petroleum trade and the construction of the much-awaited Raxaul-Amlekhgunj petroleum pipeline project.

Officials of NOC said that the new NOC-IOC supply agreement would be instrumental in ensuring regular supply of petroleum products in the domestic market.

Among others, the draft of the new agreement has a provision whereby NOC can import petroleum products from a third country if IOC fails to supply fuel to Nepal as per demand, according to NOC sources.

The old agreement bars NOC from purchasing fuel from sources other than IOC. The draft of the new agreement also has a provision that requires IOC to supply fuel to Nepal uninterruptedly under any circumstances.

The review meeting of the supply agreement between NOC and IOC in the first week of March in Kathmandu had finalised the new draft of the agreement. During the meeting, IOC had agreed to reduce the marketing charge — from 2.5 per cent to two per cent — that it has been levying on fuel in the new agreement. Similarly, the two fuel giants have also introduced a provision in the new agreement to appoint an independent surveyor from a third country in all oil depots of IOC from where Nepal takes loading to deal with issues related to fuel supply to Nepal.

Likewise, IOC in the new agreement has also agreed to waive interest levied on NOC for delays in payment. NOC makes payment for petroleum products that it imports from IOC twice a month — on each eighth and 23rd day of the English month.

The two companies have also agreed to implement security locking system in all vehicles used to supply petroleum

products to Nepal.