Govt fails to sign fuel deal with China

Kathmandu, December 27

The much-awaited Nepal-China petroleum trade deal could not be signed at the government-level during the official visit of Deputy Prime Minister and Foreign Affairs Minister Kamal Thapa to Beijing last week, as the Chinese authorities failed to decide on Nepal’s proposal to waive tax on fuel export.

Earlier this month, Nepal had requested China to waive tax on export of fuel so that the country could purchase fuel at the international market rates.

As Nepal Oil Corporation and China government-owned China National United Oil Corporation (PetroChina) had signed a memorandum of understanding to pave the way for petroleum trade between China and Nepal on October 28 in Beijing, it was expected that petroleum import from China at a commercial scale would begin at the earliest.

After the MoU was signed NOC started talks with the Chinese oil giant to try and expedite imports to deal with the crippling fuel shortage across the country.

In the talks between the two oil giants, PetroChina clearly mentioned that they could not export fuel at the international market rates and suggested NOC to settle the issue of tax at the government to government level.

Following the developments, the Nepali government requested China to waive the tax on export of fuel. Currently, a litre of petrol in the Chinese market costs $1.05 (around Rs 111).

If transportation costs, customs tariff and other taxes are added, the cost will further go up, making it economically unviable for Nepal to import fuel from China.

The first high-level visit to China, led by Deputy Prime Minister Thapa, held from December 24 to 26, was expected to finalise the fuel trade deal and create a conducive environment for importing fuel on a commercial scale from the northern neighbour. “Until the issue of taxation is concluded, the Nepal-China fuel deal will not get any concrete shape,” a high-level source privy to the development told THT.

If the deal is finalised, Nepal will need to transport fuel from Shigatse city that lies at a distance of 457 km from Nepali border of Tatopani.

Fuel tankers need to travel 100 km more than the Tatopani route while bringing fuel from Shigatse via Kyirong-Rasuwagadhi route, which is the only trade route (via land) in operation with the northern neighbour.