Kathmandu, March 30

Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC) have agreed to form a joint venture company for the development of fuel infrastructure in Nepal.

Accepting the request to this effect made by Minister for Supplies Deepak Bohara during the fuel supply agreement between two oil companies on Monday, IOC has agreed to explore the possibility of forming NOC-IOC joint venture firm for the development of fuel infrastructure in Nepal, according to NOC sources.

The forged agreement aims at developing retail petroleum infrastructure in Nepal, along with storage facilities for petrol, diesel, liquefied petroleum gas (LPG) and aviation turbine fuel (ATF).

“As IOC has shown Nepal’s proposal to form a joint-venture company positively, the two sides will form a joint committee that will hold feasibility study of setting up such firm, its jurisdiction and the entire protocol of the company,” Sushil Bhattarai, deputy managing director of NOC said, adding that formation process of NOC-IOC joint venture firm will be expedited once the yet-to-be-formed committee submits its report.

According to NOC, the aim of establishing the NOC-IOC joint venture company is to standardise the current state of fuel industry of Nepal.

“For instance, most stations in Nepal have a single nozzle for a particular type of fuel, due to which vehicles have to queue for long to refill. But, fuel stations in the international market are operating with more than 10 nozzles,” Bhattarai said, adding that the joint venture concept aims to address such infrastructure gaps in Nepal’s petroleum sector.

NOC and IOC renewed the fuel supply agreement on Monday which will be effective for the next five years — that is, until March 2022. Both the companies have made amendments in the new agreement, which includes IOC slashing marketing charge to two per cent from 2.5 per cent, provision to appoint independent surveyor at different petroleum loading points for Nepal, provision to waive interest being levied on NOC for payment delays, allowing NOC to procure fuel from other countries in case IOC fails to provide regular supply, and provision to compensate NOC if IOC fails to provide supply as per demand, among others.

Similarly, the NOC-IOC supply agreement signing ceremony also ended with promises to extend the Raxaul-Amlekhgunj Petroleum Pipeline to Chitwan, form a committee to study the feasibility of expanding LPG pipeline from Motihari of India to Amlekhgunj and also extend the natural gas pipeline from Gorakhpur to Nepal’s border.