KATHMANDU: In order to reduce Nepal’s dependency on India for petroleum products, NOC has struck a new agreement with IOC that allows Nepal to use refineries in India for refining crude oils imported from Arabic countries. According to Ministry of Supply Under-Secretary Baburam Bhusal, this new agreement will allow NOC to directly use crude oil through refineries in India for domestic purposes. However, the government has no immediate plans to build refineries in Nepal to refine crude oil domestically.

Refineries are large and follow complex industrial structure that heavily depends upon advanced technology. Speaking to THT Perspectives, Bhusal says, “In the long term, the government could build petroleum refineries in Nepal but we are not sure if domestic refineries will decrease the cost of production of per unit of petroleum products because our market demand for petroleum products is not very huge.” He further says, “As a result, refineries might turn out to be an expensive investment for the government and we also lack technical expertise and will need to employ foreign agents for the construction of refineries.” According to him, a study needs to be conducted to look into the economic feasibility of building refineries and its impact on national economy before framing a plan to build refineries within the country.