Petroleum pipeline deal to be inked soon
Kathmandu, August 13
The Nepal-India petroleum pipeline deal is expected to be signed very soon as the Cabinets of both the countries have approved the memorandum of understanding (MoU) for Raxaul-Amlekhgunj petroleum pipeline and re-engineering of Amlekhgunj depot.
The Cabinet meeting in India, chaired by Prime Minister Narendra Modi, gave its approval for signing the MoU with Nepal on Wednesday, according to the official site of the Indian prime minister’s office. Nepal government had already approved the draft MoU in the third week of May, before sending it to the Ministry of Petroleum and Natural Gas, India.
“As both sides have approved the draft MoU, it has paved the way to seal the deal at a mutually convenient time, which will be fixed soon,” said Naindra Prasad Upadhyay, secretary at the Ministry of Commerce and Supplies.
The framework agreement will be signed at the government-to-government (G2G) level to ensure the implementation of the long-awaited cross-border petroleum pipeline.
“Indian Oil Corporation (IOC), on behalf of the government of India, has been entrusted with the job of constructing the pipeline and re-engineering the Amlekhgunj depot and allied facilities,” the official site of the Prime Minister’s Office, India states.
“IOC will bear a cost of INR two billion for the first phase of the project and there will be a long-term contract of 15 years between IOC and Nepal Oil Corporation.”
The initial contract will be signed for five years and will be extendable for two terms, of five years each.
It is reported that Nepal Oil Corporation (NOC) will also contribute INR 750 million for the project to re-engineer the Amlekhgunj depot.
“Once we sign the framework agreement, it will pave the way for NOC and IOC to sign the pipeline construction deal,” as per Secretary Upadhyay. NOC and IOC will sign the agreement based on the framework agreement signed between the two governments.
Even though Nepal and India had been doing homework for the construction of the 41-kilometre pipeline since over a decade, the project received momentum only after the first visit of Indian Premier Narendra Modi in August last year. During his address at Nepal’s Constituent Assembly, he had pledged India’s support to construct the pipeline without further delay.
Thirty-nine kilometres of the proposed cross-border petroleum pipeline lies on the Indian territory and the remaining two kilometres in Nepal. Both the public entities have already finalised the technical modality of the project and modus operandi (operation modality) will be finalised after signing the agreement at the G2G level, according to NOC officials.
The proposed pipeline is expected to save Rs 30 million per month while transporting fuel from Raxaul to Amlekhgunj. Subsequently, it will save the travel time of tankers as well as control pilferages. In total, the country can save Rs 500 million a year in terms of reduced transportation cost and leakages.