Soaring fuel demand dashes NOC’s plans

Kathmandu, February 6

The state-owned Nepal Oil Corporation (NOC) has said that the planned Motihari-Amlekhgunj fuel pipeline will not substitute oil tankers currently transporting fuel from India to Nepali market.

As the supply capacity of the planned cross-border petroleum pipeline is constant while demand for fuel in the country has been increasing rapidly, a large volume of fuel would have to be imported via land route even after the Motihari-Amlekhgunj pipeline project comes into operation, according to Sushil Bhattarai, acting deputy managing director of NOC.

“The design and structure of the Motihari-Amlekhgunj petroleum pipeline was furnished in 2010 taking into consideration the demand of fuel back then. At that time, the pipeline was expected to supply almost 80 per cent of the demand of petroleum products in Nepali market,” informed Bhattarai, adding that the demand for petroleum products has increased manifolds in the past seven years, making it impossible to cater to 80 per cent of fuel demand via pipeline.

“Even after the Motihari-Amlekhgunj fuel pipeline is completed, almost half of the fuel supply would have to be made via land routes using tanks and trucks,” he said.

NOC officials said that the Motihari-Amlekhgunj petroleum pipeline will have the capacity to supply only 200,000 litres of fuel per hour. As all petrol, diesel and kerosene are supplied via same pipes, interior parts of the pipes will have to be cleaned every time one type of fuel is switched to another, which will interrupt continuous fuel supply, as per NOC.

“Even if we operate the pipeline for 10 hours a day, we will be able to supply only two million litres of fuel, while per day demand stands at over seven million litres,” said Bhattarai.

Currently, almost 2,000 oil tankers have been supplying fuel to the Nepali market.

Nevertheless, the INR 2.75 billion-petroleum pipeline project is expected to be crucial to ensure regular supply of petroleum products in Nepal and reduce fuel transportation costs.

Though Nepal and India signed a memorandum of understanding to complete the Motihari-Amlekhgunj project in August 2015, execution of the project has been delayed constantly following issues related to land encroachment along the finalised route of the project, Environmental Impact Assessment and forest clearance.

However, the project has been gathering momentum in recent months as different Indian manufacturers have started supplying pipes required for the project to Nepal.

“Both NOC and Indian Oil Corporation are desperate to start the construction works of the Motihari-Amlekhgunj project,” said Bhattarai.