EDITORIAL: A landmark deal

Both Nepal and China should reach an agreement to expedite the construction of petroleum pipelines across the borders and other necessary infrastructure

With the signing of a Memorandum of Understanding between Nepal Oil Corporation (NOC) and China National United Oil Corporation (Petro-China) Nepal has ended the four-decade-old monopoly of the Indian Oil Corporation (IOC) for the supply of petroleum products to Nepal. Nepal has ended the IOC’s monopoly after the Nepali officials led by Nepali Ambassador to China Mahesh Maskey reached a historic deal with the Petro-China in Beijing on Wednesday. The Memorandum of Understanding has cleared the decks for the import of petroleum products from Tibet’s Kyirong, about 28 kilometers from Nepal’s customs point of Rasuwagadhi. The Nepali delegation has also signed another deal too on importing 1,000 metric tonnes of petrol offered by China to Nepal as a grant that should reach Kathmandu by next week. The initial understanding is that Nepal would import up to one-third of petrol, diesel and cooking gas required for Nepal at the same price that Nepal has been buying from IOC. Petro-China has said the standard of the fuel to be exported to Nepal will be of higher quality than the quality of the product provided by India.

The agreement has paved the way for commercial import of petroleum products from China. Both the sides are yet to finalise pricing details and timelines for the supply of fuel. There will be no problem on fixing the pricing of the petroleum products as the Chinese side has assured to provide the fuel close to the current market prices in Nepal. It all became possible after the 11-member Nepali delegation which was authorized to reach the deal held talks with China’s Foreign Ministry and Ministry of Commerce, both of which extended full cooperation to the Nepali side. India’s unofficial blockade on the export of petroleum products forced the Government of Nepal to seek other options to meet the domestic requirements of the petroleum products. Nepal’s economy has come to a grinding halt as a result of the blockade imposed immediately after the promulgation of the new constitution.

The commercial agreement with Petro-China for the imports of fuel has not only reduced Nepal’s over-dependency on India, but it has also paved the way for trade diversification that will ultimately benefit the country in the long-run. It is the petroleum products which had always been used as a bargaining chip for any political gain, and the nation had to compromise its national interests for the sake of it. As the understanding has been reached between NOC and Petro-China, both Nepal and China should reach an agreement to expedite the construction of petroleum pipelines across the borders and other necessary infrastructure such as storage depots at convenient places that can sustain the supply of at least for four months and widening the roads linking Tibet to ensure smooth supply of fuel to Nepal. China can support Nepal in building those infrastructures which will be beneficial for bilateral trade and commerce in the long run. Narrow roads, difficult geographical terrains, absence of proper physical infrastructures and the long distance of ferrying the fuel are the bottlenecks to execute the deal. But they can be overcome if both the countries give topmost priority to this goal.

For stern action

When acute shortages of goods exist, black markets flourish. This is generally true, but this trend is particularly true in developing countries, including in South Asia. But where poor official monitoring and no action or weak action reign, such evil practices become more prevalent. When ethical standards in society are not strict, such ills grow apace. This is what is happening in the country because of the ongoing acute shortages of various essential commodities, particularly of petroleum products. Supply is short and rationing of fuel has been enforced, and cooking gas is yet to be distributed.

News reports of flourishing black markets in petro-products smuggled into the country have become common. But particularly worrying is the black marketing of diesel and petrol as well as cooking gas meant to be fairly rationed according to some criteria. This aspect demands the government’s top attention because malpractices in rationed petroleum products will tarnish the government’s image.