MoU for petroleum pipeline receives Cabinet's nod
KATHMANDU:
As the Cabinet has approved the memorandum of understanding (MoU) for Nepal-India petroleum pipeline deal, the Ministry of Commerce and Supplies (MoCS) is gearing up to sign an agreement with the Ministry of Petroleum and Natural Gas of India.
The framework agreement will be signed at the government-to-government (G2G) level to ensure implementation of the long awaited cross-border petroleum pipeline. The Economic Infrastructure Committee (EIC), which is led by the finance minister, recently approved the MoU for the pipeline that had been submitted by MoCS some three weeks back.
Indian Oil Corporation (IOC), which is the sole supplier of petroleum products to Nepal Oil Corporation (NOC), will provide grant assistance worth INR two billion and NOC will contribute INR 750 million for the project.
The pipeline project will also incorporate expansion of the Amlekhgunj depot. The current storage capacity of petrol and diesel tanks at the Amlekhgunj depot will be expanded under the project, which is estimated to be completed at a total cost of INR 2.75 billion, according to MoCS Secretary Naindra Prasad Upadhyay.
“Once we sign the framework agreement, it will pave the way for NOC and IOC to sign the pipeline construction deal.” NOC and IOC will sign the agreement based on the framework agreement signed between the two governments.
The MoU that was recently approved by the Cabinet bars NOC from procuring fuel from a third party for five years following construction of the pipeline. After that, the agreement will be automatically renewed for two times, that is, for another 10 years. If NOC wants to terminate fuel purchase agreement with IOC after the first five years, it should pay required charges to IOC. This basically means that IOC owns the pipeline for 15 years post-construction.
It is reported that IOC will be responsible for implementation of the project.
Thirty-nine kilometres of the proposed Raxaul-Amlekhgunj petroleum pipeline lies on 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 the agreement is signed 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 the tankers as well as pilferages. In total, the country can save Rs 500 million per annum on transportation cost and leakages.
Source: THT
