MoU of Raxaul-Amlekhgunj Petroleum Pipeline likely on Aug 24

KATHMANDU, Aug 14:

A team led by Minister for Petroleum of Gas of India is scheduled to visit Nepal in the fourth week of August to sign Memorandum of Understanding (MoU) for Raxaul-Amlekhgunj Petroleum Pipeline Project.

The team is coming to Nepal after the Indian cabinet meeting held on Wednesday approved the MoU signed between Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC).

Naindra Prasad Upadhaya, secretary of Ministry of Commerce and Supplies (MoCS), confirmed that the Indian team will visit Nepal to sign the MoU within two weeks.

The long-delayed cross-border pipeline project moved ahead after the Indian government approved the MoU to be signed with Nepal. Similarly, the cabinet has also approved the draft of MoU to re-engineer Amlekhgunj Depot and allied facilities of NOC.

"We are preparing to organize MoU signing ceremony on August 24," Gopal Bahadur Khadka, managing director of NOC, told Republica. "We have already sent invitations to Indian petroleum minister and other high-ranking officials."

Though the 41-km petroleum pipeline was proposed by IOC in 1995, it remained in limbo for years. The project was revived last year after Indian Prime Minister Narendra Modi pledged to develop the project through Indian investment.

Following Modi's pledge, Nepal's cabinet meeting had give go-ahead to the project. However, the implementation of the project was delayed again after the Indian government put the MoU between NOC and IOC on the back burner.

"We are hopeful that the signing of MoU at the minister-level will expedite works on the petroleum pipeline," Upadhaya said.

As per the MoU signed between IOC and NOC, IOC will have to oversee construction of the pipeline as well re-engineering of the Amlekhgunj Depot and allied facilities.

IOC will invest IRs 2 billion for the project, while Nepal will chip in IRs 750 million. While IOC's contribution will solely be used to construct petroleum pipeline from Raxaul (India) to Amlekhgunj (Nepal), Nepal's investment will be used to restructure and automate the Amlekhgunj depot of NOC and to build a pumping station.

Earlier, IOC had urged Nepal to acquire necessary land for the pipeline project.

According to the MoU, the project will complete within 30 months of the beginning of works.

IOC and NOC has already agreed a long-term petroleum products supply contract for 15 years -- an initial contract of five years which can be extended to two terms of five years each.

The project is being developed in two phases. The first phase of the project focuses on construction of petroleum pipeline between the two countries. In the second phase of the project, the petroleum pipeline will be extended to Kathmandu.

Construction of pipeline is expected to reduce NOC's transportation cost by Rs 2 billion annually. "Reduction of transportation bill by Rs 2 billion annually will play a crucial role to improve financial health of NOC," said Khadka. "It will also bring down price of petroleum products."

The debt-ridden NOC owes Rs 20 billion debts to different lenders.

The pipeline is also expected to reduce leakages, maintain fuel purity, and ease supply of petroleum products in the market.

Source: Republica