Raxaul-Amlekhganj petroleum pipeline deal likely to be inked soon

KATHMANDU:

Nepal and India may soon sign Raxaul-Amlekhganj petroleum pipeline deal, as the Cabinet here is gearing up to approve the memorandum of understanding (MoU) for it. The MoU prepared by the Ministry of Commerce and Supplies (MoCS), the parent ministry of Nepal Oil Corporation (NOC), had been forwarded to the Cabinet for its approval.

According to a high-level source at the MoCS, the Cabinet has delegated the authority to approve the MoU to its Economic Infrastructure Committee (EIC) led by the Finance Minister Ram Sharan Mahat.

In this respect, EIC has called the meeting with MoCS secretary and senior officials from NOC. Led by finance minister, EIC comprises industry minister, energy minister and secretary of the Office of the Prime Minister and Council of Ministers (OPMCM) and finance secretary. The committee may approve the MoU with its inputs during the meeting scheduled for tomorrow.

Following the Cabinet’s nod, NOC and the Indian Oil Corporation (IOC) will sign the MoU.

As per the MoU, the pipeline will be built on the business-to-business (B2B) model. In this regard, IOC will extend grant of INR two billion for the construction of 41-km cross border petroleum pipeline and the MoU bars NOC from procuring fuel from any other party for five years following the pipeline construction.

After completing the five-year period, the fuel purchase agreement can be automatically renewed for another five years. If NOC wants to terminate the contract after five years, it can import fuel from another party as well, but it should pay required charges to IOC.

NOC will contribute INR 750 million for the expansion of its Amlekhganj depot. The project, which also includes expansion of Amlekhganj depot, is expected to cost INR 2.75 billion.

Around 39 km of the proposed Raxaul-Amlekhganj petroleum pipeline lies on the Indian territory and 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, according to Gopal Bahadur Khadka, managing director of NOC.

The proposed pipeline is expected to save Rs 30 million per month while transporting fuel from Raxaul to Amlekhganj, and subsequently it will save the travel time for the tankers as well as pilferages. In total, the country can save 500 million per annum from transportation cost and leakages, according to NOC officials.

Source: THT