Amlekhgunj-Raxaul oil pipeline : Govt mulling other alternatives for project

NEW DELHI, MAY 06 -

Finance Minister Shankar Koirala, who is in the Indian capital for the annual meeting of the Asian Development Bank, told the Post on Sunday that the Nepal government has started considering other options as the construction process of the pipeline has been delayed although it was agreed, in principle, to be built by India and later transferred to Nepal under the Build, Own, Operate and Transfer (BOOT) model.

“We are working on two alternatives — first, Nepal and India build the parts of the pipeline that fall on their territories, and second, establishing an independent venture on agreement of both sides,” Minister Koirala said.

Recently, there were reports in the Indian media that the Ministry of External Affairs (MEA) has sent a note to the Indian Oil Corporation (IOC) cautioning it not to make any commitment to build the oil pipeline . However, in an irony to the recent development, it was actually the IOC that first proposed to build this pipeline in 1995.

The proposed 40-km pipeline is crucial for Nepal as it is expected to reduce leakage considerably and address perennial problems of petro products’ unavailability. The project is expected to reduce fuel transportation costs by over 50 percent, besides reducing leakage and facilitating cleaner and cheaper supply.

It will also water down the level of problems created by the owners of oil tankers who are indulged in serving their petty interests at the cost of the customers, ranging from frequent strikes to the demands for unnecessary commissions. Although the concept of the project was developed 17 years ago, it has not been realized so far.

After a series of on-again, off-again discussions, NOC and IOC brought up the topic of the pipeline during the signing of a new petroleum supply agreement in April 2012. The move followed the High-Level Petroleum Sector Reform Committee’s recommendation to immediately start the project.

The pipeline is estimated to cost Rs 1.60 billion excluding the cost of land acquisition. A pre-feasibility study done in 2004 and a technical study done in 2006 had determined that the project would be economically viable if it is operated unhindered for 20 years.

Source: The Kathmandu Post