Nepal-India Petroleum Pipeline: Panel recommendations lack specific details: NPC

KATHMANDU, MAR 31 -

The National Planning Commission (NPC) has said the recommendations put forward by a technical team on the proposed Nepal-India cross-border petroleum pipeline do not include any specific details that would help the government to move ahead with the project development.

The technical team entrusted with the job of holding a study on the appropriate modality for the development of the much-delayed 41-km Amalekhgunj-Raxaul petroleum pipeline two weeks ago recommended the Build Operate Transfer (BOT) modality.

The team has also recommended the project be developed under joint initiative of the Nepal and Indian governments. And, the Nepal government should request the southern neighbour for a grant support to develop the project, which has been in limbo since 1995. The technical committee was headed by Suresh Kumar Agrawal, erstwhile acting managing director of the Nepal Oil Corporation (NOC). The committee was asked to submit its opinion to a main committee of the NPC headed by its Vice-chairman Dipendra Bahadur Kshetry.

Kshetry said the technical committee’s recommendations have no specific details and the two opinions contradict each other.

According to the BOT modality, a private company constructs, facilities and implements operation and maintenance of a project for a certain period before handing the project over to a public entity. Therefore, there is no logical ground for the development of the project under joint initiative of the two governments, Kshetry said. “If the project has to be developed under the BOT model, why does the Nepal government need to ask support from India?” Kshetry said the main NPC committee will hold further consultations on the project.

The project was first proposed by the IOC in 1995. On January 3, 2013, the Cabinet had agreed in principle to develop the project. Subsequently, the NPC formed a committee to look into a number of legal and technical complexities.

The project has been estimated to cost Rs 1.6 billion, excluding the costs for land acquisition. A pre-feasibility study in 2004 and a technical study in 2006 had termed the project economically viable on condition that the pipeline is operated unhindered for 20 years. The pipeline , if developed, is expected to save Rs 300-350 million annually in transportation costs alone for NOC, which currently spends around Rs 500 million annually to transport petroleum products from Raxaul to Amalekhgunj.

The annual operation cost of the proposed pipeline is estimated at Rs 120 million. It is envisaged to reduce leakage and ensure the supply of cleaner and cheaper fuel.

It could also bring relief to Nepali consumers from frequent shortages caused by strikes. A report of the High-Level Petroleum Reform Committee had also suggested immediate construction of the pipeline .

Source: The Kathmandu Post