IOC sends draft MOU on Raxaul-Amlekhgunj petro pipeline

KATHMANDU, Sept 21: The Nepal Oil Corporation (NOC) has forwarded a draft of memorandum of understanding (MOU) of a proposed petroleum pipeline to the Ministry of Foreign Affairs and Ministry of Finance. 

The draft was prepared by the Indian Oil Corporation (IOC)–the sole supplier of petroleum to NOC — and sent to the Nepali side for approval.  The 41 km petroleum pipeline extending from Raxaul (India) to Amlekhgunj (Nepal) was proposed by India a long ago, but it had been shelved due to the Maoist insurgency. 

But the Indian side has shown readiness to develop the pipeline following Indian Prime Minister Narendra Modi´s visit to Nepal in August.  Modi, addressing Nepali parliament, had announced that the government of India will gift the petroleum pipeline to Nepal. 

Likewise, Minister for Commerce and Supplies Sunil Bahadur Thapa had recently requested his Indian counterpart Nirmala Sitharaman for the construction of petroleum pipeline for easy supply of petroleum products to Nepal.  Around 70 percent of the fuel supply from India to Nepal takes places through the Raxaul depot

The technical team of the IOC and NOC has completed the survey of petroleum pipeline by last week of August.  India itself is taking initiative to complete the project at the earliest, according to NOC officials. 

Indian side will only bear the cost of petroleum pipeline construction, while Nepal should provide necessary land for the project, according to the proposed MOU draft. 

“Customs clearance time for cargo vehicles will be shortened markedly after the construction of petroleum pipeline because, there will no longer be a long queue of petroleum tankers” Chandika Prasad Bhatta, executive director of NOC, said, adding, “Pipeline will not only reduce the cost of the petroleum supply but also help ease congestion at the Birgunj customs.” 

Officials said that the pipeline construction will start once an MoU is signed with IOC. “ The MOU will be signed after cabinet approval of the project,” Bhatta said. 

Earlier in 2002, a joint technical team of NOC and IOC had prepared a detailed project report of the pipeline.  According to the report, the pipeline whose 39 km section will lie in Nepal and 2 km section in India, will cost 1 billion Indian rupees.  The estimate however does not include the funds required for acquiring the required land and resettling the people, who will be displaced by the project.  Now the cost of petroleum pipeline has been calculated at Rs 1.5 billion due to time overrun. 

NOC officials have said that the pipeline will be built outside human settlement.  It will not affect the agriculture land, according to them. “ Once the pipeline is laid, people can resume farm activities as usual,” according to Bhanu Bhakta Khanal, NOC depot chief of Amlekhgunj. “ The government will compensate the affected farmers for the full extent of output loss due to the pipeline construction.” 

NOC will start land acquisition process and resettlement of the project affected peoples after signing the MOU. 

Import of petroleum products from India has been increasing every year.  Last year alone, Nepal imported petroleum products worth Rs 120 billion. 

The proposed pipeline will have the capacity to supply 6,000 kiloliters of petroleum products per day.  Officials say the pipeline will help in reducing transportation cost, leakage and adulteration of petroleum products.  It will also ensure smooth supply during strikes and shutdowns, they said.