Nepal will continue to get its supply of fuel from India for the next five years, with Indian Oil Corporation (IOC) signing a deal for the same. Under the deal, IOC will supply the landlocked country 1.3 million tonnes of fuel per year.
The move follows China’s intention to provide fuel to Nepal, which Indian authorities saw as China’s bid to enter India’s neighbourhood. India has been exclusively supplying fuel to Nepal since 1974. China saw an opportunity to build ties with Nepal during the economic blockade in September 2015, wherein it gifted fuel to the country.
Under the deal, IOC will supply 1.3 million tonnes of fuel each year until 2020, with plans to double this quantity in 2021 and 2022. The agreement between IOC and Nepal Oil Corporation (NOC) gave India the sole right to provide fuel to Nepal, but NOC was looking at other alternatives following IOCs inability to ensure regular petroleum supply.
Officials at IOC not only renewed the contract, but also added incentives like waiver of interest in case of delayed payments by NOC, lower marketing charges, and compensation to NOC if it fails to meet demand.
Under the deal, India will also work on the extension of the proposed Raxaul-Amlekhganj pipeline, connecting it to Chitwan now. The government will also form an official committee to look into the proposal for a LPG pipeline from Motihari to Amlekhganj, in addition to the feasibility of extending the natural gas pipeline to Nepal.
India will also look at the feasibility of a joint venture between IOC and NOC to develop retail and storage infrastructure for fuel in remote areas of Nepal.
Nepal currently receives fuel from India through road, with a pipeline expected to ease the process.