Nepal likely to share 27pc cost

Nepal is likely to share 27 percent of the total cost of the proposed Nepal-India cross-border petroleum pipeline. Nepal likely to share 27pc cost

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Published at : March 27, 2015

Updated at : March 27, 2015 09:16

Kathmandu

Nepal is likely to share 27 percent of the total cost of the proposed Nepal-India cross-border petroleum pipeline.

As per the final draft of the Memorandum of Understanding (MoU) approved by the Law Ministry, Nepal will spend IRs 750 million out of the total projected cost of IRs 2.75 billion. The rest will be borne by Indian Oil Corporation (IOC), according to an official at the Ministry of Commerce and Supply (MoCS).

Commerce Secretary Naindra Prasad Upadhyaya said the MoCS received the final draft of the MoU from the Law Ministry. He, however, declined to mention the MoU’s salient features.

As per the MoU, Nepal will spend IRs 750 million for capacity upgradation of Nepal Oil Corporation’s (NOC) Amlekhgunj depot, its automation, and construction of a pumping station. The IOC will bear the major cost of installing the pipeline system.

The MoU is also said to have given go-ahead to the government to construct the pipeline along the Amlekhgunj-Pathlaiya-Simara-Raxaul highway.

“The proposed route will involve almost no private land and will make the government install the pipeline without bearing any hefty cost of compensation for land acquisition,” said a source at the MoCS.

The MoU has also allowed the NOC to sign an agreement with IOC to renew the petroleum dispatching system every five years. The IOC had earlier sought the renewal period to be at least 15 years.

After the Law Ministry’s approval, the MoCS now plans to table the draft at the Cabinet for final approval. MoCS Spokesperson Deepak Raj Pandey said the ministry had to postpone its plan to get final approval due to the cancellation of the Cabinet meeting scheduled for Thursday.

According to the MoCS, the Indian government has also given its green signal on clauses in the final MoU.

“Provided the draft is okayed by the Cabinet, the ministry in consent of the Indian government will fixed the date and venue for signing the MoU,” said Pandey.

The project, which was first proposed by IOC in 1995, is expected to reduce the transportation cost of fuel by over 50 percent.

It is also expected to end frequent shortages of petroleum products due to strikes of petroleum transporters.