Nepal Oil Corporation (NOC) is considering constructing oil depots in Nuwakot or Dhading in anticipation of imports from China.

NOC’s sole supplier Indian Oil Corporation (IOC) has agreed to allow it to import oil from China too during the renewal of the bilateral petroleum agreement in March. The relaxation of restrictions by IOC has prompted the state-owned company to plan new storage facilities to receive shipments from the northern neighbour.

The government moved to boost the country’s oil storage capacity and explore alternative sources after a 2015 trade embargo by India lasting four and a half months crippled the economy and caused extreme hardship to the public. 

The government has asked NOC to erect storage plants in all seven provinces to store enough fuel to meet the country’s requirement for at least 90 days. The government’s budget statement for fiscal 2017-18 also says storage facilities will be built in all seven provinces in the next fiscal year. 

Following the government’s directive, NOC has started acquiring land at its proposed sites to build storage plants. So far, its has bought 22 bighas of land in Jhapa in Province 1, 22 bighas in Sarlahi in Province 2 and 20 bighas in Chitwan in Province 3. 

According to NOC, it has identified a site in Bhairahawa and is exploring other possible sites in Dhading, Dhangadhi and Surkhet. “To this end, we have invited tenders to buy land in these areas,” said NOC Spokesperson Sitaram Pokharel. 

According to Pokharel, NOC has given priority to buying land in Dhading or Nuwakot with an eye on oil imports from China. Earlier, NOC had planned to build a depot in Rasuwagadhi near the Nepal-China border, but it could not find the required land. 

Pokharel said NOC selected Dhading or Nuwakot district as an alternative to Rasuwagadhi. “These districts are closer to the Chinese border town of Kyirong, the only overland trade link with China currently open,” Pokharel said. NOC estimates that the new fuel storage plants will cost Rs117 billion. Out of the total outlay, it expects to spend Rs10 billion on land acquisition, Rs50 billion on construction, Rs20 billion on petrol and diesel, Rs30 billion on LPG storage plants and Rs57 billion to buy fuel for three months.

According to Pokharel, NOC will be using the profits it has been making from the fuel business to build the depots. NOC’s projected profit for July stands at Rs880 million.

Thankot depot holds 11 days’ supply of petrol

KATHMANDU: NOC has expanded the petrol storage capacity at its Thankot depot by 4,200 kilolitres to 5,300 kilolitres. The stock is sufficient to meet the requirement of Bagmati zone for 11 days. 

Earlier, the Thankot depot could hold only two to three days’ supply of petrol. Netra Kafle, chief of the NOC’s Thankot depot, said they expanded the storage 

capacity following soaring demand for fuel in the region. According to him, NOC 

adapted its kerosene tanks to hold petrol.