The National Planning Commission (NPC) has asked various government agencies to increase the oil storage capacity fourfold after the undeclared blockade by India exposed Nepal’s precarious supply lines and extreme vulnerability to fuel shortages.

Last week, the NPC directed the Commerce and Supply, Industry, Defence and Home ministries, Nepal Army, Nepal Police, Armed Police Force and Nepal Oil Corporation (NOC) to boost storage facilities and asked the Finance Ministry to provide the necessary funding. NOC has said that increasing the storage capacity should get priority as managing energy supplies during a crisis is of crucial importance.

Nepal presently maintains oil storage tanks at 10 locations with a total capacity of 71,622 kilolitres of petrol, diesel, kerosene and aviation fuel, according to NOC. The stock is just enough for 20 days based on the sales trends of 2014.

NOC said that it had been working to develop its storage capacity to be able to fulfill the country’s requirement for at least 30 days.  

Meanwhile, the Independent Power Producers’ Association of Nepal (Ippan) said during a recent presentation on energy security in Nepal that Israel maintains fuel reserves enough for 270 days, South Korea 240 days, US 137 days and Switzerland 137 days.  

Although NOC has long been talking about increasing the storage capacity, the plan has not been carried out. NPC Member Chandramani Adhikari said that government agencies had been asked to increase the oil storage capacity substantially as the current crisis resulting from India’s unofficial embargo had shown that the country needed to have longer lasting fuel reserves.

“This kind of crisis may arise not only due to blockades, but also natural disasters and other catastrophes,” he said. “We have also asked them to look for alternatives to fossil fuel as far as possible.”

NOC said it planned to increase the storage capacity of its depots located across the country in the fiscal year 2015-16. Under this scheme, it has targeted boosting stocks of almost all types of petroleum products. The state-owned oil monopoly has planned to upgrade the existing infrastructure and install new facilities to increase the storage capacity.

With regard to LPG, the corporation will build storage plants with a capacity of 35,000 kilolitres each in Janakpur, Dhading, Mechi-Koshi, Western Region and Mid-Western or Far Western regions.

It will boost the capacity of its aviation fuel depot in Kathmandu by 4,000 kilolitres. It plans to upgrade the storage capacity of its Pokhara depot by 150 kilolitres, besides constructing new storage plants at Bhadrapur Airport in Jhapa, Simara Airport in Bara and Gautam Buddha Airport in Rupandehi.

Likewise, NOC will begin work to install storage plants in Janakpur, Solukhumbu and Dang. It also aims to increase the storage capacity of its petrol and diesel depots at Thankot in Kathmandu, Charali in Jhapa, Dhangadhi in Kanchanpur and Bhairahawa in Rupandehi. The corporation has been operating two gasoline stations in Manthali, Ramechhap for the last two years.

However, NOC Managing Director Gopal Bahadur Khadka said that the NOC board was not unanimous on increasing the storage capacity immediately.

Meanwhile, the NPC has directed the Ministry of Commerce and Supply to distribute petroleum products with a 10 percent mixture of ethanol for vehicles operating in the Kathmandu Valley as provisioned in the budget for fiscal 2014-15.

The NPC has also asked the government to waive taxes on electric vehicles. The government has given a 50 percent customs duty exemption to electric vehicles through the Financial Act this year. The NPC has also decided to instruct the concerned government agencies to develop solar energy and bio gas with the participation of the private sector.