Nepal Oil Corporation (NOC) has been holding discussions with Indian company Reliance Petroleum for possible imports of petroleum products in a bid to diversify its sources, Managing Director Gopal Bahadur Khadka said Tuesday.

Indian Oil Corporation (IOC) is NOC’s sole supplier. The state-owned oil monopoly said it was receiving only 70 percent of the usual supply even though India had lifted the trade embargo two weeks ago. 

Speaking at a meeting of the Supply and Consumer Welfare Sub-Committee of the parliamentary Industry, Commerce and Consumers’ Welfare Interests Committee, Khadka said that NOC had been forced to look for alternatives as IOC had not fully restored the supply even after the end of the blockade.

Reliance Petroleum is an Indian private oil company. The Mumbai-based company maintains a refinery in Jamnagar.

“In a bid to end the present shortage, we have started talks with Reliance Petroleum to boost the supply,” said Khadka. “Reliance is also keen to sell oil to NOC.” According to him, prices and the quality of the oil the company will supply are yet to be finalised.

Khadka told the lawmakers that IOC had not increased shipments even though NOC had long been asking it to send more oil. According to NOC officials, IOC has refused to boost shipments because they have been told by “higher-ups” to limit supplies to 70 percent. During the embargo, the Indian state-owned oil company had cut fuel supplies by as much as 90 percent.

Shortages have not eased even though NOC has been repeatedly saying that the situation will return to normal soon. 

According to the corporation, it has ramped up petrol supplies to 450 kilolitres daily against the Kathmandu Valley’s requirement of 350 kilolitres. Similarly, it said that diesel deliveries had swelled to 500 kilolitres from 450 kilolitres daily. 

Khadka said that they had requested IOC to increase the loading of petrol and cooking gas instead of diesel. “Due to the acute shortage of these fuels, we had asked IOC to send us petrol and cooking gas if they could not increase shipments to more than 70 percent of the total requirement,” Khadka said.

NOC and IOC have a four-decade-long business association. As per the latest bilateral agreement signed between the two corporations in 2012, NOC can import refined petroleum products only from IOC, but it can buy crude oil from the international market. The agreement expires in 2017.  

A senior NOC official said that the pact may have become null and void as IOC had violated it. “We have written to IOC telling them about this matter,” he added.