India, Nepal renew fuel sale deal for five more years

As per the deal signed by Indian Oil Corp. and Nepal Oil Corp., the Indian company will supply about 1.3 million tonnes of fuel every year for the next five years


Indian Oil Corporation has agreed to supply refined products to Nepal. Photo: Bloomberg
Indian Oil Corporation has agreed to supply refined products to Nepal. Photo: Bloomberg

New Delhi: India and Nepal on Monday agreed to deepen energy ties by renewing India’s fuel sale deal with the Himalayan country by another five years and assist in implementing a cooking gas-for poor scheme akin to Prime Minister Narendra Modi’s Ujjwala scheme in India.

The scope of energy trade between the neighbours is being extended after two Prime Ministerial visits to India from Nepal in 2016 subsequent to tensions in ties a year before over Kathmandu’s new Constitution.

As per the agreement signed here by Indian Oil Corp. and Nepal Oil Corp. in the presence of oil minister Dharmendra Pradhan and Nepal’s minister for supplies Deepak Bohara, the Indian company will supply about 1.3 million tonnes of fuel every year for the next five years.

India has been supplying fuel to Nepal since 1974 under contracts that were periodically renewed. Indian Oil chairman B. Ashok, who was present on the occasion, said the renewed deal is for the period April 2017 to March 2022 covering petrol, diesel, kerosene, jet fuel and liquified petroleum gas (LPG).

Pradhan said Prime Minister Narendra Modi had in 2014 said in an address to the Nepal parliament that India would build the Raxaul-Amlekhganj petroleum product pipeline, for which work is expected to start in 2017-18.

Nepal wants that pipeline to be extended closer to Kathmandu. Pradhan said while the investments will be made by Nepal, Indian Oil will provide technical assistance.

“Pradhan emphasized the benefits of Pradhan Mantri Ujjwala Yojna to his Nepalese counterpart and recommended its implementation in Nepal. He said that India will assist Nepal in the implementation by sharing its experience and expertise,” a statement by the oil ministry said.

Fuel supplies from India witnessed temporary disruption in 2015 when protestors blocked the main transit point on the border. Indian Oil then used alternative entry points to supply fuel to Nepal. Nepal also signed a fuel purchase deal with China, but the route between the nations presents logistic challenges.

Nepal’s second Constituent Assembly promulgated a Constitution on 20 September 2015 amid protests by Madhes-based parties and other groups. The Indian government has expressed grave concern regarding the ongoing protests and has urged the Nepal to make efforts to resolve all issues through a credible political dialogue.

Nepal’s president Bidhya Devi Bhandari is expected to visit India in April—after her first proposed visit to India in May last year was called off by the Nepalese government.

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