India Signs Pact to Lay Oil Pipeline to Nepal

India today signed an agreement to lay an oil pipeline from Raxaul in Bihar to Amlekhgunj in
Nepal to supply petrol, diesel and ATF to the land-locked Himalayan Kingdom.

Oil Minister Dharmendra Pradhan, who is on a three-day visit to Kathmandu, and Nepalese Minister of Commerce and Supplies Sunil Bahadur Thapa signed an MoU for the petroleum product pipeline, an official statement said.

This will be the first trans-national petroleum pipeline in South Asia.

Nepal depends on India for meeting all of its fuel requirements. Petrol, diesel, domestic LPG and jet fuel (ATF) are currently trucked from Indian Oil Corp's (IOC) depot at Raxaul to Nepal.

"The two ministers reviewed bilateral cooperation in the petroleum sector. They agreed that the two sides can work to expand cooperation in oil and gas to several other areas," it added.

The 41 kilometre pipeline -- 2 km in India and 39 km in Nepal -- will initially supply petrol, diesel and kerosene. It will be built by IOC at a cost of Rs 200 crore.

IOC will take 30 months to complete the project after receipt of necessary statutory clearances from the Government of Nepal.

"Nepal Oil Corporation will invest Rs 75 crore to develop additional facilities in Amlekhgunj depot," the statement said.

In addition, IOC will also do re-engineering of the Amlekhgunj petroleum depot to make it compatible to receive petroleum products by pipeline.

India exports about $1.1 billion worth of petroleum products per annum to Nepal. Bulk of this volume will be transported through this pipeline.

"This will also ensure smooth, cost effective and environment friendly supply of petroleum products to Nepal," it said.

The pipeline was first proposed in 2006 for transportation of fuel from Raxaul to Amlekhgunj. The pipeline was to be funded 50:50 by IOC and Nepal Oil Corp (NOC). The project, however, never took off as Nepal refused to fund its share of cost.

IOC has now agreed to foot the Rs 200 crore cost in exchange for Nepal committing to buy products for at least 15 years.