NOC to Propose Integrated Project

Nov 5th, 2014 | By | Category: Government Policies, Nepal

Nepal Oil Corporation (NOC) — the state-owned petroleum supply monopoly — is planning to propose integrated project for Raxaul-Amlekhgunj cross border petroleum pipeline and Amlekhgunj depot expansion with its Indian counterpart, Indian Oil Corporation (IOC) during the bilateral talks to finalise financial modality of the project, going to be held on Friday and Saturday.

IOC officials, under the leadership of additional secretary of India’s Ministry of Petroleum and Natural Gas, are scheduled to take part in the meeting with Nepali counterparts on Friday

and Saturday, according to Mukunda Ghimire, spokesperson for NOC. “The cost of integrated project is estimated at IRs five billion.”

Earlier, the joint technical team of NOC and IOC estimated the total cost of the 41-kilometre petroleum pipeline, which the Indian government has pledged to build on grant assistance, at IRs 1.5 billion. The joint technical team had concluded the survey in the third week of August, following the Indian Premier Narendra Modi’s visit to Nepal.

Indian Prime Minister Modi had announced of gifting the petroleum pipeline to Nepal during his address in Parliament on August 3.

“Now, officials of both countries are finalising the project modality and the memorandum of understanding for the project development is likely to be signed on the sidelines of SAARC summit in the presence of Indian PM Modi,” Ghimire told The Himalayan Times.

The detailed project report on the construction of the petroleum pipeline was prepared in 2002. However, the project had been shelved owing to numerous hurdles, including security reasons.

NOC estimates it will cost IRs 3.5 billion to expand the Amlekhgunj depot and IRs 1.5 billion for the pipeline segment. NOC has said that it must expand the storage capacity of petroleum in Amlekhgunj depot to run the pipeline in full capacity. The proposed pipeline has the capacity to supply 3,000 kilolitres of petroleum products at one time.

Currently, Amlekhgunj Depot has storage capacity of 1,900 kilolitres of petrol, 16,000 kilolitres of diesel and 4,100 kilolitres of kerosene. As per the expansion plan, storage capacity for petrol would be expanded by additional 12,300 kilolitres and 16,400 kilolitres for diesel. Even as the depot reportedly does not need additional storage for kerosene, four new tanks of 4,100 kilolitres each would be expanded for Aviation Turbine Fuel (ATF).

“The combined capacity of ATF would be 16,400 kilolitres,” said Ghimire.

Import of petroleum products is increasing with every passing year and import of petroleum amounted to Rs 134 billion in previous fiscal 2013-14.

The Raxaul Depot of IOC caters to around 70 per cent of Nepal’s total petroleum imports. Officials say the pipeline will help reduce transportation cost, leakage and adulteration of petroleum products. The pipeline is expected to reduce transportation cost by up to 40 per cent, according to Spokesperson Ghimire.

NOC officials have said that they will start land acquisition process for the project, projected to cost Rs one billion, following the signing of the project development pact. Officials from the Ministry of Commerce and Supplies and Ministry of Finance and NOC will also participate in the bilateral talks.

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