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India-Nepal Sign a Deal to Construct Oil Pipeline
Aug 27, 2015

India and Nepal signed an agreement to construct a 41-km-long oil pipeline connecting both countries. The MoU of the Rs 275 crore project was signed by Indian petroleum minister Dharmendra Pradhan and Nepal’s minister for commerce and supplies Sunil Bahadur Thapa. It is an important project that would benefit both countries.

  • Two kilometers of the pipeline connecting Raxual in India and Amlekhganj in Nepal will be constructed on the Indian side of the border and the rest in Nepal.

  • The project is expected to be completed within 30 months after construction has started.

  • Nepal depends on India for meeting all of fuel requirements, worth some 41 billion. The products are currently sent in truck-tankers.

  • Indian Oil Corporation is slated to construct the pipeline.

  • India is to provide Rs 200 crores while the rest would come from Nepal government.

  • Besides reducing annual transportation costs by an estimated Rs 70 crores, the pipeline will also ease traffic congestion at Birgunj in Nepal—the busiest border point for trade between both countries.

  • Indian Oil Corporation will have monopoly of supplying petrol products through the pipeline for a period of 15 years once construction is completed.

  • Indian Oil would supply petrol, diesel and kerosene. It would also re-engineer the Amlekhganj depot to receive products by pipeline.

  • Nepal Oil would spend Rs 75 crore on additional facilities.

  • After the pipeline is laid, only LPG would be supplied in special tankers.

The pipeline project has been hanging fire since 2006. Initially it was envisaged that the two companies would fund the pipeline equally. But the project got stalled after Nepal Oil backtracked. Security cover for construction workers and the pipeline too emerged as a bone of contention. Nepal refused to provide security cover to construction crew and the pipeline.

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