The Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC) have reached an agreement in New Delhi to initiate the construction of major petroleum projects, backed by around Rs 15 billion grant from the Government of India.
The agreement, under the B2B framework, was signed on Thursday, October 3, amid a ceremony in New Delhi. Senior officials from NOC and IOC, including Executive Director of NOC Chandika Prasad Bhatt, Chairman of IOC V. Satish Kumar, and Director of IOC Senthil Kumar, Secretary of the Ministry of Petroleum and Natural Gas of the Government of India and Pankaj Jain were present during the signing ceremony.
The agreement includes the construction of a 50-km petroleum pipeline from Siliguri, India to Charali in Jhapa, Nepal, along with a smart greenfield terminal with an 18,900-kilolitre capacity at Charali, under the grant from the Indian government, reads a statement issued by NOC. The Indian side has also agreed to finance the construction of a 62-km petroleum pipeline from Amlekhganj, Bara to Lothar, Chitwan.
Besides these, the NOC will build a smart greenfield terminal with a capacity of 91,900 kilolitre at Lothar with technical support from the Government of India.
A Nepali delegation led by Bhatt had reached New Delhi on Wednesday, following an invitation from IOC to finalise the contracts by October 3.
NOC Director Purna Rijal informed New Business Age that the modern petroleum storage depot and pipeline expansion will facilitate Nepal in importing petroleum products.
Earlier, a study conducted in 2020 estimated the cost of these three projects to be Rs 17.1 billion. Of the total, the cost of Amlekhganj-Lothar pipeline was estimated to be Rs 4.38 billion, Siliguri-Jhapa pipeline Rs 4.60 billion and Jhapa warehouse Rs 8.3 billion.
The two countries reached an understanding for these projects during the then Prime Minister Pushpa Kamal Dahal's visit to India in June, 2023. Indian Prime Minister Narendra Modi had said that India would bear all the costs.
All three projects are expected to complete within 51 months from the date of agreement.