Fuel pipeline
New Delhi   26-Oct-2010

The latest attempt made by Nepal Oil Corporation (NOC) to revive over a decade-old project to transport petroleum products to landlocked Nepal from India through a 41- kilometer pipeline is something encouraging. The announcement by NOC that it is soon holding high-level talks with its Indian supplier, IndianOil (IOC), to finalize the details of the project by the end of this year have given hope that the much-touted project might come into implementation in 2011.

According to a detailed project report prepared by the IOC, the project that aims to connect IOC’s regional depot at bordering Indian city of Raxaul with Nepal´s biggest fuel storage based in Amlekhgunj will cost about Rs 1.6 billion. This is a not a huge investment. Given the money NOC spends to transport fuel via tankers, it is calculated that NOC will recoup the investment in 20 years.

Studies have long confirmed numerous economic benefits of the project. For instance, it is estimated that it will reduce fuel transportation cost by 40 percent, reduce technical loss and oil theft. As financial gains of these benefits can directly be transferred to consumers, the project will relieve the Nepali consumers greatly. Apart from that, it will also prevent rapid road deterioration, something which has been happening due to movement of wide fleet of oil ferrying tankers. Still more, because the pipeline will make adulteration during import impossible, the country will receive cleaner supplies.

This will have positive impact on vehicles and environment as well. It will also end existing unpredictability of supply, which has been troubling consumers and affecting the country for long. The pipeline can bring to the nation much needed oil security. Hence, government should act seriously to expedite its implementation and help the NOC by laying down necessary laws on operation and safety of the system.

But, at the same time, we would like to stress here that the government and NOC in particular must make sure that the system being laid down as a national infrastructure is utilized fully. It must win India’s assurance that the system will be operated unhindered round the year. Likewise, it must also negotiate provisions whereby Nepal could use the system to transport fuel imported from any other source, particularly third countries. Also the access to the system must not just be limited to NOC only.

With liberalization, Nepal is planning to welcome private players in petroleum trade. Even those possible future players should have rights to use it against the payment of service charge. This access to pipeline is necessary to make it truly a national property. The NOC top brass that are negotiating technicalities for laying down and operating the bilateral pipeline system must make every effort to attain that.