NOC‚ IOC to renew fuel agreement
Kathmandu   29-Dec-2011

IndianOil (IOC)– the sole supplier of petroleum products to Nepal Oil Corporation (NOC) – has officially initiated the agreement renewal process between two parties.

A team from IndianOil is visiting Nepal to hold discussion on the issue of agreement renewal process, Nepal Oil Corporation official said, adding that the team including Rahul Bhardwaj and M Karandikar from IOC are visiting Nepal to discuss the issue with concerned Nepali officials.

The state oil monopoly and IndianOil had signed a five-year contract agreement on 31st March 2007 to import petroleum products from India.

Acting managing director Suresh Kumar Agrawal said that the visit from officials of Indian Oil Corporation is not meant to put Indian agenda for agreement renewal but is regular one. “This is regular visit between long time partner Nepal Oil Corporation and IndianOil.”

However, officials at the state oil monopoly said that the main purpose of the visit is agreement renew process. Nepal is expected to revise existing Price Adjustment Factor (PAF) which Indian Oil Corporation has been charging while importing petroleum products from India.

Earlier, the ministry had formed a committee led by the then secretary Sushil Jung Bahadur Rana to carry out the necessary arrangements to amend Price Adjustment Factor.

Representatives from Finance Ministry, Ministry of Law and Justice, Ministry of Foreign Affairs and NOC officials were also involved in the committee. “The committee has prepared a detailed report and identified the issues for revision,” the ministry source said. Currently, Nepal Oil Corporation is importing petroleum products based on import parity price and the ministry is thinking to convert it into export parity price in the new agreement with IndianOil, he said.

The High Level Committee led by lawmaker Bhim Acharya had recommended the government to start immediate homework to revise current agreement with IOC— the sole supplier of the petroleum products to NOC.

NOC has been paying more money to IndianOil (IOC) as price adjustment factor, hence it would be beneficial to import fuel on an export price basis, the report prepared by the high level committee had stated. It has suggested the government to form a separate committee to start homework to revise existing pact.

It is expected that NOC officials will strongly urge IOC to adopt international pricing mechanism while dealing with their supply to Nepal. Likewise, they will also urge their support to build pipeline between Raxaul and Amalekhgunj according to earlier pact.