India, Nepal agree to construct oil pipeline

India and Nepal signed an agreement on Monday to construct a 41-km-long oil pipeline connecting both countries.

The memorandum of understanding (MoU) of the ` 275 crore project was signed here by Indian petroleum minister Dhar mendra Pradhan and Nepal’s minister for commerce and supplies Sunil Bahadur Thapa. Two kilometre of the pipeline connecting Raxual in India and Amlekhganj in Nepal will fall in India and the rest in Nepal. The project is expected to be completed within 30 months of start of construction.

“It is an important project that would benefit both countries and we hope that it would be completed before the 30 month deadline,” Pradhan stated after the signing ceremony. India is the sole sup- plier of petroleum products to Nepal. Though there were talks of constructing a pipeline for two decades, the project picked momentum after Prime Minister Narendra Modi’s visit to Nepal last year. Public sector Indian Oil Corporation would construct the pipeline. Of the total project cost, India would provide ` 200 crores, while the rest would come from Nepal government. Besides reducing transportation costs by ` 70 crores annually, the pipeline will also ease traffic congestion at Birgunj in Nepal — the busiest border point for trade between both countries.

“It is a historic day for the petroleum sector in Nepal. Once the project is complete, we would try to extend it till Kathmandu,” said Thapa. Indian Oil Corporation will have monopoly of supplying petrol products through the pipeline for a period of 15 years once construction is completed.