India and Nepal have further strengthened their energy cooperation through a significant Business-to-Business (B2B) Framework Agreement focused on developing petroleum infrastructure in Nepal. This milestone agreement was recently signed between Indian Oil Corporation Limited (IOCL) and Nepal Oil Corporation (NOC) during a meeting in New Delhi. Dr. Chandika Prasad Bhatta, the Executive Director of NOC, and Senthil Kumar, Director of IOCL, formalized the deal in the presence of prominent figures such as Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas (MoP&NG), Government of India, and V. Satish Kumar, Chairman of IndianOil.
The B2B agreement follows an earlier Government-to-Government (G2G) Memorandum of Understanding (MoU) that was signed on May 31, 2023, between India’s Ministry of Petroleum and Natural Gas and Nepal’s Ministry of Industry, Commerce, and Supplies. This MoU, witnessed by the Prime Ministers of both nations, underscored the deepening of India-Nepal ties, particularly in energy collaboration.
The newly signed agreement marks a crucial step in the India-Nepal energy partnership, which aims to enhance the energy infrastructure in Nepal. The focus is on making petroleum transportation more efficient, reducing dependency on tank trucks, and thus cutting costs for Nepal Oil Corporation.
This will address issues related to handling losses, mitigate environmental risks, ease road congestion caused by tanker trucks, and bolster Nepal’s energy security, especially in times of natural disasters like floods and landslides.
The B2B Framework Agreement outlines the development of two key petroleum pipelines:
A 50-kilometer petroleum pipeline will be built from Siliguri in India to Charali in Jhapa, Nepal.
A Smart Greenfield Terminal will also be constructed at Charali to support efficient storage and distribution.
Furthermore, the Government of India will extend a grant to build a 62-kilometer petroleum pipeline from Amlekhgunj to Lothar in Chitwan, Nepal. A Smart Greenfield Terminal with a storage capacity of 91,900 kiloliters will be constructed at Lothar by the NOC, with technical assistance provided by the Indian government. The total investment for these projects is estimated to be worth Rs 15 billion.
The development of these petroleum pipelines will be a game-changer for Nepal's energy sector, as it reduces the country's heavy reliance on road-based transportation for petroleum products. Nepal, being a landlocked nation, imports most of its petroleum products from India, and this new infrastructure will ensure uninterrupted and cost-effective supply, minimizing logistical challenges.
The pipelines will also serve as a robust mechanism for Nepal to deal with emergencies, ensuring fuel availability even during natural disasters. The environmental benefits are also significant, as the reduced use of tank trucks will lead to fewer emissions, contributing to a greener and more sustainable future for the country.
This collaboration is yet another testament to the growing cooperation between India and Nepal, particularly in the energy sector. The successful implementation of these projects will not only meet Nepal's growing energy needs but also position India as a strong ally in helping its neighbors achieve energy security.
Such initiatives are critical to both countries' economic stability, fostering mutual benefits through technology sharing, infrastructure development, and regional collaboration. By strengthening this partnership, India is further reinforcing its commitment to assisting Nepal in achieving long-term energy independence and stability.
The B2B Framework Agreement between Indian Oil Corporation Limited (IOCL) and Nepal Oil Corporation (NOC) marks a monumental step in strengthening the energy ties between India and Nepal. By focusing on the development of critical petroleum infrastructure, this agreement not only addresses Nepal’s immediate energy transportation challenges but also sets the foundation for long-term energy security.
The construction of key pipelines from Siliguri to Charali and from Amlekhgunj to Lothar, coupled with the establishment of smart greenfield terminals, exemplifies a modern approach to energy distribution that will reduce dependency on traditional road-based fuel transport methods.
This shift is anticipated to bring a range of benefits to Nepal, including significant cost reductions for the NOC, lower handling losses, mitigation of environmental risks, and decreased congestion caused by tanker trucks.
More importantly, these pipelines will provide resilience against natural disasters, ensuring a consistent supply of petroleum products during emergencies like floods and landslides.
From India's perspective, this agreement reinforces its role as a dependable energy partner in the region. The technical assistance and financial grants extended by the Indian government demonstrate India's commitment to not only strengthening its ties with Nepal but also contributing to the broader stability and development of its neighboring countries.
This collaboration further deepens the strategic partnership between the two nations, with energy security playing a key role in shaping their future relationship.