NOC, IOC to review oil trade, pipeline

KATHMANDU, Oct 2 - Senior officials of Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC) are gathering in Kathmandu this week to review bilateral fuel trade and joint projects -- particularly the bilateral petroleum pipeline project.The meeting will be held on Friday, said a senior NOC official. “The two ...

The cash-strapped NOC, on the other hand, will be requesting its counterpart not to tighten supplies in case it falls behind by one or two instalments in a month.

“What matters most is if we paid enough during the month, instead of how much we paid in an individual installment,” said the source. NOC places monthly orders and submits a timetable of payments which are made on the 4th, 11th, 18th and 25th day of the month. The payment is done on an equal weekly installment (EWI) basis.

However, because of NOC’s financial ill health, it has not been able to make the EWI. Likewise, IOC which saw NOC’s dues ballooning to as much as Rs. 10 billion in the past -- when it supplied fuel on credit -- is presently making shipments only on a cash basis.

While IOC adheres to this policy strictly, NOC, reeling under a financial crisis, has been fighting in vain to end the fuel shortage plaguing the domestic market for the last two years.

“Our belief is that if IOC was more lenient, we would be able to prevent sudden changes in quantity of imports and stabilise supplies to a large extent,” said the source.

Likewise, the two sides would strongly take up the issue of establishing a fuel quality testing laboratory in Raxaul. The issue is being pushed by NOC, especially as consumers and the automobile industry here are sceptical about the quality of fuel Nepal receives.

“This will enable us to cross-check the quality of fuel India dispatches from Raxaul -- the largest import point - with what we receive in Amlekhgunj,” said the source.

Different studies have shown that adulteration largely takes place while the fuel is in transit between Raxaul and Amlekhgunj.

Apart from training and capacity building of NOC staff, the two sides will also discuss the possible modalities of implementing the longstanding plan of laying a 36-km long pipeline between Raxaul and Amlekhgunj.

Nepal and India agreed in principle to push this bilateral project in 2004. The project was also discussed when Prime Minister Pushpa Kamal Dahal visited New Delhi last month.

However, the two sides are still to finalise the investment, modus operandi and management of the much-talked-about pipeline, leaving the fate of the 2-billion-rupee project unclear.