Wednesday, March 10, 2021

Petro-pipeline extention to Chitwan to cost Rs 4 billion

 Some 62 km long petroleum pipeline extension from Amlekhgunj to Chitwan is going to cost Rs 4 billion, though, the entire project, including building associated infrastructure, is estimated to be around Rs 14 billion, according to a feasibility study conducted by the Nepal Oil Corporation (NOC).

The government is planning to stretch the pipeline to Chitwan in the first phase, and to Kathmandu eventually. Currently, the 69-km cross-border pipeline from Motihari in India to Amlekhgunj is operational since last one-and-a-half year. 

A joint technical study team of NOC and its sole petroleum products supplier Indian Oil Corporation (IOC) has prepared the feasibility study that has suggested the extension of the pipeline from Amlekhgunj to Lothar in Chitwan. The team submitted the feasibility study report to the Ministry of Industry, Commerce and Supplies. 

The NOC has also started discussions regarding the investment and construction modality with the ministry as it doesnot have the technical expertise to build the project on their own. 

The ministry, however, said a decision regarding the construction and financial modality will be finalised next week by the cabinet.

According to the ministry, the same company that build the Motihari-Amlekhgunj pipeline could be awarded the project or it can be awarded to any other experienced company through an open bidding process.

The NOC, along with the pipeline, also plan to construct a modern depot in Lothar for oil storage. The depot in Lothar will have a capacity of more than 100,000 kilolitres. Currently, the NOC's total storage capacity across the country amounts to 71,000 kilolitres, enough to meet its requirement for less than a week.

The construction of the Motihari-Amlekhgunj pipeline has allowed NOC to save Rs 2 billion in freight charges so far. The NOC is able to save freight charges as it will not need to seek the services of tanker, after the construction of pipeline.

The pipeline currently brings diesel only, but the NOC plans to bring petrol too through the pipeline this year. The pipeline also helps in reducing petroleum leakage, theft and adulteration. According to the NOC, it spends around Rs 6 billion on transporting petroleum products through oil tankers annually.

Following the obstruction in petroleum supply during the four-and-a-half-months-long Tarai unrest in 2015, the government thought of expanding fuel storage capacity to meet domestic demand for at least three months.

Likewise, another team from Indian Oil Corporation (IOC), which built the Motihari-Amlekhgunj pipeline as a gift to Nepal, also conducted a survey for pipeline connecting Nepal Oil Corporation's depot at Charali in Jhapa with Siliguri, in West Bengal of India. The initial survey revealed that some 35 km of pipeline will be laid in Indian territory and 15 km on the Nepal side of the border.

Nepal imports petroleum products worth more than Rs 200 billion annually, except last fiscal year, when the entire country was under lockdown reducing the vehicular movement. However, Nepal's petroleum consumption has almost doubled in last five years, according to a report of the Central Bureau of Statistics. Nepal's total export receipt is not enough to pay for a single commodity petroleum product's import bill. 

Due to ever growing requirement, the government has also planned to extend the pipeline to Kathmandu.

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