NOC saves Rs 3 billion due to pipeline but consumers pay all time high

Nepal Oil Corporation (NOC) saved fuel transport costs of Rs 3 billion in last two years after the construction of 69-kilometer cross-border petroleum pipeline between Nepal and India, but the consumers have been paying all time high price.

The first petroleum pipeline that connects Motihari in India to Amlekhgunj in Nepal has been operational since September 11, 2019. "It can supply petroleum products at the rate of 294 kiloliters per hour," according to the government oil monopoly.

The pipeline is being used to transport diesel from India, the NOC informed, adding that it has been importing an average of 3,500 kl diesel daily, almost half of its capacity to transport 6.500 kl daily. "The NOC imported 1.61 billion liters of diesel through the pipeline in the fiscal years 2019-20 and 2020-21."

In almost two months of the current fiscal year, the NOC has imported a total of 124.41 million liters of diesel through the pipeline.

Likewise, the NOC also informed that it costs an average of Rs 45,000 to transport fuel from the Barauni depot of India to Amlekhgunj of Nepal. "The pipeline has helped cut the costs of fuel tankers apart from reducing technical losses," the NOC claimed. But the consumers have been got no any respite as they have been forced to pay Rs 130 per litre petrol and Rs 113 per litre diesel.

The first cross-border petroleum pipeline in South Asia was built at a total cost of Rs 5.18 billion.

PM Oli, Modi to inaugurate oil pipeline tomorrow

Prime Minister KP Sharma Oli and his Indian counterpart Narendra Modi will virtually inaugurate the first cross-border petroleum pipeline in South Asia tomorrow through video conference.
According to the Ministry of Industry, Commerce and Supplies (MoICS), the formal inauguration will be marked by pressing a switch button via remote control by the executive heads of both countries through a live video conference connected simultaneously in between the Prime Minister’s Office at Singha Durbar in Kathmandu and Office of the Indian Prime Minister in New Delhi.
“The two heads of states are scheduled to press the pipeline switch that opens the valve of the petroleum pipeline at the presence of high-level government dignitaries of both countries at the conference,” informed NOC deputy executive director Sushil Bhattarai.
The Amlekhgunj-based oil depot of Nepal Oil Corporation (NOC) and Motihari-based depot of the Indian Oil Corporation (IOC) will witness the official ceremony of inauguration on the ground by handing over a bottle of diesel from the pipeline among the officers of the IOC and NOC.
The NOC and IOC had successfully concluded the ‘testing transfer’ of the Motihari-Amlekhgunj pipeline project last month. The IOC – through its refinery in Motihari – had supplied diesel to NOC’s Amlekhgunj-based depot last month during the testing transfer. However, NOC had unloaded only 1,000 kilolitres of the 3,100 kilolitres of diesel supplied by IOC via the pipeline to test the newly constructed tanks at Amlekhgunj.
According to the NOC, the pipeline is able to supply 394 kilolitres of petroleum products per hour. “In the initial phase, NOC plans to receive only diesel, which is about the 70 per cent of total petroleum product imports, through the pipeline,” the NOC informed, adding that some 3,000 kilolitres of diesel will be imported per day through the pipeline, after the pipeline is formally inaugurated.
Though, the Motihari-Amlekhgunj oil pipeline was first proposed in 1996, it finally took off during Indian Prime Minister Modi’s visit to Kathmandu in 2014. The two governments inked an agreement to construct the first cross border pipeline – that is expected to reduce the cost of transportation of petroleum products worth Rs 1 billion – in the South Asia in August 2015. But, the project construction was again delayed due to devastating earthquake of 2015. “After the commercial operation of the pipeline, it will bring down fuel price by at least Re 1 per litre in the domestic market,” according to the NOC.

Cross border petro pipeline to open from next month

The first cross border petroleum pipeline in South Asia will start commercial operation by the first week of August following virtual inauguration of the Nepal-India bilateral project by the heads of the states.
The Motihari-Amlekhgunj oil pipeline project has been completed and is awaiting its formal inauguration by the Prime Ministers of Nepal KP Sharma Oli and his Indian counterpart Narendra Modi, according to the state oil monopoly. “The two Prime Ministers will officially open the fuel trade via the pipeline through the remote control, though the date for the official inauguration is yet to be fixed.”
Nepal Oil Corporation (NOC), the two governments are working to ensure that inauguration of the project takes place in the first week of August. “The virtual inauguration of the project will be done through video conferencing, where the two prime ministers will press a button in New Delhi and Kathmandu, resulting in opening of the valve of the petroleum pipeline,” the petroleum monopoly informed.
First proposed in 1996, the Motihari-Amlekhgunj petroleum pipeline memorandum of understanding was signed with Nepal Oil Corporation at the junior executive level a year later. In 2004, the two sides upgraded the agreement to the chief executive level. However, due to a number of legal hurdles, the project failed to take off. The project finally moved closer to reality during Indian PM Modi’s visit to Kathmandu in 2014. The then supply minister Sunil Bahadur Thapa and Indian state minister for petroleum and natural gas Dharmendra Pradhan signed an agreement on August 24, 2015 on constructing the Motihari-Amlekhgunj petroleum pipeline within 30 months, though the project was delayed due to devastating earthquake. But still Motihari-Amlekhgunj petroleum pipeline is the only mega project completed in time, apart from being the bilateral project completed in time.
“The NOC and Indian Oil Corporation (IOC) today successfully tested the Motihari-Amlekhguni pipeline project,” the NOC said, adding that the IOC – through its refinery in Motihari – had supplied diesel to NOC’s Amlekhgunj-based depot yesterday, and received it today. “However, NOC will unload only 1,000 kilolitres of the 3,100-kilolitre diesel supplied by IOC via the pipeline to test the newly constructed tanks at Amlekhgunj.”
Though the project was estimated to cost Rs 2.75 billion Indian Currency (IC) with Indian government injecting Rs 2 billion IC and Rs 750 million IC by NOC and the remaining Indian grants, the final project cost escalated to almost Rs 3.25 billion IC. “The 69.2-km-long pipeline was completed with the budget of Rs 5.18 billion,” the NOC added. Of the Motihari- Amlekhgunj pipeline’s total length, 36.2 km lies within Nepali territory. The fuel pumping facilities will be located in Motihari, India. It is estimated that 300 kilolitres to 350 kiloliters of diesel can be supplied through the pipeline per hour.
The cross border petro pipeline is going to save NOC’s around Rs 2 billion – in transportation and ensure smooth supply of diesel, even during the strikes in Terai – helping it to bring down the petroleum price in the domestic market.
Under the first phase of the project, a pipeline will be laid from Raxaul to Amlekhgunj. In the second phase, it will be extended to Kathmandu.
Though some of the energy experts claim that the cross border pipeline will make Nepal further dependent on India because Nepal has to deal with a single company, officials say the pipeline will be a boon for the country, not only in reducing transportation costs and eliminating the hassles of hiring tanker trucks but also running operation during strikes that often hamper petroleum imports through the Indian border. “Most importantly, the pipeline will end fuel adulteration,” the NOC claimed, adding that fuel adulteration is a major problem. “The Nepal Bureau of Standards and Metrology reports revealed that the diesel sold in the valley is heavily adulterated.”

Nepal-India cross border pipeline nears ready for operation

Laying of Nepal-India cross border pipeline – connecting Motihari in India to Amlekhgunj in Nepal – is finally coming to an end.
The South Asia's first cross border petroleum pipeline that covers a distance of 70.2-km will have to tested before it starts flowing diesel, which will save around Rs 2 billion of transportation cost apart from ensuring the smooth flow of diesel even in the times of unrest in the southern plains.
Estimated to cost around Rs 2.75 billion, the petroleum pipeline covers a distance of 32.65-km from Motihri to Raxaul on the Indian side was completed a month ago, and the task of laying pipeline for a distance of 37.25-km from Raxaul to Amlekhgunj of Bara on the Nepal side is also over, according to the Nepal Oil Corporation (NOC). “The pipeline's technical examination – including hydro-test, radiography of pipes joined by welding, taking X-ray at the points where the pipes have been joined and removing the rust in the pipe through scan-plast have started with the completion of the pipeline laying works – is underway,” it informed, adding that a 25-member technical team, including NOC engineers, has left for Lucknow for training on hydro-test and other technical works of the pipeline. The sole supplier of the petroleum products to Nepal Indian Oil Corporation (IOC) is providing training to the technicians to make them capable to take care of the petroleum pipeline.
After signing an agreement to lay the pipeline on August 24, 2015, Prime Minister KP Sharma Oli and his Indian counterpart Narendra Modi during Oli's India visit jointly laid the foundation stone for Motihari-Amlekhgunj petroleum pipeline project at the Hyderabad House in New Delhi.

Petroleum pipeline nears completion

Construction of Motihari-Amlekhgunj fuel pipeline nears completion as 99 per cent of the pipe-laying process has been completed.
According to Nepal Oil Corporation (NOC), around 99 per cent of the installation of petroleum pipeline on the Motihari-Amlekhgunj has been completed. “The pipe laying process of 36.6-kilometre on Nepal side has been completed,” the fuel monopoly said, adding that Indian Oil Corporation (IOC) – which is the project developer – has already completed laying pipes along 32.7-km within the Indian territory. “Petroleum products from India will be imported to Nepal via the 78-km pipeline under the project, which is the first cross-border project in the entire South Asia.”
Though, the project is estimated to come into operation from mid-April, the launch date has been rescheduled for mid-July. A total of 25 Nepali technicians are currently in India to receive an eight-day training that IOC is providing to handle the project. “After the training of technicians concludes, the pipeline’s ownership will be handed over to Nepal.”
The project – with a total cost of over INR 2 billio – is expected to reduce the annual cost of importing petroleum products from India to Nepal by road by Rs 2 billion. NOC plans to further expand the petroleum pipeline up to Lothar in Chitwan, the fuel monopoly added.