The Cabinet recently approved signing of an agreement to lay an oil pipeline from Raxaul in Bihar to Amlekhgunj in Nepal to supply petrol, diesel and ATF to the land-locked Himalayan Kingdom.
The Cabinet this evening approved "signing of a Memorandum of Understanding (MoU) between the Indian Government and the Government of Nepal for the construction of a petroleum products pipeline from Raxaul (India) to Amlekhgunj (Nepal) and re-engineering of Amlekhgunj Depot and allied facilities," an official statement said.
Nepal depends on India for meeting all of its fuel requirements. Petrol, diesel, domestic LPG and jet fuel (ATF) are currently trucked from Indian Oil Corp's (IOC) depot at Raxaul to Nepal.
In 2006, a 41-km pipeline from Raxaul to Amlekhgunj in Nepal was proposed for transportation of the fuel. The pipeline was to be funded 50:50 by IOC and Nepal Oil Corp (NOC). The project, however, never took off as Nepal refused to fund its share of cost.
IOC has now agreed to foot the Rs 200 crore cost in exchange for Nepal committing to buy products for at least 15 years.
Of 41-km pipeline, about 39 km would lie in Nepal.
"The MoU will promote bilateral cooperation in the oil and gas sector and secure long term supply of petroleum products to Nepal. It would help preserve the environment along the route and decongest the international border at Raxaul," the statement said.
It said Nepal had requested India during the visit of Prime Minister to Nepal on 3-4th August, 2014 for the construction of this petroleum products pipeline.
"Bearing in mind the close and friendly relations between the two countries and their people, this was agreed to by the Indian government," it said.
The project will be completed in two phases. In the first phase, a petroleum products pipeline from Raxaul in India to Amlekhgunj in Nepal would be constructed. IOC will bear a cost of Rs 200 crore for the first phase of the project.
"There will be a long term contract of 15 years (initial contract for five years extendable for two terms of five years each) between IOC and the Nepal Oil Corporation," it added.