India is considering setting up more pipelines for transporting refined petroleum products such as diesel to Nepal, two officials aware of the development said, outlining a measure to enhance New Delhi’s ties with Nepal and thwart China’s influence in the neighbourhood.
One of the two officials said Nepal has sent proposals and that talks are at the initial stages. However, the route for a new pipeline has not been finalized. The development comes at a time when the first 69-km Motihari-Amlekhganj pipeline, which can move 2 million tonnes of petroleum products to Nepal every year, has completed three years of operations. It was inaugurated in September 2019 after the agreement for the project was signed in 2015.
“Right now it’s in talks. Now we are in talks with them (Nepal)... They have shown interest for more pipelines, more interlinkages, but we have to see which route (to select)," said the official. The official said the plan is not to interlink the existing pipelines and that any new pipeline would be a standalone infrastructure.
Landlocked Nepal is significantly dependent on India for petroleum products. During the first eleven months of the Nepali financial year 2021-22, the Himalayan country imported petroleum products worth Nepali rupee 292.77 billion, which was 88.7% more than the imported amount of fossil fuels during previous financial year. The Nepali financial year starts on 16 July and ends on 15 July. Petroleum products accounted for 16.6% of the country’s total imports during the first 11 months of the last fiscal.
Nihar R. Nayak, research fellow at the Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), said the proposals have been resisted by the opposition, civil society and academics in Nepal on the grounds that the country has set out ambitious climate goals. “The proposal may face some challenges as the import of petroleum products goes against its energy transition goes. The locals would not want further impact of the Himalayan climate due to fossil fuels," he said.
Harsh V. Pant, professor of international relations at King’s College London, said any decision will be contingent on the elections to be held on 20 November. “No big decision is going to happen before the new government takes power," he added.
To be sure, the pipelines may be seen as a key step by India to bolster its bilateral relations with its northern neighbour, after ties touched a low in 2015 amid the Madhesi agitation. Of late, India has redoubled efforts to strengthen ties and curb the increasing influence of China. During a visit by Sher Bahadur Deuba, the prime minister of Nepal to India, in April, the Indian and Nepali prime ministers exchanged views on the economic and trade agenda and decided to accelerate action to deepen and facilitate trade, investment and connectivity linkages.