The sole supplier, which recently responded positively to the government´s request, has proposed that it will construct the pipeline if the Council of Ministers allowed it to own and operate it for 10 years. [break]
“The proposal does not cite the word ´build-own operate and transfer´ (BOOT), but it categorically mentions that Nepal´s cabinet should take a clear decision and give it a mandate for the construction and operation of the pipeline,” said a highly place official at Ministry of Commerce and Supplies (MoCS).
IOC has said Nepal should solely rely on the pipeline for importing fuel for the 10 years after the pipeline system is readied. After completion of ten years of operations, it then will hand over the pipeline in the Nepali territory to the Nepal government.
Officials at MoCS said they have already informed about the IOC´s proposal to the Prime Minister´s office. “As the cabinet´s clear mandate is necessary for taking any decision on the proposal, we are soon forwarding it to the cabinet for appropriate decision,” said Lal Mani Joshi, secretary at MoCS.
According to Nepal Oil Corporation (NOC), which was the first recipient of the proposal, IOC will develop the pipeline system, which will stretch 39 kilometers in Nepal and 2 kilometers in India, on its own investment.
The Indian oil firm will lay down a 10.7 inch-diameter pipeline to match rapidly growing demand for fossil fuels, said an NOC official. As Raxaul is the largest petroleum import point, which fulfills over two-third of national demand, IOC has projected that the pipeline will enable it recover the construction cost within seven years.
“The revenue it will enjoy for the next three years will be its return on the investment,” said the NOC source. As for benefits to Nepal, the use of pipeline is expected to drastically cut the cost of transportation, assure uninterrupted import and supplies, check fuel adulteration and cut pollution as it will displace a large number of 500 tankers used so far in transporting fuel.
Nepal and India had committed to construct the pipeline almost one-and-a-half decade ago, but had failed to materialize the project because of lack of clarity over the structure, ownership, management and legal provisions required to safeguard the system.
Officials doubted IOC´s proposal of making any headway anytime soon as the Election Commission´s directives bars the government from taking any decision that will have long-term impact in the country.
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