NOC can import LPG from other countries

Published On: March 14, 2017 01:00 AM NPT By: Republica  | @RepublicaNepal

India has remained sole supplier of petro prodcuts to Nepal so far
KATHMANDU, Mar 14: Nepal will be able to import cooking gas from countries other than India very soon.

A new clause is being inserted in the petroleum trade agreement signed between Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC), which is due for renewal this month, that allows Nepal to import cooking gas from other countries as well.

"As the demand for cooking gas has been increasing by 20 percent annually in India, we are including a provision that allows Nepal to import liquefied petroleum gas (LPG) from other countries as well," Sushil Bhattarai, deputy executive director of NOC, said at a meeting of Industry, Commerce and Consumer Welfare Committee of the parliament on Monday. He also said that the IOC has also agreed to include such provision in the agreement. 

Nepal imports around 30 tons of LPG from India every month.

Speaking at the meeting, NOC Managing Director Gopal Khadka said that the draft agreement also includes a provision that allows NOC to buy crude oil and give it to Indian refinery for processing should IOC fail to supply fuel to Nepal as per the demand.

A team from IOC had visited Kathmandu last week to hold discussion with the NOC team on the new agendas that are being included in the agreement. 

The existing agreement was signed in 2012.

After the Indian blockade that ran for nearly six months, NOC is under pressure to include some provisions, including allowing Nepal to import petroleum products from other countries, compensation to NOC if IOC failed to supply petroleum products as per the demand, in the draft. But the draft has not included these provisions, despite pressure from all quarters.

However, NOC has included some provisions like reducing marketing charge that IOC has been levying on fuel supplied to Nepal from 2.5 percent per to 2 percent. It is expected to reduce NOC's cost of import by more than Rs 1 billion every year.

The review meeting of Supply Agreement between IOC and NOC held last week had decided to reduce the marketing charge in the new agreement that comes into effect from April 1. 

The new agreement will be in force until March 31, 2022. 

The new agreement also allows Nepal to import fuel from third countries if IOC is unable to ensure regular supply of petroleum products to Nepal.

Likewise, IOC has also agreed to waive off interest levied on NOC for delay in payment. NOC makes payment to IOC twice a month -- on 8th and 23rd day of every month. IOC had been slapping penalty for every day in case of delay in payments. 

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