The two sides also agreed to sign an agreement within 15 days of the completion of the study to set up a joint-venture to implement the project. "Then we will instantly move on to registering the company and implementing the project," said a member of Nepali delegation in the meeting.
If the claim of Nepal Oil Corporation (NOC) chief Digambhar Jha is anything to go by, the 40-km pipeline will be laid down within the next two years, provided everything moved ahead smoothly. However, sources said a lot will depend on what transpires on the political front, as the project is considered ´politically sensitive´.
It will also depend on how fast the NOC and Indian Oil Corporation (IOC) conclude the bilateral JV agreement, which will include technical details, operation modality and business plan of the pipeline system.
"As for now, we have planned to conclude negotiations on the JV agreement within two months," the source told myrepublica.com.
During the meeting, both NOC and IOC concluded that delay in implementing the project, which was first proposed by IOC in 1995, will hinder bilateral fuel trade and obstruct Nepal from delivering quality services and products.
"So, both the sides have decided to pick up the project with a high priority," said Suresh Kumar Agrawal of NOC, the leader of the Nepali negotiation team.
The two sides also signed an eight-point memorandum of understanding (MoU) at the conclusion of the meeting.
As per the MoU, Nepal will hire technical expertise of the IOC for the feasibility study and also the physical survey of the project. NOC has agreed to pay to the IOC for the study now, but sought permission to include the cost in its equity investment later. IOC has agreed to it.
A pre-feasibility study (2004) and a technical study (2006) have tagged the bilateral pipeline project as economically viable, provided it is operated unhindered for 20 years. Those studies have estimated the cost of the project to stand at as much as Rs 2 billion.
If implemented, it is estimated to reduce fuel transportation cost by 40 percent. It is also expected to generate additional revenue, reduce loss, theft and road deterioration, besides making the supplies cleaner and cheaper. Most importantly, the pipeline is expected to end fuel shortages that hit the Nepali markets quite often.
milan@myrepublica.com
Related story
Petroleum pipeline to be built with an investment of INR 17 bil...
