"If everything moved as per our plan, the pipeline system that was first pushed by India in 1995 will be laid down within the next two years," said Digambhar Jha, chief of Nepal Oil Corporation.
If constructed, it is estimated that the much-talked pipeline will reduce fuel transportation cost by 40 percent. It will also generate additional revenue against the use of the pipeline, reduce loss and theft, and prevent road deterioration, apart from making the supplies cleaner and cheaper.
Most importantly, it could free Nepali consumers from the frequent fuel shortages they have been subjected to under different pretexts like traffic congestion along Raxaul-Birgunj customs, strikes and highway bandas.
Going by the government´s instruction, NOC, entrusted to lead the project on behalf of Government of Nepal, has pushed that the two sides first set up a joint venture company, which will function as an autonomous body governed by Pipeline Act that Nepal will formulate, to execute the project.
However, contrary to the IOC´s initial proposal, Nepal has sought that the pipeline be operated under a ´common carrier´ and ´open access´ principle, which means, fuel importer other than NOC and supplier apart from IOC would also be able to utilize its services.
India had originally pushed the project exclusively to cater to the NOC-IOC business. The change has been sought in view of Nepal´s plan to liberalize the petroleum sector and shift to other sources besides IOC.
A study commissioned by AUSAID in 2007 had warned that, if owned by the oil company itself, the pipeline will promote its de-facto monopoly, leaving possible private entrees in a disadvantaged position.
"Our vision is to develop pipeline as a national infrastructure with everyone´s access to it, rather than making it a property of NOC," said a senior official at Ministry of Commerce and Supplies (MoCS).
Moreover, Nepal has also asked India to sign a bilateral technical and operational agreement, so that the pipeline thus laid down could be sustainably operated without any hindrance.
This has been done to ensure its economic viability study, as the study had ascertained that the pipeline will be economically viable only if it is operated for at least 20 years without any hiccups.
In this connection, NOC had very recently exchanged a draft of the bilateral agreement with the IOC, delineating the structure and function of the proposed NOC-IOC JV Company and modus operandi of the pipeline.
"IOC Corporate Affairs Office in New Delhi is currently studying the draft," said Jha, who added that it has notified that some of the provisions of the draft need redrafting.
To sort those provisions out, the teams of IOC and NOC are convening in Kathmandu shortly for a negotiation.
The negotiation will also finalize the paid up capital for the joint venture company on mutual agreement apart from discussing the technical provisions on which IOC has sought changes.
Given that the IOC has experience of operating 14,000-kilometers pipeline, NOC has requested it to oversee the management and operation of the pipeline for the first two years.
NOC has estimated that the cost of constructing the pipeline could stand at Rs 2 billion, excluding the cost of land acquisition.
milan@myrepublica.com
Related story
Draft Federal Civil Service Bill: Govt employees don't have to...
