Nepal Oil Corporation (NOC) officials said renewal of the agreement had been delayed mainly after Indian Oil Corporation (IOC) board’s slowness to endorse two new arrangements that the two sides negotiated for inclusion in the new accord in March.[break]
Lack of renewal has not affected the import of the petroleum products though, and NOC and IOC were continuing the trade on the basis of a clause which says the expired bilateral agreement could continue for six months in case the two sides failed to ink the deal on time due to technical reasons.
NOC board had endorsed the new changes in the PSA on March 27, the very day when those were formally agreed upon. Going by the procedures, IOC too was required to get it endorsed by its board immediately.
“However, we have been informed that IOC board is yet to endorse the new changes. This has prvented the signing and enforcement of the new accord,” said Suresh Kumar Agrawal, acting managing director of the NOC. He expressed the hope of positive development from the IOC office soon.
Though the delay has not affected supplies, officials said it could impact the pricing. Officials said IOC negotiating team had agreed to waive off Price Adjustment Factor (PAF) in the new agreement , which includes cost associated to refineries and duties, so far transferred to Nepali consumers.
As the Indian supplier was so far charging Nepal 2.5 percent (of the crude and transportation cost up to the Indian port) as PAF, the waiver was anticipated to lower the NOC’s import rate by around Rs 2 per liter compared to the past.
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