Nepal asks China to keep fuel shipments flowingNepal has requested China to continue supplying petroleum products commercially after the shipment of the 1,000 tonnes of petrol gifted by the northern neighbour is completed.
Nepal has requested China to continue supplying petroleum products commercially after the shipment of the 1,000 tonnes of petrol gifted by the northern neighbour is completed.
The Nepali delegation that conducted the negotiations and signed a memorandum of understanding (MoU) for the supply of fuel from China last week has asked it to continue shipments without a break, officials involved in the talks said.
Last Wednesday, Nepal Oil Corporation (NOC) and China National United Oil Corporation (PetroChina) signed an MoU in Beijing to supply petroleum products to Nepal, ending a four-decade supply monopoly of Indian Oil Corporation (IOC).
As per the MoU, Nepal will import one-third of its fuel requirement from China. In the last fiscal year 2014-15, Nepal imported fuel worth Rs110 billion, according to Nepal Rastra Bank.
The two sides also signed another MoU to bring 1.3 million litres of fuel gifted by China. Nepal had to ask China for fuel after facing a severe shortage due to the unofficial Indian embargo which has lasted for one and a half months.
Madhu Marasini, joint secretary at the Finance Ministry who was a member of Nepali delegation, said that they had requested China to continue commercial shipments of fuel “without a gap” after the consignment of petrol gifted by it has been delivered.
However, NOC and PetroChina will have to sign another commercial agreement to make China an additional long-term oil source before the Chinese company can start commercial fuel shipments to Nepal.
NOC said that a modality would be prepared on the required quantity, transportation route, quality and pricing before signing the business-to-business deal.
Marasini said that Nepal had invited China to discuss the nitty-gritty of the larger commercial deal soon. “We have to complete this process as soon as possible to ensure that there will be continued supply of fuel from China,” he said.
NOC officials said that it could take around one and a half months to complete the process, and that a deadline could not be fixed presently.
“Once a commercial deal is signed between NOC and PetroChina, there won’t be much difficulty in bringing oil from China commercially,” said NOC Acting
Deputy Managing Director Sushil Bhattarai who was also a member of the Nepali delegation.
According Bhattarai, who visited Kyirong and Shigatse after signing the MoU in Beijing, there is no infrastructure related problems on the Chinese side. “Improving Nepal’s road and other infrastructure will help to bring Chinese oil smoothly,” said Bhattarai.
PetroChina maintains a depot in Shigatse from where it distributes oil to regions bordering Nepal.
Shigatse is already linked by railway, and China has announced plans to extend the line within a few years to Kyirong across the border from Nepal.
Marasini said that bringing Chinese oil to Nepal would be much easier once the railway is completed.
During the negotiations with Chinese officials, the Nepali team had also asked for a reduction in taxes on the oil to be supplied to Nepal.
According to Marasini, taxes account for one-third of the price of petrol in China. Nepal has asked that the taxes be slashed so that it can get gasoline at a cheaper rate.
“The Chinese officials said that it was a matter for China’s Finance Ministry to decide,” said Marasini. The quality, transportation costs and taxes will determine the price. NOC said that a lot of homework would have to be done to determine the price of Chinese oil.