Nepal Oil Corporation’s planned new storage tanks and oil pipelines are estimated to cost Rs41.15 billion, a pre-feasibility study shows. The Institute of Engineering Consultancy Services carried out the preliminary survey for the state-owned oil monopoly.

The proposed projects will be built in six locations. The corporation has been mulling to construct an oil pipeline from Charali, Jhapa to Siliguri, India in a bid to ensure regular fuel supply. It is also planning to extend the Amlekhgunj-Motihari pipeline, which is nearing completion, to Lothar, Chitwan.

Besides the pipelines, the corporation plans to construct storage tanks with capacities of 90,000 kilolitres and 100,000 kilolitres in Charali and Lothar respectively. Its other plans include installing storage tanks with a capacity of 40,000 kilolitres in Sarlahi. Nepal Oil also plans to lay pipelines from Muzaffarpur-Mahendranagar and Motihari-Chitwan to transport cooking gas. It will build gas storage tanks with a capacity of 40,000 tonnes in Mahendranagar and Lothar, Chitwan.

Narayan Prasad Gautam, chief of the Institute of Engineering Consultancy Services, said they estimated the cost based on the expenses incurred in the construction of the Amlekhgunj-Motihari pipeline, necessary physical infrastructure, escalation data, market prices of construction materials and taxes.

The construction of the cross-border Amlekhgunj pipeline is almost at the final stage, with only 7 km of pipeline left to be laid.

The pipeline, the first of its type in the country, is scheduled to come into operation in the next two months, the corporation said.

Nepal imported 2.07 million kilolitres of petroleum in 2017-18, according to the corporation’s statistics. Demand has been swelling at the rate of 13.8 percent annually, and it is projected to exceed 13 million kilolitres in the next three years. Currently, the corporation has a storage capacity of 68,364 kilolitres of fuel.

Nepal Oil has long been considering building storage tanks with a capacity to hold 90 days’ requirement of fuel. The government had also endorsed the plan, but it hit a setback following a controversial land deal by the then corporation chief Gopal Bahadur Khadka who was accused of amassing illegal property worth more than Rs180.66 million during his tenure.

The Commission for the Investigation of Abuse of Authority sentenced him to five years in jail, slapped a fine equivalent to the value of the illegally earned property and confiscated his illegal assets.

Nepal Oil owns 23.18 bighas of land in Duwagadhi, Jhapa; 15.33 bighas in Haripur, Sarlahi; 21.29 bighas in Lothar, Chitwan and 14.37 bighas in Patkhali, Rupandehi. The study said the corporation would need to build more storage tanks than the ones it has planned to ensure regular fuel supply.

The study shows that the payback period of proposed projects will be five years. The pipelines can transport 1.92 million kilolitres of fuel annually and have a working lifetime of 20 years.