Nepal on Thursday signed a business-to-business framework agreement with India in New Delhi to build several petroleum projects. This comes amid environmentalists' call for an end to new investments in fossil fuel pipelines as Nepal has all the feasible cleaner alternatives.

The development comes a week after Nepal’s Prime Minister KP Sharma Oli addressed the 79th session of the United Nations General Assembly in New York, calling for climate justice. He told the assembly about Nepal’s plan to achieve a net-zero emission target by 2045, five years ahead of the global target.

Environmentalists say Nepal’s policy has reversed the blueprint for the country’s second Nationally Determined Contributions (NDC), which outlines its ambitious targets for the next decade to reduce emissions and support vulnerable communities in adapting to the impacts of climate change.

The NDC outlines Nepal’s mitigation efforts, which include a commitment to promote renewable energy and electric mobility and manage forests.

Under the business-to-business agreement, the Indian government will build a 50-km cross-border pipeline from Siliguri, India, to Charali, Jhapa.

In Charali, a smart green field terminal with the capacity for 18,900 kilometres will be built. Both projects are being built with an Indian grant.

According to a statement issued by Nepal Oil Corporation, Chandika Prasad Bhatta, managing director of Nepal Oil Corporation, and Senthil Kumar, director of Indian Oil Corporation, signed the agreement in New Delhi in the presence of Pankaj Jain, secretary of the Ministry of Petroleum and Natural Gas, and Satish Kumar, chairman of Indian Oil.

The statement reads that the Indian government has also agreed to build a 62 km long petroleum pipeline from Amalekhgunj to Lothar, Chitwan in Nepal, on grant. “Agreement was also done to build a 91,900-kilolitre capacity smart green field terminal with an investment from Nepal Oil Corporation in the technical support of India.”

India will provide a grant of Rs15 billion for the three petroleum projects built in Nepal.

Under the business-to-business agreement, a business contract between two parties, Nepal’s position on the length of the supply agreement is unclear.

“During the government-to-government agreement, it was agreed that all four projects would be completed within 54 months,” said Manoj Thakur, deputy director of Nepal Oil Corporation. “The work will start soon.”

“Once we hand over the land to Indian Oil Corporation, the Indian side will design the project,” he said.

The project design is expected to take 3-6 months to complete.

The land purchase in Jhapa and Chitwan has been already concluded, said Thakur.

An energy expert said that Nepal’s private sector is aggressively investing in the hydro sector, and the government’s investment in petroleum infrastructure could be a setback for them and the country.

Nepal needs to substitute fossil fuels with green energy to reduce the ever-growing trade deficit, Bhushan Tuladhar, an environmental expert, told the Post in a recent interview.

“Instead of investing in fuel pipelines, the government should invest in renewable hydropower, cross-border energy trade and installation of charging stations for EVs.”

In the UNGA, the prime minister said that Nepal is hard hit by climate change and is one of the most vulnerable nations to it, ranking it the 20th most disaster-prone country in the world.

“Nepal has been contributing to the health of our planets through its forest, mountains and rivers. Despite the efforts, we continue to bear the brunt of climate change. In this context, we call for climate justice,” said the prime minister.

In 2021, the International Energy Agency called for an immediate end to new investments in fossil fuel supply projects such as pipelines.

It urged the rapid adoption of renewable energy, such as solar and wind power and a large-scale research and development programme to develop future technologies, including advanced batteries, producing energy from hydrogen, and removing CO2 from the atmosphere.

The report, entitled Net Zero by 2050: A Roadmap for the Global Energy Sector, says that with global greenhouse gas emissions continuing to rise, current pledges to cut CO2 “would fall well short” of reaching net-zero emissions by 2050 and holding global temperature increases to 1.5 degrees Celsius (2.7 degrees Fahrenheit).

The International Energy Agency says the world has a “viable” yet “narrow” path to avoiding disruptive climate change and must embrace “an unprecedented transformation of how energy is produced, transported and used globally”.

The agency also calls for quadrupling solar and wind power capacity in the next decade and a global push to adopt energy efficiency improvements of 4 percent annually by 2030.

This rapid transition from fossil fuels must also occur as the world provides electricity to 785 million people who currently lack clean-cooking technologies and the 2.6 billion people who lack them.

The International Energy Agency says that this suite of measures to wean the economy off fossil fuels will add $5 trillion in energy investments by 2030, create millions of jobs, and lead to a global gross domestic product in 2030 four percent higher than a business-as-usual approach.

In Nepal, according to the Department of Customs, the import of petroleum products amounted to Rs337.34 billion in the last fiscal year, nearly 20 percent of the country’s total import bills.

Petroleum products are Nepal’s top imported products and are dependent on India.

Nepal's government has also introduced an ambitious hydropower roadmap to fulfill its net-zero emission commitment by 2045.

In the transport sector, Nepal has launched a strategy to increase the sales of electric vehicles (EVs) to 90 percent of all private passenger vehicles, including two-wheelers, sold and 60 percent of all four-wheeler public passenger vehicle sales by 2030.

Massive tax waivers have been given on EV imports to promote electricity and reduce fossil fuel imports.

The government has also set a goal of installing 500,000 improved cooking stoves, primarily in rural areas, and an additional 200,000 household biogas plants and 500 large-scale biogas plants.

Nepal’s strategy is to have electric stoves as the primary mode of cooking in 25 percent of households by 2030. To meet this target, Nepal would need to invest $25 billion.

Nepali politicians have been making many promises to switch to clean energy. Still, according to experts, the other hand is building a spree of petroleum projects, a mockery to the translation for clean energy.