China set to be Nepal’s 2nd oil trade partner- The Kathmandu Post


Oct 27, 2015- An eight-member government delegation left for Beijing on Monday to open Nepal’s first oil trade negotiations with the northern neighbour amid severe fuel shortages that have started to cause widespread disruption to every-day life and brought the economy virtually to a standstill.

For the first time in four decades, Nepal has moved ahead to include China as its second oil trade partner as an alternative source to cope with such a crisis in the future. India imposed an unofficial trade embargo, curtailing fuel supply to Nepal by as much as 90 percent. Over a month has passed but there are no signs of the crisis ending soon. Nepal has been dependent on the Indian Oil Corporation for its fuel needs.

The team led by Nepali Ambassador to China Mahesh Maskey, including officials from Foreign Affairs, Commerce and Supplies and Finance ministries and Nepal Oil Corporation (NOC), is scheduled to hold negotiations with China this week.

“The team has been mandated to negotiate the price, quantity, quality and other technical details of petroleum products to be procured from China,” said Minister for Commerce and Supplies Ganesh Man Pun.

The two sides would sign a memorandum of understanding on commercial oil trade. “Upon return, the team will submit a detailed report to the Commerce and Supplies Ministry. Once the report is finalised with necessary homework, it will be tabled at the Cabinet for a larger commercial deal,” he said.

Although Pun said the amount of oil to be imported from China would be determined during bilateral negotiation, high-level sources said that Nepal plans to import 30-40 percent of its total fuel needs from north. “We are definitely looking for a long-term solution,” said a source.   Before leaving for Beijing, Ambassador Maskey said they would decide the import quota after looking into costs of oil and transportation.

Nepal’s fuel import bill in the last fiscal 2014-15 amounted to Rs110 billion—the largest of imported commodities.

The country imported fuel worth Rs107.13 billion and Rs131.73 billion in 2012-13 and 2013-14 respectively. The bills dropped considerably last fiscal year in the wake of a global drop in fuel prices even as imports grew. Due to extended power cuts and increase in development works, demand for petroleum products in Nepal has been growing by 10 percent annually.

First consignment likely this week

The first petroleum consignment from China, which Beijing has pledged in grant, is expected to arrive in Nepal this week, according to NOC spokesperson Deepak Baral.

He said that once the deal is sealed in China, the consignment of 1,300 tonnes petrol would be transported through the Kerung-Rasuwagadhi border point. “Chinese tankers will transport fuel up to the border point from where Nepali tankers will bring it into Kathmandu. We will be sending 20-25 tankers daily to the border point,” he said.


Published on: The Kathmandu Post (October 27, 2015)