Presently, Indian Oil Corporation (IOC) holds supply monopoly in the Nepali market. [break]
Ministry of Commerce and Supplies (MoCS) is pushing the issue through Nepal Oil Corporation (NOC), which is presently holding talks with the IOC to review the bilateral Petroleum Supplying Agreement that expires on March 31.
“As existing bilateral agreement signed in 2007 already allows Nepal to import fuel from any countries, we see no point in India limiting oil supply authority to IOC alone,” said a highly placed MoCS official.
If required, we will also hold talks with India at the higher governmental level, said Lekh Raj Bhatta, Minister for Commerce and Supplies.
The government is raising the issue after Bharat Petroleum Corporation Limited (BPCL) - another state-owned oil marketing company (OMC) of India - formally approached the ministry, expressing interest to export petroleum products to Nepal.
Senior officials of the company had recently met with the top MoCS officials and expressed their interest personally.
“As addition of another supplier can put us in relatively comfortable position, both in terms of pricing and supplies, we have asked the company to submit a clear plan on how it plans to make supply to Nepal, among others,” said Bhatta.
This is not the first time BPCL showed interest to export fuel to Nepal. The company in 2010 had approached the Indian government to end IOC´s monopoly in exports to Nepal and open it to all oil marketing public sector undertakings.
Also BPCL is not just one company that is eying Nepal´s petroleum market. In late 2009, Essar Group -- a private petroleum group of India -- too had approached the MoCS for opening imports from private Indian suppliers as well.
Officials tagged such interest in Nepali market as ´pretty obvious´ as country´s petroleum consumption is fast growing and anticipated to touch Rs 100 billion in next one year, whereas it was just around Rs 30 billion in 2007. “Besides there is intense competition among Indian OMCs themselves,” said the source.
Presently, the Indian government has allowed only IOC to export petroleum products to Nepal without any payment of duty. And officials said formal approval of the Indian government was necessary to open imports from other Indian OMCs as only that would enable them to make supply at zero-duty facility.
Officials at the MoCS opine that Nepali consumers could witness dramatic changes fuel availability and pricing if Nepal could import fuel from multiple sources.
“Competition among exporters can instantly trigger competition in price, efficiency in supply logistics, enhance quality of supply and introduce wide array of efficient product line to serve the needs of different consumer groups,” said an official at NOC.
Given the potential that exporters are seeing in Nepal´s market, they even predicted that Nepal can effectively lure international players to tie up with any credible private players here to enter into imports and retailing business.
Unfortunately, the government has continued to push petroleum sector reforms on the backburner. Leave alone supply of quality fuel, it suggests consumers to be happy if they get as much fuel as they need.
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