 "IOC woos after client decides to move on")
Indian Oil Corporation (IOC), the nation's largest fuel retailer, said on Thursday that it would expand supply of petroleum products to Nepal.
This came a day after Nepal's government-owned petroelum company signed an agreement with China to tide over the acute fuel shortage caused by the blockage of border points with India, due to protests by local communities.
"We have a four-decade agreement with Nepal. Supplies have come down recently as a few routes are blocked but we are continuing to supply to them and are hopeful of increasing supplies once the protests subside," IOC Chairman B Ashok told Business Standard at the sidelines of an oil industry event here.
Asked how big a concern was the loss of petroleum trade volume to China, he said: "Let us wait and watch."
Wednesday's agreement between Nepal Oil Corporation (NOC) and China National Unified Fuel Corporation (CNUFC) brought to an end IOC's status for a little over 40 years as sole fuel supplier to Nepal. China has committed to supply 1,000 tonnes as a grant and agreed to negotiate a long-term commercial agreement with NOC for future supply.
China would, it appears, take away a third of India's export volume of petroleum products to Nepal. It presently supplies around 1.3 million tonnes of petroleum products there, worth around Rs 9,000 crore annually. This includes petrol, diesel, kerosene and cooking gas, transported from IOC refineries in northern and eastern India to NOC's depots across the border.
Disruption in fuel supply from India began following the dispute between Madhesi parties and major national parties over Nepal's new Constitution. An eight-member Nepali delegation had reached Beijing on Monday to discuss fuel supplies. The same day, China announced it would help Nepal as a friendly neighbour "to relieve its shortage".
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A senior IOC executive said India's supplies to NOC had reduced to nearly 40% of the average over the past few days as the agitation intensified. "There is daily fluctuation in the volumes being sent. This is also because truckers are reluctant to service their transport contracts," he said.
Nepal's snub to India comes a week after their new prime minister, K P Sharma Oli, sent his foreign minister, Kamal Thapa, to India to reset ties soured by tensions over the issue of equal rights for Madhesis in the new Constitution.
Land-locked Nepal shares a border with India on three sides, while its northern side of the snow-fed Himalayas borders Tibet. Petroleum products account for 15% of total energy consumed in Nepal but the country does not produce any oil or own refineries.
The nearest sea port is Haldia, near Kolkata, around 900 km from the nearest Indo-Nepal border. Nepal, therefore, imported its entire demand of petroleum products from IOC under five-year contracts.