Oil Minister Dharmendra Pradhan, who is on a three-day visit to Kathmandu, and Nepalese Minister of Commerce and Supplies Sunil Bahadur Thapa signed an MoU for the petroleum product pipeline, an official statement said here.
This will be the first trans-national petroleum pipeline in South Asia.
Nepal depends on India for meeting all of its fuel requirements. Petrol, diesel, domestic LPG and jet fuel (ATF) are currently trucked from Indian Oil Corp's (IOC) depot at Raxaul to Nepal.
The 41 kilometre pipeline -- 2 km in India and 39 km in Nepal -- will initially supply petrol, diesel and kerosene. It will be built by IOC at a cost of Rs 200 crore.
More From This Section
IOC will take 30 months to complete the project after receipt of necessary statutory clearances from the Government of Nepal.
"Nepal Oil Corporation will invest Rs 75 crore to develop additional facilities in Amlekhgunj depot," the statement said.
India exports about USD 1.1 billion worth of petroleum products per annum to Nepal. Bulk of this volume will be transported through this pipeline.
"This will also ensure smooth, cost effective and environment friendly supply of petroleum products to Nepal," it said.
The pipeline was first proposed in 2006 for transportation of fuel from Raxaul to Amlekhgunj. The pipeline was to be funded 50:50 by IOC and Nepal Oil Corp (NOC). The project, however, never took off as Nepal refused to fund its share of cost.