Nepal Authorities Request End to Oil Monopoly
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Friday, 05 February 2010 |
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Nepal has made a request to the Indian Government to open oil exports
to Nepal to all Indian refineries and oil marketing companies (OMCs),
ending a monopoly of Indian Oil Corporation in the Nepali market going
to 1974.
Economic Minister Rajendra Mahato of Nepals sent a letter to
his Indian counterpart requesting the Indian government to pave the way
for Nepal to source fuel from any refineries and OMCs in India.
Nepal has called for the amendment to Petroleum Supply Agreement the
two countries signed in 1974 that led to the commissioning of Nepal Oil
Corporation (NOC) and designation of IOC as the sole supplier of fuel
to Nepal. Prior to that, major oil companies based in India like Exxon
and Chevron used to directly retail fuel in the Nepali market. Since
1974, the provisions related to petroleum supplies to Nepal is worked
out and governed by the agreement that NOC and IOC have signed.
Elaborating on Nepal’s decision to open avenues of sourcing fuel from
alternative suppliers as well, officials said that new arrangements
were sought mainly keeping in view changes in market dynamics, India´s
growth as oil exporter and better management of petroleum sector of the
country. “Besides, the changes were sought considering the long-running
vision of the government to liberalize petroleum sector and open
imports to the private players,” said Commerce Secretary Purushottam
Ojha.
So far, petroleum is state-controlled commodity and NOC functions as
the sole importer of oil in Nepal. But, in the letter, the Ministry has
cited that Nepal aims to open import to the private players and has
already embarked on introducing reforms in the sector. An Act to this
connection is in the process of enactment, it states.
Sources, meanwhile, said that the government decided to seek changes in
the way Nepal sources fuel mainly after leading Indian private
petroleum refineries and also the public sector OMCs showed interest to
supply fuel to Nepal. Essar Energy and Bharat Petroleum
Corporation Limited (BPCL), are known to have been looking to supply
fuel to Nepals in recent months.
NOC does not openly support the move, its officials admit that
operating with multiple fuel sources will be beneficial for both the
consumers and the country. The beginning of competition among exporters
can instantly trigger competition in price, efficiency in supply
logistics, enhance quality of supply and introduction of wide array of
efficient product line to serve needs of different consumer groups.
PetrolWorld 030210
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