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India Burns Midnight Oil to Outdo China on Nepal Fuel Reserve

© AP Photo / Rajanish KakadeA cyclist walks past an Indian Oil company in Mumbai, India, (File)
A cyclist walks past an Indian Oil company in Mumbai, India, (File) - Sputnik International
India has agreed to set up a strategic oil reserve in Nepal to ensure uninterrupted supply of petroleum products in the Himalayan country. The decision comes in response to Kathmandu signing a petroleum supply deal with Beijing, after accusing New Delhi of siding with the unofficial Madhesi-enforced blockade in 2015.

Nepalese police clash with Madhesi minority protesters at Raibiraj, Saptari District, some 240 kms southeast of Kathmandu on March 6, 2017 - Sputnik International
India Concerned With Violent Clashes Between Police, Protesters in Nepal
New Delhi (Sputnik) India and Nepal had a bitter spat in 2015 when the Himalayan country accused New Delhi of imposing the month-long unofficial blockade in support of Madhesis, the Nepalese population living in Terai region along the border with India, who were protesting the Nepalese constitutional amendments.

On Monday, India and Nepal renewed the fuel supply agreement for five more years. The renewed agreement also put in place an institutional mechanism for cooperation in the areas of additional services and technical assistance between the two.

“India and Nepal will form a joint venture company to build oil storage facility in Nepal. We will set up a joint group to outline the structure of the company,” said Dharmendra Pradhan, India’s Minister for Petroleum and Natural Gas.

​To reduce Nepal’s reliance on India, the KPS Oli government of Nepal had signed a commercial deal with China to supply petroleum products during his visit to Beijing in March last year. Oli resigned from the post of prime minister after a no-confidence motion in June 2016.

Till 2015, India was the sole fuel supplier to the 30 million people of landlocked Nepal, which depends on India for 70% of its trade and 95% of its overland trade access.

The Indian Oil Corporation Limited, India’s largest oil marketing PSU, has been supplying petroleum products to Nepal since 1974. India and Nepal are presently working towards further deepening the engagement in the oil and gas sector, including construction of petroleum product Motihari-Amlekhgunj Pipeline. “Once the pipeline is completed, it will further ensure continuous and uninterrupted supply of products to Nepal,” Pradhan added. 

Both the countries are also discussing building a similar pipeline for LPG supply.

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