Nepal puts fuel deal with China on back-burner

Nepal will not sign a petroleum agreement with China during the official visit of Prime Minister K.P. Sharma Oli to the northern neighbour, according to key ministers.

After a five-month unofficial blockage by Madhesi groups at key entry points on the Nepal-India border that hit petroleum supplies after promulgation of the new constitution last year, Nepal attempted to import petroleum products from China.

After ties were strained with India following Oli assuming the office, Nepal looked towards its northern neighbour, aiming to import at least one-third of the total petroleum needs of the Himalayan country from China.

China gave some 100,000 kilolitres of fuel as grant to Nepal but did not complete the negotiations to export fuel, citing several reasons like difficult geographical terrain, taxes, transportation and other issues.

Nepal had sent several teams for negotiations with China that included Deputy Prime Minister and Foreign Affairs Minister Kamal Thapa.

Nepal and China agreed to sign an agreement during the visit of Prime Minister Oli.

However, officials have told IANS that the deal to import petroleum products from China was "unlikely this time".

"We have already agreed to import fuel from China," Thapa told IANS ahead of Oli's visit, adding: "We will follow the negotiations of price and other logistics gradually."

For a long time, Indian Oil Corporation Ltd. (IOCL) has been the sole supplier of petroleum products to Nepal.

After IOCL said it was considering supplying 70 percent of the total fuel demand, Nepal decided to import the rest 30 percent from China and started negotiations with Petro China. Nepal and China signed a framework deal in November last year.

However, following Oli's visit to India in February, the fuel supply from the southern neighbour eased.

As Oli begins his visit to Beijing on Sunday, Nepal's Supplies Minister Ganesh Man Pun, who was initially scheduled to join the delegation, has not been included in the final list of delegates.

This, according to sources, was because the agenda of importing fuel from China has now been put on the back-burner.

"I cannot ask the prime minister why I have not been included in the delegation. After all it is his delegation," Pun said on Saturday, admitting that he was not travelling with Oli to China.

(Anil Giri can be contacted at girianil@gmail.com)