NOC, IOC sign new petroleum supply agreement

Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC) signed a new petroleum supply agreement which stipulates that IOC will be the sole exporter of refined petroleum products to Nepal until March 31, 2017. Signatories to the bilateral agreement were NOC Acting Managing Director Suresh Kumar Agrawal and IOC General Manager (commercial) R. Karandikar. Several changes have been incorporated in the new agreement:

• The new agreement removes the existing price adjustment factor (PAF), which allows IOC to charge 5% on LPG, diesel fuel and petrol and 2.5% on other petroleum products.
• Under the new agreement, NOC can import petroleum from two ports: the Mumbai port and Haldiya port. NOC said this will reduce fuel cost for the mid- and western Region.
• Additionally, NOC will be able to sell bitumen, lubricants and grease products.
• Both companies have also agreed to negotiate the reduction of existing prices of furnace oil and light diesel oil, and begin the procedures necessary for the importation of LPG from other refineries aside from the Barauni, Haldiay and Mathura refineries.
• NOC can purchase finished products from the international market and import products through IOC.
• NOC can buy crude oil from the international market which it will then sell to IOC. For its part, IOC will supply the equivalent amount of petroleum to NOC.
• The terms of payment for imports have been revised: NOC can now make fortnightly payments, instead weekly payments.

Both companies are also discussing the construction of the Amlekhgunj-Raxaul pipeline and are conducting a feasibility study of the Nepal-India LPG pipeline. (April 28, 2012)