Though MEA (Ministry of External Affairs) has advised Indian Oil Corp not to make any commitments regarding the pipeline without consulting it, it is felt that a commitment at this stage to bear the cost of pipeline and its early execution can be a huge confidence-building measure, Petroleum Minister Pradhan wrote to Modi on Thursday.
Despite MEAs objection, Pradhan feels that a commitment from Modi on IOC building the pipeline would secure the Indian companys interest in maintaining supplies of petroleum products in Nepal.
While MEA could be consulted on this issue, I feel that this is an opportunity that should be seized to take our bilateral relations to an even higher level, he advised Modi on the eve of his visit, the first by an Indian prime minister in 17 years.
Nepal is likely to raise the issue during Modis visit as it was brought up by its Commerce Minister Sunil Bahadur Thapa during his meeting with Pradhan last Wednesday.
Thapa, who was visiting India this week, stressed on the need for a pipeline from Motihari in India to Amlekhganj in Nepal in the light of traffic congestion, associated pollution and frequent complaints of pilferage and adulteration through tankers.
MEAs opposition to the 80-km cross-border pipeline stems from Nepals refusal to co-finance the nearly Rs 200-crore project. It is essential that Nepal takes a strong financial stake in the project to ensure its commitment to the safety, security and maintenance of the pipeline, said an official.
Besides security and safety from Nepal Maoists, MEA also fears disruptions in pipeline operation orchestrated by the powerful lobby of tanker operators in Nepal, who currently transport the Himalayan kingdoms entire petroleum products requirement from IOCs supply depots on the Indian side.
Nepal, they said, wants a financial grant from India for building the project without addressing the security concerns. It has been asking us for a grant or a line of credit to build the project on its own. This would be as good as bankrolling them, said an official.
The project, which would significantly cut oil transportation cost by more than 50 per cent, has been proposed, debated and revised many times since 1995.
An agreement was reached between Nepal Oil Corp and IOC in 2010 to hand over pipeline construction to IOC but that is in limbo as NOC could not secure a special dispensation from its government to assign the project to IOC on nomination basis. Nepal laws do not permit award of any construction work or procurement on nomination basis.
Pradhans advice to woo Nepal makes sense in Modis push for a trans-Himalayan link to bring Nepal, India, and China together. Both India and China are keen on a stronger North-South connectivity through Nepal, something the Indian security establishment has been resisting for years.
The 17-year hiatus of Indian PMs from Nepal has resulted in China dominating the Himalayan kingdoms trade and infrastructure at Indias expense.