Nepal inks fuel agreement with China to ease fuel crisis

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Nepal signed its first ever fuel agreement with China under which Beijing will supply all kinds of  petroleum products by this it ended a four-decade supply monopoly of the Indian Oil Corporation (IOC).

A memorandum of understanding (MoU) was signed between the Nepal Oil Corporation (NOC) and China National United Oil Corporation (PetroChina) in Beijing to supply petroleum products to Nepal.

This is the first time that China is commercially supplying petroleum to Nepal, before this India was the sole supplier of petrolium products to Nepal.

Nepal could import 35-40 percent of its total fuel needs. The country imported fuel worth Rs107.13 billion and Rs131.73 billion in 2012-13 and 2013-14 respectively and due to extended power cuts and increase in development works, demand for petroleum products in Nepal has been growing by 10 percent annually.

The Chinese government has asked Nepal Oil Corporation (NOC) to send 12 fuel tankers at the Kerung-Rasuwagadhi border point on Saturday to take delivery of fuel that China had promised as grant.

Why Nepal has turned toward China ?

  • Madhesis, who comprise around 30 percent of the population are protesting against the newly drafted constitution of Nepal claiming that the Constitution does not guarantee enough rights and representation to the Madhesi and Tharu communities residing in Terai region of southern Nepal.
  • These Madhesis group have created economic blockade at key border trade points with India by setting up tents in no-man’s land, blocking the passage of trucks in to Nepal. It should be noted that India has earlier imposed a 15-month blockade after Nepal bought a batch of Chinese weapon. 
  • More than 2,000 trucks have been stranded at a key India-Nepal border checkpoint for more than a month, cutting off vital supplies and forcing fuel rationing across the landlocked Himalayan nation.
  • Landlocked Nepal is overwhelmingly reliant upon imports from India, including much of its food, consumer goods, and 100 percent of its fuel - aviation fuel, petrol, diesel and cooking gas.
  • The shortages have led to overnight queues at gas stations in the Nepalese capital and prompted the government to turn to its northern neighbour China for help, thus ending the four decade long monopoly by India as tensions deepen between New Delhi and Kathmandu.
  • Trading with India is much easy for Neapal due to flat plains easing the transport of imports and exports, while avoiding the mountainous terrain of the northern routes this is the reason Nepal has traditionally relied on its border crossings with India for trade.

Indo-Nepal relation 

India and Nepal has always shared friendly relationship since the British-Raj and mainly it started with the 1950 Indo-Nepal Treaty of Peace and Friendship and accompanying secret letters that defined security relations between the two countries and an agreement governing both bilateral trade and trade transiting Indian territory.

1950 Indo-Nepal Treaty of Peace and Friendship:-

The 1950 treaty and letters exchanged between the then Indian government and Rana rulers of Nepal, stated that "neither government shall tolerate any threat to the security of the other by a foreign aggressor" and obligated both sides "to inform each other of any serious friction or misunderstanding with any neighboring state likely to cause any breach in the friendly relations subsisting between the two governments."

Equal treatment for Indian and Nepalese Citizen in both the countries:-

  • These accords cemented a "special relationship" between India and Nepal that granted Nepalese the same economic and educational opportunities as Indian citizens in India and preferential treatment to Indians compared to other nationalities in Nepal.
  • The Indo-Nepal border is open; Nepalese and Indian nationals may move freely across the border without passports or visas and may live and work in either country.
  • However, Indians aren't allowed to own land-properties or work in government institutions in Nepal, while Nepalese nationals in India are allowed to work in Indian government institutions (except in some states) and some civil services (the IFS, IAS, and IPS)
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