KATHMANDU, Nepal (AP) – Fuel-starved Nepal has signed an agreement with China to import gasoline, diesel and cooking gas, effectively ending monopoly on supply from India, which has restricted fuel convoys as a result of political protests in the Himalayan nation.
The decision to import Chinese oil amid severe shortages has brought the northern giant a step closer to Nepal, which traditionally is more influenced by India in the south. The two Asian rivals have been jostling for influence in landlocked Nepal.
Nepal sent a team of officials to Beijing this week, where they signed a memorandum of understanding Wednesday with China National United Oil Corporation, said Nepal Oil Corporation official Deepak Baral.
Details on how much fuel Nepal would receive, prices and other arrangements still need to be worked out, Baral said, but confirmed the supply would be on a regular basis.
It would be the first time for Nepal to import Chinese fuel. It has so far relied exclusively on India for its energy needs.
Violent protests and road blockades over the recently adopted Nepalese Constitution by southern Madhesi ethnic groups, which have close cultural ties with India, have strained relations with India.
Delhi has restricted fuel supplies after protesters, demanding more rights for their traditionally marginalized ethnic groups, blocked a key border crossing point. Other crossings are free of protesters, but India has refused to resume the supply of fuel.
India’s External Affairs Ministry spokesman Vikas Swarup declined comment on Nepal’s agreement with China.
Earlier this week, China announced it would give Nepal 1.3 million liters (340,000 gallons) of gasoline as a grant to help ease severe shortages. The fuel, which is expected to reach the capital by early next week in about 100 tanker trucks, would normally be good for four days but will be rationed for vehicles.
Bringing in fuel from China is a logistical challenge. The border runs along the world’s highest mountains and the two crossings were damaged by an earthquake in April. Only one has reopened this month.
“This shipment is only a token from China, but commercial import is not practical right now because there is no infrastructure or equipment available at this border point to transfer fuel,” said Keshav Poudel, editor of the Spotlight news magazine. He said the road is so narrow at some points that only one vehicle can squeeze through at a time.
Nepal imported about 1.37 billion liters (360 million gallons) of fuel last year from Indian Oil Corp. at a cost of $1.05 billion. The two sides also signed a deal in August to build a 41-kilometer (26-mile) pipeline connecting two border storage facilities.
According to the Investment Board Nepal, China has shown keen interest to invest in Nepal in the past few years.
Last year, Indian companies signed agreements to build two hydropower plants worth $ 2.2 billion, while a Chinese company is finalizing a deal to build another plant for $1.5 billion.