India yet again aligns with its Neighbourhood First and Vasudhaiva Kutumbakam philosophy
In a significant development in the India-Nepal energy partnership, the Indian Oil Corporation Limited (IOC) and Nepal Oil Corporation (NOC) signed a Business-to-Business (B2B) Framework Agreement in New Delhi earlier this month.

The B2B Framework Agreement, signed in New Delhi on October 3, 2024, marks a major milestone in the India-Nepal energy partnership, with a focus on enhancing petroleum infrastructure in Nepal. The agreement lays the groundwork for a series of projects designed to optimize the transportation of petroleum products from India to Nepal, thereby reducing costs and environmental risks. The infrastructure development is expected to have far-reaching benefits, including mitigating handling losses, reducing road congestion caused by tank truck movements, and bolstering Nepal’s energy security, particularly during natural disasters like floods and landslides.

The agreement was signed by Dr. Chandika Prasad Bhatta, Executive Director of NOC, and Senthil Kumar, Director of IOC, in the presence of senior officials, including Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas (MoP&NG), India, and V. Satish Kumar, Chairman of Indian Oil.

This collaboration builds on a Government-to-Government (G2G) Memorandum of Understanding signed earlier in May 2023 between India’s MoP&NG and Nepal’s Ministry of Industry, Commerce and Supplies. The G2G agreement was exchanged in the presence of the Prime Ministers of both countries, reinforcing the strong bilateral ties between India and Nepal.

Union Minister for Petroleum and Natural Gas Hardeep Singh Puri emphasized the significance of this collaboration, stating that it would strengthen petroleum infrastructure, reduce costs, and enhance supply security for the people and economy of Nepal. Posting on X, he highlighted the initiative as an example of the ‘Neighborhood First’ policy under the leadership of Indian Prime Minister Narendra Modi, emphasizing the Indian philosophy of Vasudhaiva Kutumbakam, meaning “The world is one family.”

Key Projects Under the B2B Agreement
 Under the agreement, several critical infrastructure projects will be developed, including:
Siliguri to Charali Pipeline: A 50-kilometer petroleum pipeline will be constructed from Siliguri in India to Charali in Jhapa, Nepal. This pipeline will facilitate the efficient transportation of petroleum products, reducing reliance on road-based tank trucks.

Smart Greenfield Terminal at Charali: A state-of-the-art terminal will be built in Charali, enhancing storage and distribution capabilities in the region. The terminal is expected to streamline petroleum logistics, ensuring efficient supply to Nepal's demand centers.

Amlekhgunj to Lothar Pipeline: The Indian government will provide a grant to support the development of a 62-kilometer pipeline connecting Amlekhgunj to Lothar in Chitwan, Nepal. This pipeline is intended to improve supply chain efficiency by ensuring a direct link between critical supply points.

Smart Greenfield Terminal at Lothar: A modern terminal with a storage capacity of 91,900 kiloliters will be developed at Lothar. The terminal will be built by NOC, with technical assistance from the Indian government. This facility aims to enhance Nepal's energy security and storage capacity, particularly during peak demand periods or emergencies.

The total investment for these projects is estimated to be around Rs 15 billion.

The agreement is not just about enhancing energy infrastructure; it also represents a broader effort to deepen economic and strategic ties between India and Nepal. The development of petroleum pipelines and storage facilities will create opportunities for further economic integration, bringing mutual benefits to both nations. The reduction in transportation costs for petroleum products is expected to positively impact the Nepalese economy, while also providing India with a reliable partner for cross-border energy trade.

Pankaj Jain, Secretary of MoP&NG, underscored the pivotal role of IndianOil in these projects, commending their expertise and timely execution. He stated, “IndianOil’s efforts are commendable, and this collaboration will not only strengthen India-Nepal relations but also enhance energy security for Nepal.” Such collaborative projects, he added, are critical for fostering regional stability and economic growth.

The B2B Framework Agreement aligns with a broader trend of growing energy cooperation between India and Nepal. Earlier, the Nepal Electricity Authority (NEA), India’s National Thermal Power Corporation (NTPC), and the Bangladesh Power Development Board signed an agreement in Kathmandu, enabling Nepal to sell electricity to Bangladesh through Indian transmission infrastructure. This historic deal, allowing Nepal to export electricity to a third country for the first time, exemplifies the increasing integration of energy networks in the region.

Under this agreement, Nepal will export 40 megawatts of electricity to Bangladesh, with the NEA expected to earn around Rs 330 million ($24.78 million) through the sale.

The recent agreements and infrastructure projects between India and Nepal indicate a robust and growing partnership that goes beyond just petroleum infrastructure. As both countries continue to explore opportunities for collaboration, the focus remains on developing sustainable, resilient energy networks that can support their respective economies and enhance regional stability.

With the successful signing of the B2B Framework Agreement, India and Nepal are set to strengthen their energy ties, fostering a relationship built on mutual trust, economic integration, and a shared vision for regional development. As these projects progress, the partnership between the two nations is poised to set new benchmarks for collaboration and growth in the energy sector.