For viable oil import from China, government-to-government deal a must

Kathmandu, December 2. Only a government-to-government agreement between Nepal and China can bring northern oil to Nepal on subsidy, which has been reeling under the shortage of essentials like petroleum products resulting from the Indian blockade and the Madhesh Movement.

Nepali and Chinese petroleum officials have signed a memorandum of understanding on oil import on a commercial scale. But a full agreement has not materialised between the two countries with Nepal seeking tax concessions from China.

Nepali officials say they have been holding talks with Chinese officials on technical aspects like oil prices.

A technical team from the Nepal Oil Corporation had discussed oil prices with PetroChina officials. Nepal has formally asked China to give tax concessions on oil import, pointing that the northern oil should not cost more than the oil imported from India.

Nepal is willing to import one-third of its oil requirement from China. Import of that much of oil from the north means China will have to waive tax amounting to Rs 30 billion every year, a source said, adding: This (a declaration to this effect) is possible only at the political level.

If Nepal creates a conducive environment, China can make a declaration to this effect at the government level, according to officials.

Without tax concessions, Chinese oil will be pretty costly. The 1300 KL petrol that China recently granted to Nepal costed Rs 175/litre, with road tax, VAT and customs duty totalling Rs 35/litre.

In China itself, petrol costs Rs 140/litre. Nepal is seeking waiver of 67 per cent tax that China slaps on petrol.

The National Planning Commission will make a decision on tax.

PetroChina has asked the NOC to take high-level political initiatives for tax exemption, an NOC official informed.

During talks with the NOC team, PetroChina said it cannot sell petrol to Nepal from Kerung.

China has proposed that Nepali tankers come up to Sigatse, 548 km farther from Kerung, to fetch oil. This is virtually impossible, given sub-zero temperatures in the Himalayan region. The NOC team has asked China to supply oil to Nepal from Kerung.

Nepal is willing to import one-third of its oil requirement from China, apparently if the price is not more than the price of oil brought from India. Import of that much of oil from the north at that rate means China will have to waive tax amounting to Rs 30 billion every year, a source said, adding: This (a declaration to this effect) is possible only at the political level.

Source: Sabkura News Pvt. Ltd.