How India’s pipelines to Bangladesh, Nepal are changing oil trade dynamics

Pratim Ranjan Bose Guwahati | Updated on September 19, 2019 Published on September 19, 2019

While the network has secured supplies to Nepal, it may boost trade volumes with Dhaka

In September 2018, India and Bangladesh entered an agreement for a cross-border pipeline to carry one million tonne diesel annually from Siliguri (West Bengal) depot of the Numaligarh Refinery (NRL) to Parbatipur in Bangladesh. One year down the line, the project is gaining speed.

According to sources, the contracts for pipes are already in place and delivery is expected to start from November.

Meanwhile, the Bangladesh government is expected to notify landowners for right-of-way for the underground line. Of the 130-km long pipeline only six km is in India. The West Bengal government has already ensured the right of way. India is offering ₹303 crore financial assistance in completing the project that will largely meet the diesel requirements of northern parts of Bangladesh.

Bangladesh imported 4.8 mt of diesel in 2017-18. This includes 1-1.5 lakh kilolitre supplies by rail from India beginning 2016. In the absence of pipeline infrastructure, diesel is distributed mostly by river to the oil bunkers.

Oil diplomacy

The pipeline supply will therefore bring in major logistical change in auto-fuel distribution in Bangladesh. India is fast establishing pipeline network in the region. The beginning was made with Nepal as Delhi completed construction of 69-km Motihari (Bihar)-Amlekhigunj (Nepal) early this month.

The project was completed in half the scheduled time, eliminating roughly 1,000-1,200 road tankers which were earlier congesting the roads of Raxaul (Bihar) and Birgunj (Nepal). But more importantly, it ended a long pending political irritant.

During the 2015 Madhesi stir in southern Nepal, the protestors blocked the trading gate to cut off oil supplies. Nepal in turn blamed India for stopping the oil supplies. With oil now delivered 30 km inside Nepal and at a lower cost, the political narrative between the two countries is set to change.

POL exports

With Nepal dependent on Indian supplies for petroleum products naturally the Moti-Hari-Amlekhigunj pipeline will not have any impact on trade volume. But the reverse is true for Bangladesh. Petroleum products already started occupying space in the bilateral trade and its importance will increase in the days to come.

With Indian refiners exploring markets in the entire neighbourhood, oil and oil pipelines are set to gain prominence in the future.

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Published on September 19, 2019
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