Nepal fuel crisis

  • Amid strain in ties between India and Nepal hitting the fuel supply to the Himalayan nation, China confirmed it was sending fuel supplies to Nepal.This move breaks India’s monopoly on the export of petroleum products to Nepal. Indian Oil Corporation (IOC), which had been the sole supplier of fuel to Nepal for four decades

The Fuel Crisis

  • The government of India has cited security reasons and discouraged Indian trucks to enter Nepal following the protests leading to a sharp fall in the supply of petroleum products and acute shortage
  • The fuel crisis caused by the blockade has cut the food supply chain, causing shortages in all parts of the country. It has disrupted transportation at the height of Nepal’s national holiday season, preventing millions from travelling to ancestral homes. There have been many deaths from traffic accidents caused by dangerously overcrowded public transport.
  • The situation had briefly improved during the Dussehra season when trucks carrying goods and fuel from Indian ports and businesses were able to travel inside Nepal. But it deteriorated subsequently with schools and colleges shutting down temporarily as shortage of energy crippled normal life.
  • Also scarcity was creating extreme social tension among various ethnic groups
  • Meanwhile, pressure mounted on the government of Nepal from the civil society to act to ease the situation.

A long term pact

  • Further  Nepal and China have gone ahead to reach a landmark energy deal which will transform the Himalayan country’s future energy scenario.
  • Details of the deal, signed between Nepal Oil Corporation and China National United Oil Corporation (PetroChina) in Beijing, are not yet fully known, though initial assessments coming from Kathmadu suggest that it’s a long-term pact which will free Nepal of economic and energy dependence on India.
  • China will immediately supply 1.2 million litres of kerosene to Nepal.

Significance

  • Nepal point of view-The Chinese gesture comes as a big relief as it is fuel-starved following obstruction in supply from India for the past five weeks. Analysts point out that India’s de facto embargo on oil supplies to Nepal, following the adoption of a new Constitution, in which the Indian origin Madhesis appeared poorly represented, had imparted fresh urgency in Kathmandu to seek China as an alternative energy supplier
  • Impact on India– This move breaks India’s monopoly on the export of petroleum products to Nepal. However Indian supply of essential commodities including fuel and medicines  continues from other entry points other than the Raxaul border crossing that accounts for the biggest volume of export to Kathmandu due to cheaper transportation cost.
  • Boost to China’s Silk Road-The fuel deal with Nepal feeds into China’s broader strategic perspective, with Kathmandu as one of the nodes of the Beijing-led Belt and Road connectivity initiative that would integrate the economies of Eurasia. Nepal and China have inked a four-point document endorsing the Belt and Road initiative

Expert Comments

  • Former ambassador and academic Prof. S. D. Muni however believes that the China-Nepal energy pact is a short term step which will soon cease to be a major issue once India-Nepal ties are normalised. The Chinese are not known to sacrifice commercial interest for a long time. So the pact will not impact India-Nepal ties in a big way, though it obviously indicates that the Chinese are impatient to access the market of South Asia. Further irrespective of the estimate by Indian experts, it is obvious that the Nepali political class has finally hit back at India for the blockade which they believe is receiving tacit support from India.