LPG Shortage Grips Kathmandu Amid Transportation Hurdles and Indian Refusal to Allow Nepali Tankers

Kathmandu. An acute shortage of cooking gas has gripped the Kathmandu Valley. Consumers, unable to find gas in the market, have been queuing up at the Nepal Gas Industry office in Balaju, carrying empty cylinders.

While the Nepal Oil Corporation (NOC) claims there is no shortage of other brands and that the issue in Kathmandu is due only to internal problems with Nepal Gas, industry insiders state the problem is deepening. Although the immediate causes are cited as issues at Indian refineries and increased consumption, the root cause lies in Nepal's lack of its own gas transportation system (bullet tankers) and India's refusal to grant permission for Nepali tankers to operate.

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• Over-reliance on Transportation is the Main Factor

The primary reason for recurring supply problems in the Nepali market is the 100% dependence on Indian bullet tankers for transportation. The supply chain is disrupted when Indian transporters hesitate to carry gas to Nepal.

Gas industry operators say that Indian bullet owners are reluctant to come to Nepal because they can earn higher transportation fees within India itself.

According to Shiva Prasad Ghimire, former president of the Nepal LP Gas Industry Association, Indian transporters avoid routes in Nepal citing difficulties in driving on hilly roads, higher maintenance costs, and the legal hassles involved in case of accidents.

To permanently resolve the gas shortage issue, Nepali entrepreneurs attempted to establish their own gas transportation system about seven years ago. Although entrepreneurs initiated the process to purchase bullet tankers with billions in investment, the plan to operate Nepal's own tankers has been stalled for years because India has not granted permission. Ghimire states that the persistent problem in gas transportation arises because India does not allow gas-carrying Nepali-plated bullet tankers access to its refineries.

• 'Nepali Tankers' Rusting for 7 Years

According to industry insider Ghimire, the Nepal Oil Corporation encouraged Nepali entrepreneurs to become self-reliant in gas transportation about seven years ago. Accordingly, the NOC also provided a two-thirds customs exemption for the purchase of Nepali gas bullet tankers compared to other vehicles.

Encouraged by the NOC's policy, gas industry operators initiated the process to purchase 775 gas bullet tankers and even deposited guarantees. Among these, two tankers were brought to Nepal as a trial.

However, Ghimire lamented that these two tankers have been sitting idle and rusting in Hetauda for the past 7 years. 'The two tankers we brought as samples are decaying in Hetauda,' Ghimire said, 'The investment and process for the remaining 775 tankers became uncertain due to the lack of permission from India. Because the Government of Nepal and the NOC failed to take necessary initiatives with the Indian government, billions in investment were put at risk, and we remain dependent on Indian tankers.'

He argues that problems like the current one recur frequently because Nepal lacks its own tankers and must rely on Indian transporters.

Meanwhile, an official from the NOC claims that the Indian side has barred entry to its refineries and depots, raising questions about the quality and safety standards of Nepali bullet tankers.

'Despite the NOC repeatedly pushing for gas bullet tankers to be Nepali, similar to petroleum tankers, the Indian side has not agreed,' an NOC official stated. 'The issue of operating Nepali bullet tankers was on the agenda during the visits of former Prime Ministers to India. However, the Indian side did not grant entry permission to its refineries and depots, citing concerns over the quality and safety standards of Nepali bullet tankers.'

However, they argue that the Indian side cannot question the quality since the tankers were manufactured in the same factories that build Indian bullet tankers. Furthermore, he suggests that the NOC is making excuses because it failed to take the necessary initiatives with India.

According to Ghimire, the nearby Barauni refinery in India is currently experiencing technical problems. With problems at Barauni, there is a compulsion to travel to distant refineries to collect gas, which has increased the 'turnaround time' (the time taken to bring one consignment of gas). He stated that this is the reason the supply cycle in the market has been disrupted, leading to shortages. He added that if Nepal had its own operational tankers and the management was under Nepal's control, it would be easier to manage such issues internally.