NEW DELHI: India and Nepal on Monday decided to lay a Rs 200 crore pipeline for supplying petroproducts to the Himalayan country. This would be the first oil pipeline project between two countries in the Saarc region.

The agreement was signed by oil minister Dharmendra Pradhan and Nepal’s commerce and supplies minister Sunil Bahadur Thapa in Kathmandu.

India’s flagship refiner IndianOil would fund and construct the pipeline linking its supply depot at Raxaul in Bihar with Nepal Oil Corporation’s receiving terminal at Amalekhganj in Birganj, a distance of 41 km.

In return for the funding, Nepal has given commitment to buy products from IndianOil for at least 15 years. Only 2 km of the pipeline would be in India and 39 km in Nepal.

IndianOil would supply petrol, diesel and kerosene. It would also re-engineer the Amalekhganj depot to receive products by pipeline. Nepal Oil would spend Rs 75 crore on additional facilities.

Nepal depends on India for meeting all of fuel requirements, worth some 41 billion. The products are currently sent in truck-tankers. IOC will take 30 months to complete the project after receiving all clearances from the Nepal government.

The pipeline project has been hanging fire since 2006. Initially it was envisaged that the two companies would fund the pipeline equally. But the project got stalled after Nepal Oil backtracked.

Security cover for construction workers and the pipeline too emerged as a bone of contention. Nepal refused to provide security cover to construction crew and the pipeline.

Sources said the truckers’ lobby was opposed to the pipeline as it would hurt their business. After the pipeline is laid, only LPG would be supplied in special tankers.