March 23, 2016 / 2:47 PM / 4 years ago

China to supply petroleum products to landlocked Nepal

BEIJING (Reuters) - China has agreed to supply petroleum products to Nepal, a landlocked and impoverished country which has been trying to lessen its dependence on India, its large neighbor to the south.

After a visit to Beijing by Nepali Prime Minister K.P. Oli, the two countries said on Wednesday they have “agreed to conclude a commercial deal on the supply of petroleum products from China to Nepal”.

Kathmandu says it wants to import 33 percent of Nepal’s annual demand of 1.8 million tonnes of petroleum products from China, but trade officials say poor connectivity and logistics, high costs and transportation through difficult Himalayan terrain pose a challenge to any fuel trade between the two countries.

Under the agreement, companies will be encouraged to speed up negotiations on issues including transportation, quality control, and customs and frontier formalities, according to a joint statement from the two governments.

China will also build oil storage facilities for Nepal, and will send experts to Nepal to carry out a feasibility study on oil and gas resources research.

The two countries will also set up an energy cooperation mechanism to study longer-term projects such as a trans-border power grid, hydro power and solar power, the statement, carried by China’s official Xinhua news agency, added.

Nepal, which serves as a natural buffer between China and India, adopted its first post-monarchy constitution in September hoping this would usher in peace and stability after years of conflict.

But protesters opposing the new constitution blocked trucks from India, leading to acute shortages of fuel and medicine. Nepal blamed New Delhi for siding with the protesters, a charge India denied.

The border blockade ended last month but supply of oil and cooking gas has yet to return to normal.

Reporting by Ben Blanchard; Editing by Nerys Avery

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