The Bhutanese Leading the way.
By the end of November 2022 a delegation of Indian officials from India’s Petroleum Ministry were expected to come to Thimphu as part of a joint working group to discuss and finalize an MoU on fuel with Bhutan.
It was hoped that such an MoU can lead to Bhutan getting not only cheaper fuel prices like Nepal but also more transparent pricing, more points of entry for fuel and an assured supply.
However, the delegation from India could not make it and so instead around a month ago a team from the Department of Trade went to Delhi and met with the working group officials there and drafted a joint MoU there.
An official said, “Except for a few things here and there the MoU is done and now will undergo some internal processes in the Ministry of Petroleum and Natural Gas in India.”
It is expected that once the Petroleum Ministry completes its internal process and gets clearance from the cabinet then it can be signed by the two countries.
So far there has been no MoU between the two countries on fuel supply to Bhutan and the pricing methods were not clear.
The MoU when it comes to pricing says that, ‘GoI will facilitate export from India to Bhutan at ex-factory price excluding all domestic taxes and levies.”
It also says that GoI shall arrange for the concerned PSU to provide detailed invoice break up every fortnightly as when requested by the RGoB.
The above is important in Bhutan’s efforts to get cheaper fuel from India as the same fuel in India minus local taxes is much cheaper and even Nepal gets cheaper fuel than Bhutan from the same PSU suppliers.
The other purpose of the MoU is uninterrupted supply of fuel. Here the MoU says ‘GoI shall facilitate the uninterrupted flow of MS, HSD, LPG, Lube, Grease, SKO, FO, LDO, ATF, Bitumen and any product as per mutual agreement.’
The third aim is to get fuel from multiple entry points to Bhutan for fuel trucks apart from Phuentsholing, Gelephu and Samdrupjongkhar.
Here the MoU says, “GoI shall mandate OMCs for delivery of POL and related products through mentioned 9 ports of entry or any other port as mutually agreed.”
Lyonpo Loknath Sharma a few weeks ago attended an energy summit in Bengaluru, India where he met the Petroleum Minister Hardeep Singh Puri and requested for the MoU to be cleared faster.
Lyonpo also met the Chairman of the Indian Oil Corporation Limited (IOCL) and expressed that the pricing mechanism is not transparent. IOCL from their side said that export taxes are not levied on Bhutan and Nepal.
The minister also requested that if a pipeline can be explored to Bhutan though Bhutan’s volume of consumption is very low.
Lyonpo said they are very optimistic as he met the Minister and the IOCL Chairman.
Several stories by this paper showed how Bhutan should actually be paying much lesser for fuel as Indian domestic taxes should not apply to us, and also how fuel in Nepal sourced from the same PSUs in India was cheaper than in Bhutan. Nepal has an MoU with the Indian government on fuel supply.
The Department of Trade in the past made several attempts to get a price break up of the fuel sent to Bhutan from the Indian PSU Oil Companies, but they did not share the break up so far.
It is hoped that, if nothing else, with the MoU, Bhutan will at least get the fuel at the same price as Nepal which is cheaper than Bhutan.
A key problem is that Bhutan is being charged a bulk pricing rate as admitted by Indian officials in the recent past, which is very high.
