Nepal inks fuel agreement with China to ease crisis

Nepal signed its first ever fuel agreement with China Wednesday for Beijing to supply petroleum to ease a crippling shortage after protests blocked imports from sole supplier India, an official said.

 Scores of trucks have been stranded at a key India-Nepal border checkpoint for more than a month, cutting off vital supplies and forcing fuel rationing across the landlocked Himalayan nation.

 The shortages have led to overnight queues at gas stations in the Nepalese capital and prompted the government to turn to its northern neighbour for help, ending a decades-long monopoly by India as tensions deepen between New Delhi and Kathmandu.

 "We have signed a MOU (memorandum of understanding) with China National United Oil Corporation to supply the petroleum products that Nepal needs," said Deepak Baral, spokesman at the state-run Nepal Oil Corporation.

 "This is the first time that China is commercially supplying petroleum to Nepal, so we need to study various aspects like price and transportation of the fuel," Baral reportedly said.

 Beijing has already agreed to donate 1.3 million litres of petrol to Nepal but the two countries have never commercially traded oil or gas.

 Kathmandu is exploring the possibility of transporting fuel via its northern land crossings with China, one of which reopened this month after suffering damage in the earthquake that caused widespread devastation in the impoverished country in April.

 Nepal has traditionally relied on its border crossings with India for trade, with the flat plains easing the transport of imports and exports, while avoiding the mountainous terrain of the northern routes.