With China in mind, India has agreed to deepen the energy ties with Nepal by renewing its fuel sale agreement with the country of 39 Himalaya from five years ago.
New Delhi also offered its expertise for the implementation of a pro-poor cooking gas program project in Nepal.
Indian Oil Corporation and Nepal Oil Corporation signed an agreement in New Delhi Monday in the presence of Indian oil minister Dharmendra Pradhan and Nepali Supply Minister Deepak Bohara.
As part of the agreement, the Indian Indian Oil company will provide about 1.3 million tons of fuel each year for the next five years.
India has supplied fuel to Nepal since 1974 under contracts that have been renewed from time to time.
President of Indian Oil B Ashok, who was present at the occasion, said the renewed agreement is for the period from April 2017 to March 2022, covering Gasoline, diesel, kerosene, jet fuel and liquefied petroleum gas (LPG).
Pradhan said that Indian Prime Minister Narendra Modi said in 2014 that India would build the pipeline of Raxaul-Amlekhganj oil products, whose work is expected to start in 2017-18. Nepal hopes that the pipeline will be extended closer to its capital, Kathmandu.
The Indian Minister said that investments for the pipeline will be made by Nepal, while Indian Oil will provide technical assistance.
Pradhan and Bohara also discussed the construction of a similar pipeline for the supply of LPG between India and Nepal.
India's fuel supplies witnessed a temporary disruption in 2015 when protesters blocked the main transit point on the border between India and Nepal. Indian Oil then used other entry points to power Nepal.
The renewal of the fuel agreement with Nepal indicates India's attempt to check the growing influence of China in the Himalayan nation that had seen a rise in anti- Indian during the blockade.
Nepal signed a fuel purchase agreement with China, but the road between nations presents logistical challenges.
During the blockade, China had offered to supply LPG to Nepal after giving fuel to alleviate the crisis in the country.
According to the ambassador of Nepal to China, Mahesh Maskey, China has expressed its willingness to supply cooking gas balls directly to Kathmandu by establishing a common customs point in Panchkhal District of Kavrepalanchowk, located at 75 Km to the east of Kathmandu.
But the logistical difficulties and costs associated with bringing fuel from China through high mountain passes made this option economically unsustainable.
Pradhan suggested that Nepal implement the Prime Minister's flagship regime, under which cooking gas is provided free to the poor in Uttar Pradesh. He said that India would help the implementation of the system by sharing its experience and expertise.