The Indian Government has signed a memorandum of understanding with the Nepalese counterpart for the construction of 41km petroleum pipeline project.

The Indian Petroleum & Natural Gas Minister of State (I/C) Dharmendra Pradhan has reviewed the bilateral cooperation in the petroleum sector with the Nepal Commerce and Supplies Minister Sunil Bahadur Thapa in Kathmandu.

The countries also agreed to expand cooperation in oil and gas in several other areas.

The Amlekhgunj-Raxaul project is expected to take 30 months to complete following approvals from the Nepalese Government.

Indian Oil Corporation (IOC) will build the pipeline with an initial investment of approximately Rs200bn ($30.1m). Around Rs750m ($11.3m) will also be financed through Nepal Oil Corporation for the development of additional facilities in Amlekhgunj depot.

Nepal will purchase products, including petrol, diesel and kerosene for at least 15 years.

IOC will also reengineer the Amlekhgunj petroleum depot to enable it to receive petroleum products through the pipeline.

Nepal receives Indian petroleum products worth about $1.1bn annually.