Nepal’s edible oil refiners have all but stopped buying crude palm oil amid growing domestic stockpiles after India’s top buyer suspended most of the country’s refined oil imports, industry officials told Reuters.
India revoked 39 oil import licenses in May to delay duty-free shipments from neighbouring nations, crippling Nepal’s refiners that had flourished as a result of preferential access to India’s huge market.
‘Refiners are not importing fresh crude palm oil but we have to take (delivery) of the stock which is in transit,’ said Amit Sarda, director at Pashupati Oil Industries, a leading refiner and exporter based at Nepal’s industrial town of Biratnagar.
Palm oil stockpiles in Nepal have swelled to 70,000 tonnes, overwhelming local demand needs, he said.
As a result, crude palm imports from Nepal had plunged from about 21,000 tons earlier in 2020 to less than 7,000 tons per month by mid-June, according to government statistics.
India accounts for almost two-thirds of Nepal’s trade and is their sole supplier of fuel. Nepal-India ties have lately strained following a territorial dispute.
In response to India’s high refined oil import taxes, Nepal’s palm oil refining industry was boosted to 54 per cent in 2018 to support domestic refiners.
The spike spurred oil refiners to build plants in neighbouring countries, and then to export tax-free refined oil to India under the South Asian Free Trade Agreement (SAFTA).
Around 30 billion Nepali rupees ($250 million) were invested to set up 19 refining units in Nepal alone, according to trade body Nepal Ghee and Oil Association.
Nepal’s palm oil exports to India rose from zero to 45,667 tonnes in the 2018/19 fiscal year, and then to 189,078 tonnes in 2019/20, according to India’s commerce ministry.
Such refiners could not repay bank loans if Indian ban remains in effect, Sarda said. ‘We have followed the SAFTA requirements and there is no question with that. Vikkas Dugar, managing director of the Nepalese refiner Swastik Oil Industries Pvt Ltd, said that our value-added is around 32-33 per cent.
India, the world’s largest palm oil importer, imports more than 9 million tons of crude palm oil annually which is then refined mainly by its own refiners. ‘It is high time the SAFTA agreements were checked and re-negotiated with longer-term targets such as’ Make in India, “said Sudhakar Desai, president of the Association of Indian Vegetable Oil Producers (IVPA).

Leave a Reply

Your email address will not be published. Required fields are marked *