Private Sector Enters LNG Trade as Nepal Records First Import for Industrial Use

Nepal has recorded its first-ever import of liquefied natural gas (LNG) by a private sector company, with the fuel to be supplied exclusively to industries rather than to household consumers, the importing company said.

Yogya Holding, a company under the SG Group, imported LNG from India last week, marking the private sector’s entry into the petroleum business that has long been dominated by the state-owned oil monopoly - Nepal Oil Corporation.

While Nepal Oil Corporation imports only liquefied petroleum gas (LPG), Yogya Holding has become the first company to bring LNG into the country. Chairman of SG Group Shivaprasad Ghimire said the initial focus is on supplying LNG to industries.

“In the first phase, we have targeted industries only,” Ghimire said. “Natural gas can replace coal, furnace oil, firewood, husk, diesel and LPG used in factories. This will benefit industries.”

Claiming that LNG is cheaper than other fuels and around eight percent more efficient, he said the gas is also environmentally friendly.

“We are physically demonstrating its benefits to industrialists so that they can clearly see how effectively it works,” he added. Ghimire said the group had been preparing for LNG imports for the past five years and has finally succeeded.

In February, Yogya Holding signed an agreement with Indian Oil Corporation to supply 240 metric tonnes of LNG to Nepal. Under the agreement, a limited quantity was imported last week.

The LNG is currently being used at an industrial facility established by SG Group in Bara district. “We are using it at my Bright Metal Industries Pvt Ltd,” said Ghimire, who is also the former president of the Nepal LP Gas Industries Association. “The gas has been connected through a pipeline from the storage facility, replacing the LPG that was previously in use.”

He said discussions are also underway to supply LNG to other industries. For storage, SG Group has constructed a 55-tonne-capacity LNG storage facility at Simara in Bara. The facility has been built on part of around 30 bighas of land owned by the group. Ghimire said the storage facility required an investment of Rs 600 million.

“This is only the initial investment,” he said. “As demand grows and storage capacity will be expanded and the total investment is expected to reach Rs 1 billion.”

At present, the Indian Oil Corporation is supplying LNG using its own bullet tankers. SG Group’s move to import gas has drawn attention at a time when the government is seeking to reduce imports of petroleum products and promote clean energy.

However, as Nepal Oil Corporation prepares to import gas through pipeline systems in the future, questions have been raised about the long-term sustainability of transporting LNG by road.

Ghimire said policy-level support from the government would be necessary for the promotion of LNG. “If LNG is considered necessary, the government must also provide policy backing,” he said.

He added that natural gas is particularly useful for industries currently running on furnace oil, diesel, coal, firewood and husk, and can also substitute LPG. “Nepal Oil Corporation is incurring losses on LPG. Natural gas can replace it,” he said.

Ghimire also pointed out that natural gas could play a vital role in future chemical fertiliser production, and noted the discovery of natural gas in Dailekh. He said the Dailekh reserves could be developed under a public-private partnership model.