Kathmandu, Jul 19 (IANS): The Motihari-Amlekhgunj oil pipeline project will start commercial operation by August following virtual inauguration of the Nepal-India bilateral project by executive heads of the two countries, the Himalayan Times reported on Friday.

According to the report, Nepal will officially start fuel trade with India via the pipeline after its virtual launch by Prime Minister K.P. Sharma Oli and his Indian counterpart Narendra Modi.

The Ministry of Foreign Affairs (MoFA) and Nepal Oil Corporation (NOC) confirmed that groundwork on for the inauguration in the first week of August, said the Himalayan Times report.

The MoFA sources said there was also the possibility of the project being inaugurated by the heads of state of the two nations as President Bidhya Devi Bhandari, during her recent visit to India, had invited her Indian counterpart Ram Nath Kovind for an official visit to Nepal. Although the exact date has not been fixed, preparations are under way for Kovind's Nepal visit, the source said.

"While the first option is more likely, the two governments are also exploring the possibility of the second option," said a MoFA source, who did not want to be named.

The Motihari-Amlekhgunj oil pipeline was first proposed in 1996. However, the project

finally edged closer to reality during Indian PM Modi's visit to Kathmandu in 2014.

The two governments inked an agreement to execute the project in August 2015. However, project construction was delayed following the 2015 earthquake and supply obstruction along the southern border. The project construction works finally began in April last year with the mandate to complete the project within 30 months.

Interestingly, the project has been completed much ahead of its deadline and is ready for commercial operation.

Though the initial cost of the project was estimated to be INR 2.75 billion, where the Indian government would inject INR 2 billion, the NOC stated that total project cost escalated to almost INR 3.25 billion.

Along with reducing huge transportation cost for the NOC, commercial operation of the oil project will also ensure reduction in fuel price in the domestic market.

"Commercial operation of the cross-border fuel project will bring down fuel price by at least one rupee per litre," said Sushil Bhattarai, deputy executive director at the NOC.