New Delhi: India and Nepal on Tuesday reviewed the progress on the proposed Rs 100 crore pipeline project for supply of petroleum products from Raxaul in Bihar to Amlekhgunj in the neighbouring country.

The issue came up for discussion between India's Commerce Secretary Rahul Khullar and his Nepalese counterpart Purushottam Ojha here.

"Currently we are getting petroleum products from Indian Oil Corporation depot in Raxaul. It is all transported by we have that plan to connect Amlekhgunj to Raxaul as it will save cost. There are a lot of advantages," Ojha told reporters.

He said that the project cost was estimated at Rs 84 crore when proposed in 2009. However, it would cost Rs 100 crore now, he said.

While the project is important for the bilateral trade, it is not yet clear as to how the resources for the same are going to be raised.

"...we got to look into it, we got to find money for it. Where the money is going to come from....things don't get sorted out in one meeting...give us some time," Khullar said.

If implemented, the project is expected to reduce fuel transportation cost by 40 percent. It will also help the land-locked Himalayan country which often faces fuel shortages.

Nepal sought increased level of investments from Indian companies. "India remains our largest trading partner. Since we have supply side constraints, we aspire for investments particularly from India," Ojha said.

On security concerns by Indian investors, Khullar said while it was an issue, "but I do not think that is the only concern that is holding back private investments".

He said the issues relating to transit trade also figured in the talks. New Delhi has been complaining that the third country shipments enter Indian markets through Nepal which enjoys preferential trade with India.

The bilateral trade between the countries stood at USD 2.7 billion in 2010-11.