Nepal cool to China’s offer of building railways under BRI

Nepal’s caretaker government led by Sher Bahadur Deuba has expressed its reservations over a Chinese proposal to sign a deal in order to carry out a feasibility study of an ambitious cross-border railway under the Belt and Road Initiative (BRI).

In a letter to the Ministry of Foreign Affairs of Nepal, the Chinese Embassy in Kathmandu sought the former’s approval for the signing of the agreement at an opportune time, officials said.

An official privy to the matter said that the current government, which turned into a caretaker one after the announcement of elections in the first week of August, is unlikely to sign long-term deals with foreign countries including China.

“We received a Letter of Exchange (LoE) from China requesting to sign the agreement on cross-border railway last month. But no decision has been made in this regard because the present caretaker government is not supposed to sign long-term deals with foreign countries including China,” a senior official at Nepal’s Prime Minister’s Office, told India Narrative on Sunday, requesting anonymity. He termed China’s proposal ‘ill-timed’.

“The to-be-formed government will make a decision whether to go ahead with the Chinese proposal,” the official added. Nepal is yet to get a new government after it held elections to the House of Representatives (HoR) and provincial assemblies on November 20. Nepal’s major political parties have intensified cross-party efforts to form a new coalition government.

As per China’s proposal, the country will send a team of railway experts to Nepal to conduct the feasibility study for the cross-border railway, if Nepal agrees.

The estimated cost for the feasibility study of the 72-km cross-border railway will be around Nepali rupees 3.4 billion (180.47 million RMB), according to Nepali officials.

“China has agreed to provide grants for the feasibility study of the railway and its technical studies,” an official at Nepal’s Ministry of Physical Infrastructure, told India Narrative, on Sunday.

Nepal and China have already discussed the ambitious railway project, but are yet to finalize its funding modalities.

Earlier, the two countries had discussed the matter when Nepal’s Minister for Foreign Affairs Narayan Khadka paid an official visit to China at the invitation of Wang Yi, the Chinese foreign foreign minister, also the state councilor.

Another source at the Nepal’s foreign ministry said that Nepali foreign minister Khadka chose not to make specific deals on the BRI during his visit to China in August, believing that the country needs additional negotiations for finalizing connectivity projects including the much-hyped cross-border Kerung-Rasuwagadhi railway.

“We need only grants not commercial loans under the BRI for developing connectivity projects. There is a deep fear among the political leadership that Nepal also may slip into a debt trap like another South Asian neighbour Sri Lanka if it accepts commercial loans from China,” the source had told India Narrative in an earlier interview in August this year.

Nepal had signed a Memorandum of Understanding (MoU) on the Belt and Road with China in May 2017. However, it has not implemented a single project under the BRI yet.

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(Santosh Ghimire is India Narrative’s Nepal correspondent based in Kathmandu)