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Nepal and China fail to make BRI projects headway, Tibet-Nepal railway plan report to take four more years

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(TibetanReview.net, Mar27’22) – Nepal signed up to China’s global infrastructure projects plan, the Belt and Road Initiative (BRI), in 2017, but none under it has reached the stage of implementation even after Chinese State Councilor and Foreign Minister Wang Yi’s Mar 25-27 visit to the country. As regard the much-hyped railway project between Tibet’s border town of Kyirong (or Kerung) and Nepal’s capital Kathmandu, the feasibility study was underway and it will take another four years to prepare a detailed project report, according to the kathmandupost.com Mar 27.

Still, following the delegation-level talks between Nepal’s Foreign Minister Narayan Khadka and his Chinese counterpart, nine agreements were signed relating to cooperation, trade, aid, and other matters.

One of the main sticking points on the BRI projects remains the issue of funding.

While requesting more grants and new projects during his meeting with Wang, Prime Minister Sher Bahadur Deuba was reported to have said his country was not yet seeking a loan as the two countries were at the final stage to conclude negotiations on the implementation agreement for the BRI projects.

Chinese Foreign Minister Wang Yi with Nepali Prime Minister Sher Bahadur Deuba & Foreign Minister Dr Narayan Khadka on March 26, 2022. (Photo courtesy: Himal Sanchar)

During the most recent negotiations on it, the Nepali side insisted on grants and that if a loan had to be taken, it should be a “soft loan” or “concessional loan”. However, Beijing usually offers loans under the BRI at a higher interest rate with a short payback period, the report noted.

Nepal’s position is that loans for the projects financed under the BRI must be soft loans and should not have an interest rate more than 2 percent. “Similarly, the repayment time should be as per the international standard or as per the interest rate imposed by the World Bank, the Asian Development Bank and others,” the report quoted a senior Nepali Finance Ministry official as saying.

Another major sticking point is Nepal’s insistence that projects under BRI should be open to all for execution, meaning the right to bid cannot be reserved exclusively for Chinese firms.

Because of these differences, BRI projects were not taken up for finalization during Wang’s visit.

Besides, the report cited Govinda Pariyar, the prime minister’s publicity affairs chief, as saying Nepal made it clear to China that it would not accept any project that comes with strings attached—political or any other – referring to the Feb 27 parliament-approved Millennium Challenge Corporation (MCC) Compact, a $500 million American grant for building electricity transmission lines and improving roads. China had criticized the US grant bitterly, seeing it as a rival to its BRI projects and as a geopolitical threat to it.

On the proposed Kerung-Kathmandu railway, officials have said the feasibility study was ongoing and it will take another four years to prepare the detailed project report.

Both sides agreed that the Sino-Nepali cross-border railway project, planned by leaders of both countries and welcomed by the two peoples, should be completed, stretching the railway to Kathmandu, said China’s official Xinhua news agency Mar 26.

However, while Nepal looks to China to foot the bill for this project, the latter has previously been reported to be only willing to offer a loan for its building.

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