Nepal yet to execute BRI projects, says Foreign Minister Saud

China’s unilateral announcement that Pokhara International Airport falls under the framework has put officials in a quandary.

Anil Giri

Anil Giri

The Kathmandu Post


Six months after the airport’s opening, a Sichuan Airlines chartered flight landed in Pokhara on Wednesday with 84 passengers on board the Airbus A319 aircraft. Deepak Pariyar/TKP

June 28, 2023

KATHMANDU – China’s unilateral announcement that the Pokhara International Airport was built under the framework of the Belt and Road Initiative (BRI) has finally reached Parliament.

Two members of Parliament—Ram Hari Khatiwada of the Nepali Congress and Asim Shah of the Rastriya Swatantra Party—on Monday asked Foreign Minister NP Saud and Tourism Minister Sudan Kirati whether the Pokhara International Airport is a part of the BRI and whether the government would clarify its position on the issue.

Responding to them, Foreign Minister Saud said that Nepal and China had signed the framework agreement of the Belt and Road Initiative (BRI) in 2017 and it is still at the stage of execution. He did not name the Pokhara airport but stated that not a single project under the BRI has come into operation in Nepal.

“The project implementation plan of the BRI is at the stage of discussion between Nepal and China. Not a single project in Nepal under the BRI has been executed. The project implementation plan of the BRI is still under consideration,” said Saud.

After the Nepal side selected nine projects to be executed under the BRI, the second Belt and Road Initiative Conference in China in 2019 incorporated the Trans Himalayan Multidimensional Connectivity in its outcome document.

The nine projects were—the Rasuwagadhi-Kathmandu road upgrade; Kimathanka-Hile road construction; road from Dipayal to the Chinese border; Tokha-Bidur road; Galchhi-Rasuwagadhi-Kerung 400kV transmission line; Kerung-Kathmandu rail; 762MW Tamor hydroelectricity project; 426 MW Phukot Karnali hydroelectric project; and the Madan Bhandari Technical Institute.

Ahead of Chinese President Xi Jinping’s state visit to Nepal four years ago, when the Chinese Foreign Minister Wang Yi was in Kathmandu in March 2019, the Nepali side proposed developing the Madan Bhandari University under the BRI. That was the only project the Nepali side had proposed for development under the BRI, but due to several reasons, it is in limbo. After the Covid pandemic hit China, other projects were also affected.

Then the Chinese side, about two years ago, forwarded the text of the project implementation plan of the BRI so that negotiations of projects and their execution under the initiative could be expedited. A draft of the implementation plan is a prerequisite for project selection, funding modality, budgeting, supervision and monitoring, and human resource management.

The Ministry of Foreign Affairs was taking the lead in developing the plan while other agencies like the Office of the Prime Minister and the Ministry of Finance provided inputs on the draft, which is not moving yet, two government officials told the Post.

“Once we agree on the text of the project implementation plan, we can negotiate and execute the project under the BRI,” said one official. “Not only from Nepal, the Chinese had also asked for similar implementation drafts from other countries that have signed up for the initiative.”

When Nepal signed the BRI agreement in 2017, it was touted as a watershed moment in Nepal-China ties. But with not a single project taking off under the Chinese programme, there were doubts if Nepal was itself reluctant to undertake these projects for geopolitical reasons.

India and the United States see the BRI as China’s bid to exert influence in the region, using its economic heft. Countries like Sri Lanka and Pakistan in South Asia too are part of the BRI.

When Nepal agreed to build projects under the initiative, Pushpa Kamal Dahal of the Communist Party of Nepal (Maoist Centre) was prime minister. After him, Sher Bahadur Deuba of the Nepali Congress led the government, followed by KP Sharma Oli of the CPN-UML.

After successive governments failed to initiate any project under the BRI, said a pair of foreign ministry and finance ministry officials who are familiar with the matter, there was some kind of unease on the Chinese side if Nepal was really committed to what it signed up for.

The only development on the BRI from the Nepali side is that Kathmandu in January 2019 sent a list of nine projects to China. There was no further progress. Before finalising the text of the project implementation plan of the BRI, the former Dueba government told visiting Chinese Foreign Minister Yi that Nepal would prefer grant and aid or soft loans under the BRI due to the country’s precarious economic situation and that Nepal cannot afford big-ticket projects with high-interest loans and short repayment timelines. This was something time and again communicated to the Chinese side.

The Finance Ministry, while writing its comments in the text of the project implementation plan, said that Nepal cannot afford a loan whose interest rate goes beyond one percent, nor can it receive commercial loans to execute the BRI projects. The Nepali side also insisted that there should be free and fair competition among the bidders under the BRI framework. The major impediment in the selection and implementation of projects is a lack of clarity on the financing modality, according to multiple officials. Nepal, they say, wants donations while the Chinese insist on soft loans.

A Nepali diplomat who was earlier based in Beijing said that there is no hard and fast rule to develop the implementation plan and not all countries that signed up to the BRI have such plans.

A month after signing the agreement, the government in June 2017 had formed three different committees headed by secretaries from finance, foreign and physical infrastructure ministries to execute the BRI projects.

The finance secretary-led committee was tasked with coordinating and facilitating the selection of the projects and forwarding the concept to the foreign secretary, who was mandated to hold meetings with the relevant stakeholders before pitching them to the Chinese side.

A sub-committee led by secretaries from several ministries was entrusted with providing technical support to the finance and foreign secretaries. These thematic and sectoral sub-committees were supposed to prepare technical details of the projects and recommend them to the three secretaries, according to a former secretary at the Ministry of Physical Infrastructure.

“None of these mechanisms, however, functioned properly. They became defunct without holding a single meeting,” the former secretary, who did not wish to be named, told the Post.

Initially, there were speculations that China would be building two separate railway projects—linking China’s Kerung with Kathmandu, and Kerung with Pokhara—whose detailed study is still being carried out. China has already agreed to carry out the study under the banner of Nepal-China Trans-Himalayan Multi-Dimensional Connectivity Network.

The feasibility study of Kerung-Kathmandu railway has begun with a Chinese grant and is expected to be completed in another 40 months. Without progress on a single project, the BRI framework agreement has been renewed twice, with the most recent in May. Policy coordination, infrastructure connectivity, unimpeded trade, financial integration and connecting people are the five major priority areas of the initiative. The implementation plan encompasses all possible areas of cooperation and gives clarity on project negotiations on both sides.

For example, according to officials working on the draft, if Nepal seeks support for connectivity projects under the BRI, it would make a list of various kinds of projects under air connectivity, physical connectivity, digital connectivity, transmission lines, cultural connectivity and connectivity through trade, goods and commerce. Another foreign ministry official told the Post that there were some rounds of discussions between the two sides and drafts were exchanged so as to reach a consensus on the proposed projects. But in the absence of a dedicated implementation plan, Nepal could not identify the projects under the BRI.

But China’s unilateral announcement that Pokhara International Airport falls under the framework has put officials in a quandary.

On December 31 last year, on the eve of the Pokhara International Airport inauguration by Prime Minister Pushpa Kamal Dahal, the Chinese Embassy wrote on its Twitter account that “This [Pokhara airport] is the flagship project of the China-Nepal BRI cooperation.”

Six months after the airport’s opening, a Sichuan Airlines chartered flight landed in Pokhara on Wednesday with 84 passengers on board the Airbus A319 aircraft.

The Chinese Ambassador Chen Song, on Wednesday, reiterated that the Pokhara airport falls under the BRI. Nepali government officials, however, have been rejecting the Chinese claim.

“The whole world is saying that the airport is not under the BRI, so why are our MPs confused whether it is under the BRI?,” asked tourism minister Kirati.

He added: “Why is this issue being raised in Parliament ? Why are our parliamentarians so confused ? Why are we unnecessarily spending our time and energy on this issue when the whole world and newspapers are saying no, it is not [a part of the BRI].”

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