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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2402

Railway Euphoria In Himalayan Nepal

By Rattan Saldi - Syndicate Features

Least Developed Country, Nepal, situated in the lap of the world’s tallest mountain ‘The Himalayas’ is in the grip of railway euphoria, after the Prime Minister K.P. Sharma Oli’s visit to China from June 19 to 24, 2018. Rail linkages figured on his agenda when he was in India in April as well.

Nepal is a signatory to China’s ambitious Belt and Road Initiative (BRI), previously called One Belt, One Road (OBOR) Initiative.

The joint statement issued at the end of Oli’s talks with President Xi Jinping, Prime Minister Li Keqiang and other Chinese leaders, said the two sides have agreed to intensify cooperation under OBOR to enhance connectivity encompassing roads, railways, aviation and communications “within the overarching framework of trans-Himalayan Multi-Dimensional Connectivity Network”.

The MOU on cooperation for railways, the joint statement said, is “the most significant initiative in the history of bilateral cooperation”. It would herald “a new era or cross-border connectivity between the two countries’.

As a follow up, feasibility study will be conducted for Kerung-Rasuwagadhi-Kathmandu line and Kathmandu-Pokhra-Lumbini line with China providing financial and technical support.

Kerung (Kyirong in Tibetan) is the nearest Tibetan town to Nepal. Rasuwagadhi in Nepal’s Rasuwa district is about 35km from there. The area was the scene of a three-day battle during the second Nepal Tibet War in 1792.

The Kerung-Rasuwagadhi border crossing was opened to trade in December 2014. It is about 120 km from Kathmandu.

The second largest Tibetan city of Shigatse is about 540 km from Kerung, and both are getting connected by train.

Shigatse came on the rail map in August 2014 when China inaugurated the 253-km Lhasa-Shigatse extension of the Qinghai-Tibet railway. It takes about 3 hours to cover the distance.

A historical nugget. Officially known as Xigazê, Shigatse, is home to the Tashilhunpo Monastery, traditionally the seat of the Panchen Lama.

The Nepal-China joint statement was short on details about Kerung-Rasuwagadhi-Kathmandu line. But from what one hears, the Chinese appear keen to bring their railways to Nepal’s doorstep by 2022.

As stated at the outset, rail connectivity figured prominently on the agenda of Prime Minister Oli’s visit to New Delhi in the first week of April and his Indian counterpart, Narendra Modi’s return visit to Nepal a month later on 11th and 12th May.

During Oli-Modi talks (in New Delhi) both sides agreed to lay a rail link between Kathmandu and the Indian border town of Raxaul with India’s financial support. India will ready a Detailed Project Report (DPR) within a year. Funding and implementation modalities will be finalised thereafter, said the two leaders in a joint statement.

Presently Nepal has a very limited railway capacity (built by India). The 59- kilometre long line from Jaynagar (India) to Janakpur, and Bijalpura (Nepal) is operational up to Janakpur. This is because a bridge on the section has collapsed. Raxaul is connected with Sirsiya Inland Container Depot near Birgunj with broad gauge. Oli and Modi agreed that work on Jogbani to Biratnagar Custom Yard would be completed this year itself.

New Delhi had also offered Nepal connectivity through inland waterways for movement of cargo through India. Prime Minister Oli welcomed the plan saying that additional connectivity would have an enormous impact on the growth of business and economy of his country.

But to achieve this goal, Nepal must create a massive manpower to implement, manage and operate all connectivity projects. As of now it has hardly any trained engineers even to conduct feasibility studies, much less to prepare DPRs.

The China - Nepal joint statement is silent on the modalities and funding of the Beijing aided two rail projects in the Himalayan country. A report published in Rising Nepal quoted the Chinese experts to put the cost of Kyirong-Kathmandu railway at US dollars 2.75 billion; the Kathmandu-Pokhara-Lumbini line is estimated to cost US dollars 3 billion.

Undoubtedly, these connectivity projects will give a boost to the tourism industry. even for religious tourism since Nepal is the seat of Buddhism. But who will fund these projects when their financial viability is not known?

Reporters put this question to Prime Minister Oli as he returned to Kathmandu from Beijing. His one-liner was “those who have money”.

Who are those money bags? He did not throw light.

His own government is not footing the bill. The giveaway was the allocation for railways in the budget for the current fiscal. It was very meagre.

This leaves a big question mark over execution of the ambitious rail ventures. Given its poor financial health, Nepal cannot afford big loans from international financial institutions. Even the Chinese for that matter.

Sri Lanka has just learned the hard way about the fine print on Chinese loans. The Hambantota port built to rival Singapore port has become a white elephant; the nearby Mattala airport has emerged as the world's emptiest airport due to lack of flights.

No surprise voices are being raised in Nepal that it would be prudent for the country to take into account its own past experience in dealing with major Chinese companies. Kathmandu had to cancel the agreement with Gezhouba Group for the construction of 1200 MW Budhi Gandaki hydro power project after a parliamentary panel found the deal lacked transparency.

750 MW West Seti Hydro Power Project was awarded in 2015 to Three Gorges International Corp, a Chinese government owned company. The venture is in doldrums. The Chinese company is clamouring for better terms on construction and tariffs. It has termed the power purchase rate offered by Nepal unfeasible but Nepal has refused to budge, according to Nepali officials.

“West Seti is our national priority project and our decision on its execution is guided by the consideration of what is best in our national interest. Such decisions are never guided by external factors,” Oli told Global Times, when asked whether Indian pressure was behind the cancellation of the $1.6 billion contract.

His energy minister Barshaman Pun appears eager to contain the fallout resulting from the “cancellation”. In an interview with Xinhua, he said: “The West Seti project is still in the hands of the China Three Gorges Company (CTGC) and we are ready to continue with CTGC if it is eager to develop this project.”

This bitter experience, notwithstanding, Prime Minister Oli sealed agreements worth US$ 2 billion on the very second day of his official visit to China to facilitate private investment in Nepal’s hydro power sector. These deals cover four projects which together can generate some 1000 MW of power.

Nepal Electricity Authority and China’s State owned Grid Corporation will construct a 159 - kilometre long 400 KV Kerung-Galchhi transmission line, the first of its kind between the two countries.

Nepal hardly has any big industry. It is primarily an agricultural country. For a turnaround in its economy, Oli government will have to take a relook at the commercial and trading practices and give a big push to production capacity in various sectors to reduce its trade imbalance with India and China and other trading partners.

China has agreed to support Nepal’s feasibility study on oil and gas resources research. Nepal needs a big oil storage facility. Both sides have agreed to explore this option as well to reduce dependence for supplies on India.

The market is not much enthused by this proposal. Two years ago, in March 2016, China had offered to supply oil and gas to Nepal. The offer came in the context of a blockade of the border with India by Terai based parties.

What arrived from China were a small quantity?

A clear pointer to the limitations imposed by the Himalayan topography on the Chinese munificence.

- Asian Tribune -

Railway Euphoria In Himalayan Nepal
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