BEIJING // Nepal’s prime minister Khadga Prasad Sharma Oli returned home on Sunday after a week-long visit to China and walked straight into a government row that threatens a raft of multibillion-dollar agreements signed while in Beijing.
Mr Oli’s political partner in the coalition government, the Unified Communist Party of Nepal (Maoist), is threatening to withdraw support on the grounds that shelters for victims of last year’s earthquake victims have still not been built and little has been done to curb the black market in essential commodities. The threat has put at risk the 15-odd agreements signed last week between Nepal and China.
The prime minister signed a range of groundbreaking deals that could significantly enhance Nepal’s business links with China while reducing its dependence on India. They include establishing electricity transmission lines and speeding up an old Indian agreement to expand the Himalayan nation’s Pokhara Airport.
China also agreed to establish crucial petroleum storage facilities. Nepal has been woefully dependent on India for its energy needs covering petroleum products and electricity. Beijing also agreed to repair and upgrade two major motorways that have been seriously dilapidated in parts. They also began initial discussion on a possible free trade agreement (FTA).
But “the biggest achievement is the programme of connectivity, both physical and institutional, between the two countries”, Hu Shisheng, a director at the China Institutes of Contemporary International Relations, tells The National. “We have agreed to build railway and road linkages, and also work towards signing an FTA.”.
Mr Oli’s supporters are elated.
“This is a historic moment in Nepal’s history. We are opening our doors wider by joining hands with China. We have so far been dependent on India,” Rajan Bhattarai, a member of the ruling Communist Party of Nepal (Unified Marxist Leninist), tells The National.
Some analysts say China’s apparent interest in Nepal belies a grander scheme.
“I don’t think China is very ambitious about Nepal. It is too small and underdeveloped to serve Beijing’s larger economic interest, which India holds,” says Pramod Jaiswal, a senior research officer at the Institute of Peace and Conflict Studies in New Delhi.
China’s ultimate goal is a lot bigger than lighting up the Himalayan nation and giving it roads, Mr Jaiswal says. Beijing’s main intention is to first connect its border with Nepal, and then build road and rail links through the country to Lumbini on the Indian border, which is more than 300 kilometres away.
China is, in reality, eyeing the Indian market. The Chinese president Xi Jinping made no bones about it when he told Mr Oli last week: “Nepal can be a bridge between China and India.”
Mr Hu says: “China wants to connect the entire South Asian region after linking Nepal with railways. In future, we can connect this line to the Indian railways, and stretch it further to Bangladesh and Myanmar. That way we can reach the sea and the Indian Ocean. It will be good for all countries in the region”.
Power is high on Beijing’s agenda also. Chinese companies are keen to set up new photovoltaic stations for generating solar energy in Nepal. With its crippling electricity shortages, Nepal offers a new market.
However, Chinese solar makers are also eyeing the bigger opportunities in the lower Himalayan regions on the Indian side that also suffer from electricity shortages. They are keen to develop in Nepal because that could be the first step to exploring the larger market in India’s energy starved hilly regions.
The main challenge for the firms will be to match production costs to the low purchasing power in Nepal, and the mountainous regions of India if and when government subsidies are withdrawn.
