The Belt and Road Initiative agreement signed between Nepal and China have crossed the 5-year mark, however, even after so many years have passed the BRI projects are nowhere to be seen on the horizon, reported The Kathmandu Post.
According to Pradip Gyawali, who served as the Foreign Minister to Nepal, the reasons which entail the failure of the BRI project in Nepal are, "We had a slow start. It took time to select projects and then we trimmed down the number of selected projects from 35 to nine."
"As we were working on the project implementation plan and its framework, the pandemic hit, and the entire priority was shifted," he added.
Further, certain political and ideological reasons have hindered the progress of BRI in Nepal, reported The Kathmandu Post. Since the projects under the BRI were mostly funded with loans, taken by Nepal, Kathmandu had reduced the number of projects to nine from thirty-nine.
"Nepal has a long experience of taking loans from multilateral agencies like the World Bank and the Asian Development Bank, among others, where interest rates are low and payback periods are long," said Mrigendra Bahadur Karki, an associate professor at the Tribhuvan University in Nepal.
"Nepal cannot afford commercial loans at higher interest rates," he added. While multilateral agencies offer loans at a maximum of 1.5 per cent, interest rates of commercial loans cross 2 per cent.
The Trans-Himalayan Multi-Dimensional Connectivity Network, which is a cross-border railway was one of the primary components of the BRI, reported The Kathmandu Post. However, the Ministry of Physical Infrastructure and China Railway Administration upon holding a meeting with the Chinese authorities stated that 42 months are required to complete the feasibility study of the railway project.
Complex geological terrain and labour intensive engineering workload will turn out to be the greatest obstacles to building the cross-border railroad, reported The Kathmandu Post. Further, a Nepal Finance Ministry official said that high-interest rates resulted in the Nepal side dropping the idea of taking commercial loans from Chinese banks and financial institutions.
Rajeshwar Acharya, a former Nepali envoy to China, attributed the hindrance in the development of the BRI project to frequent changes in the Kathmandu government "and a lack of proper diplomacy". The former Nepali envoy also highlighted that the government changes affect cooperation efforts between China and Nepal as well.
According to Acharya, Nepal should have discussions with Chinese authorities to search for a different funding modality. reported The Kathmandu Post. "It may take some time but negotiations are the only way to a better deal," he added.
However, it is unlikely that both Nepal and China would resume talks before the next general elections in Nepal, more so because Nepal's incumbent Sher Bahadur Deuba government is disinterested in loans. I don't see any possibility of BRI projects moving ahead at least until the general elections." Acharya concluded
