June 16, 2019
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Full steam ahead for Nepal-China railway project through Himalayas

Kathmandu, Jun 13 (EFE).- The much-talked about Nepal-China railway line project has picked up the pace as China announced funding for a detailed feasibility study of the project, which many critics say reflects Beijing’s strong strategic and geopolitical engagements in the small Himalayan nation.

The $2.5 billion trans-Himalayan railway from Nepal's capital Kathmandu to Kerung on the Chinese side of the border will then link to the Tibetan plateau, traveling along some of the highest passes in the world. The joint project is considered extremely challenging due to the rugged topography of the Himalayas.

The Chinese government has included the cross-border railway line as a project to be supported under its Belt and Road Initiative (BRI).

In the first phase, the railway line will link Kerung to Kathmandu, and in the planned second phase it will extend to Lumbini, the birthplace of Buddha in the southern Terai region near the India border.

Nepal’s finance ministry has allocated an $18 million grant from the Chinese government to prepare a detailed feasibility study of the project, director-general of Department of Railways, Balram Mishra, told EFE.

“The study will begin from the next fiscal year,” he said, indicating that would be mid-July.

Mishra said the study was expected to be completed within a year and a half. After that, the total construction period will be seven years.

“Even preparing the detailed project report is an extreme task,” he said.

The BRI, unveiled by China’s leader Xi Jinping in 2013 and seen as a modern Silk Road, aims to connect China with Asia, Europe and beyond through large-scale infrastructure projects.

The Nepal-China railway line, which seeks to penetrate the massive South Asian market via Nepal, is one of the most ambitious and difficult projects the two countries have worked on. Nepal believes that completion of the project will enhance its connectivity with its northern neighbor, bringing an end to the landlocked country’s dependence on India for trade.

Nepal’s total imports bill amounted to $11 billion in the 2017-18 fiscal year. From India alone they stood at $7.4 billion, taking up 65.15 percent of Nepal’s total imports. Imports from China totaled $1.4 billion, standing at 12 percent of Nepal’s total. Most goods that arrive in Kathmandu are transported by truck from Kolkata port in eastern India.

The railway plan was mooted by China long ago, but issues around funding and building the project along such difficult terrain slowed efforts, particularly after Nepal’s deadly earthquake of 2015.

The trans-Himalayan project gained momentum after India imposed a trade embargo against Nepal in 2015, cutting off fuel and essential supplies for months. Nepal was forced to seek alternatives, which it did by turning north.

In Mar. 2016, Nepal’s Prime Minister KP Sharma Oli signed 10 key agreements with China, mostly for infrastructure and connectivity projects.

In April this year, President Bidya Devi Bhandari represented Nepal at the second Belt and Road Forum for International Cooperation in Beijing. The joint communique issued from the Leaders’ Roundtable of the event included “the Nepal-China Trans-Himalayan Multidimensional Connectivity Network, including Nepal-China cross border railway” on the list of “economic corridors and other projects catalyzed and supported by connectivity.”

According to the pre-feasibility report, the Kathmandu-Kerung railway line will span 72 kilometers (45 miles) with 98.5 percent of the section consisting of bridges and tunnels. The line’s initial cost has been estimated at $2.5 billion.

Before constructing the Kathmandu-Kerung tracks, the Kerung-Shigatse line needs to be built on the Chinese side. In 2006, the railway line reached Tibet’s capital Lhasa from Qinghai, passing spectacular icy peaks on the Tibetan plateau and climbing to altitudes of up to 5,000 meters above sea level, making it the highest railway in the world. The Shigatse-Lhasa extension opened in Aug. 2014. Shigatse, Tibet's second-largest city, is about 540km from Kerung.

Last year, Tibet said it would “open up” to private investment in the trade and business sectors from 2020, with Beijing seeking to penetrate the massive South Asian market via Nepal.

Former finance minister and Nepali Congress leader Dr Ram Sharan Mahat told EFE that building the project over such extreme terrain would be highly expensive.

“If we build the project taking (out a) loan, we could be in (a) debt trap,” he warned.

“We obviously need an enhanced connectivity with China. We can capitalize the Belt and Road Initiative of China to meet our critical infrastructure needs. But project selection should not be driven by political interest. We need to construct the projects which are economically viable,” he added.

Mahat said the railway connectivity with China is good but the techno-economic analysis — to evaluate whether or not the proposed project is sustainable by assessing the economics of scale and broader impacts — is not clear.

“The project needs an expert’s review before taking off,” he said.

Dr Posh Raj Pandey, executive chairman of South Asian NGO consortium South Asia Watch on Trade, Economics and Environment, told EFE that given the current size of Nepal’s economy of $30 billion and its resources, the project is “very big” to be able to afford.

“We need connectivity with China to increase trade, but still roadways are viable options,” he said.

Nepal’s total trade share with China is only 15 percent and investing nearly $3 billion to build the railway is a big risk, he added.

“Nepal might fall into a debt trap if the project is built taking (out a) loan,” he said, adding that the needs of the railway project could be reviewed after a decade.

Recently, Chinese ambassador to Nepal Hou Yanqi told a press conference in Kathmandu that building the Nepal-China cross-border railway was not an easy job given the tough terrain, but the Chinese side was determined to execute the project.

“Discussion on the funding modality will start only after the feasibility study. It is too early to enter into the issue now,” Hou said.

“It is unfair to say BRI leads to a debt trap as there is no instance where any country has been trapped in debt for their participation in the initiative,” she added.

China is also funding an international airport, highways, hydro power plants and a cement factory in Nepal.


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