Prime Minister Reveals Plan to Seek Grant Support under ‘Belt and Road Initiative’ (BRI) During China Visit

Prime Minister Pushpa Kamal Dahal ‘Prachanda’ has unveiled his intention to secure grant support under the Belt and Road Initiative (BRI) during his upcoming visit to China. It has been disclosed that an agreement encompassing crucial grants within the framework of the BRI will be signed during this visit. Furthermore, an agreement is anticipated for the establishment of a cross-border transmitter line, facilitating electricity trade between Nepal and China via the Rasuwa border.

Amidst this backdrop, China’s assertion that the Pokhara Regional International Airport, financed through its loans, is a BRI project has garnered attention. Experts posit that the Prime Minister’s visit to China may involve efforts to consolidate the Pokhara regional international airport within the BRI ambit. This could potentially involve adjustments to the loan interest rate for the airport project and an increase in associated subsidies.

For the Pokhara Airport project, Nepal procured a loan of 22 billion rupees from China. The financing was secured through a 40-year loan agreement with the China Export-Import (Exim) Bank, aimed at facilitating the construction of the Pokhara Airport.

It is worth noting that the initiation of the Pokhara airport’s construction predates the BRI’s inception. In 2012, Nepal and China reached an agreement to develop the airport, with China’s CAMC Engineering Company entrusted to execute the project under an ‘Engineering, Procurement Contract’ (EPC) model, sidestepping competitive bids. In contrast, the BRI initiative took root in 2015, after Chinese President Xi Jinping assumed power. This chronological sequence underscores China’s active pursuit of Nepal’s engagement in the BRI.

Construction of the Pokhara airport spanned from July 18, 2073, to August 2, 2016, following a pact between the Nepalese government and the Chinese state-owned contractor CAMCE. The total value of the agreement with CAMCE stood at US$244.4 million, including a value-added tax of 9%, while VAT amounted to zero.

The Nepalese government forged an accord with China’s Exim Bank in 2072 to fund the Pokhara airport project, securing a loan of 1.37 billion Chinese yuan. Notably, a 25 percent interest payment exemption applied to this loan. Consequently, the non-interest-bearing portion amounted to 344.46 million yuan, with the remaining sum incurring a 2 percent interest rate. However, this interest rate is relatively high, especially when juxtaposed with the interest rates offered by international donor agencies, which generally fall below 1 percent. The loan’s terms stipulate a grace period of 7 years, with repayment scheduled over a span of 20 years.

Prime Minister Dahal is slated to embark on a journey to the United States on September 16, a decision he conveyed while engaging with editors at Baluwatar on Tuesday. He divulged his intent to participate in the United Nations General Assembly, scheduled for September 16, before proceeding to China on September 21.

During his forthcoming visit to China, Prime Minister Dahal anticipates the signing of significant cooperation agreements. He also disclosed his intent to deliberate on the implementation of the BRI agreement with Nepal and to submit a proposal for grant assistance to Nepal under the aegis of the BRI project with China.

Within the context of this visit, Prime Minister Dahal is set to engage in a bilateral meeting with Chinese President Xi Jinping, underscoring the diplomatic dialogue between the two nations.