Business | FOCUS

To decrease its dependence on India, Nepal eagerly awaits China rail plan

by Bikash Sangraula

Kyodo

At the international border point of Rasuwagadhi (Rasuwa Fort), where Nepal fought two wars in the late 18th century with Tibetan forces and Chinese reinforcements, people now impatiently await the Qinghai-Tibet railway, which many believe will conquer the constraints posed by the Himalayas on Nepal-China trade relations.

They see the train as Nepal’s path to freedom from trade dependence on India, a neighbor about which Nepal harbors suspicions despite being geographically, culturally and socially closer to it than with China.

“This train will put to an end India’s dadagiri (bullying),” said Chowang Sangbo, 54, who operates a modest lodge at Timure village near the ruins of the historic fort, a major gateway for the traders of Nepal and Tibet since ancient times.

By “dadagiri,” Sangbo is referring to the Indian trade blockade that started in September 2015 and ended in February the following year. It wasn’t the first time that India, which accounts for 65 percent of Nepal’s total imports and 57 percent of exports, blockaded its northern neighbor.

Back then, Nepal had barely started limping back to normalcy after a massive earthquake, its biggest in eight decades, killed nearly 9,000 people and demolished or damaged about a million houses.

Squeezed by a blockade resulting from India’s displeasure with Nepal’s Constitution adopted in 2015, the small, landlocked nation — described by its 18th-century founder, Prithvi Narayan Shah, as a yam between two boulders — was forced to look up to the other boulder, China, which currently accounts for just 13 percent of Nepal’s imports mainly because connectivity is hindered by the Himalayas.

That is what Prime Minister Khadga Prasad Sharma Oli did. In March 2016, during his first stint as prime minister, he visited China and signed a slew of agreements, the most important of them being securing transit access via Chinese ports, and an agreement for enhancing transport connectivity.

That agreement translated last year into a decision by Nepalese and Chinese railway officials to prepare a detailed project report for building a high-speed train connecting Tibet’s second-largest city, Xigaze, with Nepal’s capital, Kathmandu.

Skeptics question whether China has the engineering prowess to build train tracks on one of the world’s most infrastructure-unfriendly terrains.

However, those close to the developments dismiss such doubts.

“A pre-feasibility report prepared by the Chinese team has concluded that it will be difficult but possible to build the railway,” said Balaram Mishra, Nepal’s railways chief. “The train will reach Kathmandu by 2029,” he added emphatically.

Locals residing in villages near Rasuwagadhi echo Mishra’s optimism.

“The train will come. I have heard we will be able to reach Kathmandu in 30 minutes by the train from here, instead of five hours that its takes by bus,” said 36-year-old Remika Khadka, who runs a shop in Betrawati village, 40 kilometers south of the border.

The prospect of swift transportation of people and goods between Nepal and China is the biggest reason most locals are eager for the train service to materialize.

The difficulties caused by the Indian blockade are still fresh in many people’s minds, and even truck drivers like Buddhiman Tamang, 27, whose profession would be directly hit by the railway, say it should be built.

Tamang has a lot to lose.

He makes a profit of 50,000 rupees ($450) every time he transports Chinese apples from the Tibetan town of Gyirong, 25 km from the border, to Kathmandu via a dangerous road that is prone to landslides, is extremely narrow at many points and snakes around cliffs from which rocks hang precariously.

During the monsoon season, the road condition worsens, increasing the time it takes to cover the distance of 145 km between Rasuwagadhi and Kathmandu to eight hours by four-wheel-drive vehicle. Container trucks like Tamang’s take a lot longer.

Tamang transports apples from Gyirong to Kathmandu twice a month, taking his monthly profit to $900, which is a lot for a truck driver in Nepal. But he isn’t worried about losing this income to the train.

“By the time the train comes, I will find another profession,” Tamang said cheerfully.

While technical and engineering challenges may be surmountable, financial matters are tricky.

The railway from Rasuwagadhi to Kathmandu, which will be 72 km (45 miles) long, will cost $2.7 billion. Means of funding have not been discussed by the two sides, mainly because of a misconception among Nepalese officials that Nepal will not have to fork out anything to build the train.

Prakash Upadhyaya, a former senior bureaucrat and an infrastructure expert, who was involved in two meetings held between railway officials of the two countries, says China expects Nepal to bear 30 percent of the costs.

“If Nepal is ready to do this, China is ready to finance the rest through grants and loans,” he said.

It means Nepal will have to come up with $800 million for the train, which is a lot for a country with an annual budget of $15 billion. But the cost will be spread over 10 years.

“We will need to invest about $80 million a year. It is very possible,” Upadhyaya said.

There is another concern surrounding the train project.

It will have to pass through two conservation areas in Nepal — Langtang and Shivapuri — which makes the project a potential target for slings and arrows from environmentalists and conservationists.

Chinese railway officials want Nepal to defend the project on this front.

“China wants assurance from Nepal that when there is criticism, Nepal will say, ‘We need this train,’ ‘We asked China to build it,’ ‘We will protect the environment,'” Upadhyaya said.

The biggest challenge that the train is likely to face, however, is geopolitical. India’s position on this train project will be vital for its success or failure. So far, New Delhi has neither welcomed nor opposed the project.

“This project, and the entire Belt and Road initiative (BRI), is confusing for India,” said Surya Raj Acharya, another infrastructure expert, who worked for 13 years as senior researcher at the Institute for Transport Policy Studies in Tokyo. “Connectivity with China is an opportunity for India to ensure sustained economic growth, but India has security concerns,” Acharya added. He was referring to China’s huge infrastructure development program spanning half of the globe.

India’s confused position over BRI has already infected Kathmandu, leaving politicians there guessing how India will take the Chinese train and whether Kathmandu can deal with a seriously displeased New Delhi.

“Feasibility and economic viability are less important questions for Nepal. This train is feasible. That’s why Nepal and China have agreed to prepare a Detailed Project Report. A DPR is done only after pre-feasibility study shows a project is feasible,” Acharya said.

About viability, he says this is a game changer project for Nepal. “It will provide us a steady, reliable connectivity with China for trade as well as transit. The Chinese market is huge. Businessmen in Nepal will explore the market. So, in the long-term, it will be viable too.”

The real question, Acharya adds, is whether Nepal can absorb the heat from New Delhi in the event India’s security concerns overshadow potential economic benefits of the train and of BRI.

If India is dead against the Chinese train to Kathmandu, Nepal will perhaps be better off not building it, in his opinion.

Security concerns aside, the train will significantly decrease India’s political and economic clout in Nepal.

India’s fear of losing this hegemonic clout became evident in August last year when it announced plans to build a 130-km (80-mile) train line from its northern border city of Raxaul to Kathmandu. The move, some analysts say, appears to have been designed to discourage Nepal from going ahead with the Chinese train project.

In 2016 too, India attempted to lure Nepal away from Beijing’s welcoming arms. After the latter agreed to provide Nepal transit access to its sea ports, India responded by offering Nepal access to its Vishakhapatnam port for transit, which is more attractive than the Kolkota port that Nepal has had to rely on for decades.

The Chinese train, meanwhile reached Xigaze in 2014 and has stayed there ever since. Extending the train to Paiku Lake in Tibet is certain with or without building the train to Kathmandu. The Xigaze-Paiku Lake train section is part of the 1,956-km-long (1,200-mile) Qinghai-Tibet railway.

Rasuwagadhi is merely 60 km from Paiku Lake.

There are some in Nepal who say it is better to shelve the train project and focus instead on improving road connectivity.

“Why do we need a train? Why not make this road better?” said Dawa Dhundup, chairman of Ghattekhola Village Development Committee in Rasuwa district.

Dhundup’s concern is personal. He runs one of the most popular hotels near Rasuwagadhi. A train isn’t good for his business.

Acharya, however, says roads both on the Chinese and Nepalese sides of the border will be bad in winter and in monsoon season no matter how much the two countries improve them.

“Train, on the other hand, will not be at the mercy of weather conditions,” he said.

Additionally, road and train transport speeds are incomparable.

“In 24 hours, the train will be able to transport people and goods from Kathmandu to Chengdu,” he added.

The Chinese train has raised some concerns in Nepal about falling into a Chinese debt trap.

Acharya does not believe a loan from a particular lender will automatically become a trap while those from other lenders will not.

“Debt is not something new to Nepal. We have been taking loans from the Asian Development Bank, World Bank, etc. Whether debt turns into a trap depends on financial management,” he said.