Nepal's Balen Shah Drops China BRI Project From Poll Pledges Near India Border

Parliamentary election is scheduled in Nepal on March 5 under an interim government, which was constituted after the resignation of the Oli government facing widespread Gen Z anti-corruption protests in September last year.

The Damak Industrial Park in Jhapa, renamed Nepal-China Friendship Industrial Park, is now in spotlight after Balen's decision, according to the Kathmandu Post.

Quoting unnamed government officials, the Kathmandu Post said that it was of New Delhi's concern that the project is located near the Nepal-India border, particularly the sensitive Siliguri Corridor or "chicken's neck".

Officials also wondered why Kathmandu was permitting Beijing build such a big project near the border, saying that the issue has now become sensitive for several other reasons as well.

Balen Shah was among Gen Z's popular choice as the Nepal's interim Prime Minister, but he excused himself.

The 35-year-old engineer-rapper-turned-politician with a strong youth appeal, representing the Rastriya Swatantra Party (RSP), is being projected as the future Prime Minister of Nepal.

"The project is part of the Belt and Road Initiative (BRI), an ambitious multi-continent infrastructure programme initiated by Chinese President Xi Jinping. In February 2021, former Nepal PM Oli laid the foundation stone of the project in the (Jhapa) district's Kamal Rural Municipality," the newspaper report added.

Oli, as the Chairman of the Communist Party of Nepal (Unified Marxist Leninist), reportedly shared close ties with Beijing.

"While the former Prime Minister has listed the construction and completion of the industrial park in his 41-point "commitment paper" released last week, Balen Shah has omitted the project from his manifesto unveiled on Monday," the report said.

"We know about the project and the controversy around it, so we decided to exclude it," it quoted an unnamed aide of Balen Shah.

Earlier reports had said that the Nepali Congress and the Communist Party of Nepal-Unified Marxist Leninist had differed on Kathmandu availing loans.

These also pointed to significant delays in the implementation of many BRI projects, with none yet finalised, raising concerns about the effectiveness of the initiative.

There has been concern among sections in Nepal, who expressed caution regarding the financial implications of BRI projects, particularly in light of Sri Lanka's financial difficulties linked to similar Chinese investments.

"According to those privy to negotiations, originally, China had proposed several funding modalities ranging from blended financing models to commercial loans. Nepali Congress had been insistent that it would not be taking commercial loans under BRI, but the final agreement adopted the phrase 'aid financing modalities' in place of the 'grant financing modalities' insisted upon by the Nepali Congress Party," a document released last year by the think-tank Centre for Social Innovation and Foreign Policy (CESIF) said.

The Damak Industrial Park seeks access to the Indian market through the Kakarvitta and Birgunj ports, it added, highlighting its importance being underscored with the visit of China's Ambassador to Nepal Zhang Maoming.

According to the CESIF paper, a significant hurdle for Kathmandu was Beijing's request for substantial tax exemptions, which Nepal's Finance Ministry then resisted, since it was not only during the construction phase but also for many years after the project's completion.

Though China's demand became a major point of contention, a meeting of the Investment Board of Nepal, chaired by former Prime Minister Oli, decided to accelerate the project.

The report also said that India had communicated that the project constituted a "red line" and had advised both the Nepali Congress and the Communist Party of Nepal-Unified Marxist Leninist not to move ahead.

- IANS