Nepal’s government-in-waiting to revive scrapped Chinese dam project, officials tell SCMP

The leftist alliance that is likely to form Nepal’s new government wants to attract more Chinese investment, including reviving a cancelled dam project, according to a senior member of the group.

Leaders of the Communist Party of Nepal-Unified Marxist Leninist (CPN–UML) said the new Nepalese government would maintain relations with both China and India, but called for less “micromanagement” from New Delhi.

Counting is still under way in the elections, but an alliance of the CPN-UML and the Nepal Communist Party-Maoist Centre has so far won 113 of the 165 seats in parliament decided by direct elections. The governing centrist Nepali Congress has won just 21.

The final elections results are expected to be released in the coming days, with CPN-UML chairman Khadga Prasad Oli tipped to become prime minister.

Chinese state firm criticises Nepal over decision to scrap US$2.5bn dam contract

He called during the election campaign for a Chinese-built railway network to be expanded into Nepal and for more infrastructure projects to create jobs. Analysts say such moves to increase China’s influence in Nepal will trigger unease in the Indian government.

Oli was Nepal’s prime minister between October 2015 and August 2016, but he resigned after Maoists dropped out of a coalition government.

Ishwor Pokhrel, general secretary of the CPN-UML, said that after taking power the new government would implement a 15-point joint communique signed by Oli and Chinese Premier Li Keqiang in March 2016 that covered transportation, trade and financial cooperation.

The government will also approve infrastructure projects with China after a majority government is formed in mid-January, including railway projects, plus motorways and hydroelectric schemes such as the Budhi Gandaki dam.

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The project was originally planned with state-owned China Gezhouba Group, but it was cancelled by the government on the eve of the elections.

The procurement process for the dam project will be studied again, but it is not certain if the contract will be given to China Gezhouba.

“When Oli is prime minister, then we will take [the agreements] very seriously,” Pokhrel said in an interview with the South China Morning Post.

Nepal is keen to get involved in China’s Belt and Road trade and infrastructure initiative with other nations, he added. “The ‘Belt and Road Initiative’ is very historic and this initiative is not just important for China ... we are very eager for this initiative and we are ready,” he said.

Nepal’s current deputy prime minister Kamal Thapa said on social media last month that the plan to award the US$2.5 billion dam project to Gezhouba was cancelled because of the “irregular and thoughtless manner” the agreement was made. Gezhouba criticised the cancellation as “invalid”, but expressed confidence the decision would be reversed after the elections.

Nepal has been a battleground for China and India to extend their influence on their doorsteps for years.

Relations between Kathmandu and New Delhi suffered in 2015 after what Nepal described as unofficial trade blockade by India that led to shortages of fuel, cooking gas and other supplies at a main border crossing. India said the checkpoint was blocked by protesters from the Madhesi communities, who have demonstrated for greater autonomy from Kathmandu.

India, however, still yields significant influence in Nepal and the cancellation of the Budhi Gandaki hydroelectric dam deal highlights concerns among some politicians about fostering ties with China as an alternative to its traditional ally India.

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Dipendra Shrestha, personal secretary to Pokhrel, said the preliminary election results showed the alliance “has been accepted by the people”, saying Nepal’s biggest problem was political instability. He also called on India to suspend what he described as “micromanagement” of Nepal’s affairs.

Pokhrel said the new government would be keen to develop ties with China, which he described as a friend who respected Nepalese sovereignty. “We have to maintain good relations with China. We respect the one-China policy and we are very strictly against anti-Chinese activities,” he said.

But Pokhrel also stressed that his party was neither “anti-India” nor “pro-China”, with Nepal having many existing trade and transit agreements with New Delhi.

“Both are our neighbours, we respect both neighbours,” he said. “India is our neighbour. No Nepali people will be anti-Indian.”