After four years of negotiations on investment modalities, Nepal is reportedly on the verge of finalising an implementation agreement with China regarding the Belt and Road Initiative (BRI).
According to local Nepalese reports, Deputy Prime Minister and Foreign Minister Narayan Kaji Shrestha is slated to embark on a five-day visit to China next week, where the signing of the agreement is anticipated.
During his visit, Shrestha is scheduled to hold meetings with Chinese Foreign Minister Wang Yi and other high-ranking officials.
The signing of the BRI implementation plan is expected to be a significant aspect of the visit, coinciding with Shrestha's potential attendance at the Boao Forum for Asia, scheduled from 26th to 29th March in China's Hainan Province.
This development comes in the wake of a recent political upheaval in Nepal, wherein Prime Minister Pushpa Kamal Dahal, also known as "Prachanda," formed a new alliance with the party of former premier K.P. Sharma Oli, perceived as pro-China, following discord with the Nepali Congress.
Back in January, during his tenure as the Minister for Home Affairs, Shrestha had expressed the anticipation that Nepal and China would imminently finalise the signing of the BRI implementation plan.
While the Prachanda government is yet to officially confirm the decision to sign the BRI implementation plan, reports suggest strong indications that it will be a key focus during Shrestha's forthcoming visit to China. Sources also indicate that a draft agreement is nearing completion.
According to a report in the Kathmandu Post, while the Prachanda government has not officially confirmed the signing of the BRI implementation plan, there are "strong indications" that it will feature prominently during Foreign Minister Shrestha's forthcoming visit to China.
Similarly, a report by Nepal Views suggests that a draft of the agreement is nearly finalised, hinting at progress towards potential implementation.
However, the Nepal Embassy in India was unavailable for confirmation on Shrestha's visit but has not yet received a response.
It has been seven years since Nepal and China inked a Memorandum of Understanding (MoU) on the Belt and Road Initiative (BRI) back in 2017, envisioning nine project plans in the pipeline.
However, complications emerged primarily concerning the financing of these projects.
While Nepal has expressed a preference for receiving grants to steer clear of potential debt traps, China has shown eagerness to extend loans for these endeavours.
“If Nepal and China do finalise the BRI implementation plan, it will imply that differences on financing modalities have been resolved. Either the Nepalese would have resulted from their earlier stance of grants or concessional loans only and agree to a commercial loan component as well, or the Chinese would oblige the new communist-dominated Nepalese government by sweetening their financial offers,” Ranjit Rae, former ambassador to Nepal, said.
Any proposed Nepali-China deal would have “significant implications” for the region, he added.
There are other China-funded projects in Nepal which should raise national security concerns for India, says Nihar Nayak, Research Fellow at the Institute for Defence Studies and Analyses (IDSA).
“If the Communist government under Prachanda continues, it’s likely that other BRI projects, strategically located in Nepal, will gain ground.
The proposed special economic zone in Damak region is located very close to India’s Siliguri corridor. The Trans-Himalayan Multi-dimensional Connectivity Network also involves construction of tunnels, and we are well aware that the Chinese are adept at tunnel warfare,” he said.
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