Dahal’s Defense: Analyzing Agreements from Jaishankar’s Visit


On increased grant from India for small projects, the prime minister says other countries too have been spending in Nepal similarly.

Prime Minister Pushpa Kamal Dahal on Wednesday defended the agreements with India on long-term power trade and High Impact Community Development Projects (HICDPs). These agreements were signed during the recent visit of External Affairs Minister of India S Jaishankar.

During the seventh meeting of the Nepal-India Joint Commission held in Kathmandu last week, the two sides inked four different agreements. Two of the deals have created uproar in several circles whereby the prime minister was asked to clarify the government’s position.

Defending the deals with India during a meeting of the Law, Justice and Human Rights Committee of Parliament, Prime Minister Dahal said that just like India, others like China, the United States, the United Kingdom and Australia had been running similar small grant projects in Nepal.

Though the procedures might be different, “we had a similar agreement with Japan some 60 years ago and the country has been carrying out its programmes through various nongovernmental organisations and UN agencies.”

Similarly, in all its economic assistance provided to Nepal, China asks for its own consultants and contractors and the project is implemented through its own mechanism, said the prime minister. The United States, too, has been picking its own implementing agency for the projects it finances, he added.

“The United Kingdom utilises the majority of its assistance via international consultants and Australia is implementing its projects through its own nongovernmental organisations,” said Dahal.

“There is no provision in the agreement recently signed with India giving the latter the luxury of unilaterally selecting and implementing projects. And regular monitoring and periodic review of the projects that receive the funds under the HICDPs are carried out by the mechanisms of the Nepal government.”

In the meeting, some lawmakers including CPN-UML whip Mahesh Bartuala, Pratiksha Tiwari, Sobita Gautam, and Dhruba Bahadur Pradhan sought clarifications on the agreement from the prime minister.

Jeevan Pariyar of the Nepali Congress said the government should regulate foreign assistance and receive aid as per its priorities and needs.

Bartula termed the agreement with India a “treason”. “This is unacceptable,” he said. “The new agreement with India, under which per project budget has been increased from Rs50 million to Rs200 million, should be scrapped immediately.”

Given the historical context of the HIDCP of India, the prime minister said it was launched in November 2003 and India provided Rs30 million to execute a project through the local bodies. When it was renewed in 2006, the budget increased from Rs30 million to R50 million.

The programme, known as small grant projects, was renewed in 2011 and 2014 but not in 2017 as the grant modality contradicted the new constitution Nepal promulgated in 2015. The constitution does not permit direct foreign aid to the local and provincial governments. Later, in December 2017, the small grant project was renamed HIDCP with new terms and conditions.

In July, 2018 some modalities and terms of references were changed and brought under the ambit of budgetary support to Nepal. More changes were made in July 2018 and April 2019. As per the new modality, three agreements were signed in January 2020, August 2020 and January 2024, said the prime minister.

When the new modality was agreed in 2018 and 2019, then KP Oli was the prime minister and Yubraj Khatiwada was the finance minister.

He said other countries were spending money in Nepal in similar ways.

“Just because we have been taking assistance for a long time does not mean that we have to take it now… We have been taking this particular assistance for a long time but we have also tightened the conditions. If taking 50 million was not against national interest, increasing the assistance to Rs20 million is not against national interest,” said the prime minister while responding to the queries of parliamentarians.

The ministry of finance also offered its clarification on the use of the Indian assistance on January 4, the day Nepal and India renewed the agreement. Some sections of the political fraternity and civil society opposed the agreement.

Dahal stated that there is no need to hide anything from Parliament and the government is ready to share each and every decision with the House. This particular agreement was ratified several times in the past and the current government has done nothing new, he said.

“This decision was given formality when the Indian foreign minister came here. The government had already made the decision from the Cabinet some 20 days back,” the prime minister said. “It is not like it happened after Jaishankar came.”

Besides the long-term power trade deal, more agreements were signed with India last week during Jaishankar’s visit. They are related to putting Nepal’s nano-satellite Munal in space with the support of India’s space agency, and renewable energy.

Dahal claimed that the agreement to export 10,000 megawatts of electricity to India in the next 10 years has opened another avenue for power trade between the two countries.

India has expressed reservations over buying electricity from Nepal’s projects involving Chinese contractors and companies. Though everyone is free to invest and produce energy in Nepal, the Indian side has reservations over buying energy produced by the Chinese companies/contractors.

Nepal and India formalised a long-term energy deal during the seventh meeting of the Nepal-India Joint Commission. As per the long-term power trade deal, India will buy 10,000 megawatts in ten years and the agreement is valid for 25 years, subject to renewal every ten years.

India has reservations over energy produced directly by Chinese government companies, said Dahal. “The Chinese have asked us to tell India that it’s not Chinese government-owned companies, but they were selected through global competitive bidding.”

But in the agreement with India, there is no mention of buying energy produced only by Indian companies, said Dahal. “We have requested India to consider buying energy produced through competitive bidding no matter who produces it.”

Nepal has not agreed to accept investments only from India, said Dahal. “We have a policy and arrangement that any country can produce electricity here.

“But the Indian government has reservations over buying electricity [generated by plants] with the Chinese government’s investment.”

Dahal said the government was trying to convince India to purchase the electricity produced even by Chinese companies. There is an ongoing discussion on whether India should buy electricity generated by projects Chinese companies bag through global bidding processes. Several Indian companies are now investing in Nepal’s energy sector with the core objective of exporting power to India.

An agreement has been reached for New Space India Limited of India to put into orbit the nano-satellite developed by Nepali students at its own expense, Dahal said. Another agreement signed between the Nepal Electricity Authority (NEA) and the NTPC of India is on carrying out capacity development works and conducting events including training in collaboration.

The PM claimed that preparations are being made to implement the Pancheshwar Multi-purpose Project by finalising its detailed project report (DPR) within some days. The Pancheshwar DPR is in the final stage of preparation, said Dahal.

“The atmosphere created during my visit to India was the reason why the Pancheshwar project is moving in a positive direction,” said the prime minister, claiming that there will be a breakthrough in the next few days. He said the Pancheshwar project would have a long-term positive impact on Nepal’s economy.

Prime Minister Dahal also said that in the recent meetings with Indian officials, the issues of the 1950 treaty and the border dispute with India were also raised prominently.

“We are always keeping the country’s interests at the forefront and the economic interests of the country were given priority,” said the prime minister.

On some issues, the Nepali side has maintained its position with India resolutely, Dahal claimed. “We have had some tough discussions with India on issues like replacing the peace and friendship of 1950”. On the boundary issue, “we have maintained a very strong position.”

But critics say the Dahal government has failed to build pressure on New Delhi to renegotiate issues like the peace and friendship treaty of 1950, boundary row and air entry routes for Nepal.

Later, the meeting directed the Ministry of Law, Justice and Parliamentary Affairs to produce the list of treaties and agreements signed with different countries within four days, according to Bimala Subedi, the committee president.

The meeting also urged relevant government agencies to provide full copies of agreements signed between the governments of Nepal and India to the committee secretariat within seven days.