Indian strategy on Nepal’s development project

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India’s obstruction and non-cooperation in Nepal’s development projects

In recent years, India has been looking at and dealing with Nepal’s development projects from the point of view of its strategic interests. There are many examples of development projects getting into trouble due to his behavior.

Prime Minister Pushpa Kamal Dahal Prachanda, while congratulating and wishing the newly elected working committee of the Independent Energy Producers Association (IPPAN) in Baluwatar on 7 July 2023, made a new revelation about the reason behind India’s ban on explosives.

Looking at the language of the letter sent by the Indian government, we found that there is a security interest in whether the explosives that have arrived now have been misused. The Prime Minister had said to the energy producers, ‘We have trusted the Nepali government and the Nepali Army and asked them to provide explosives as before.’

An official of IPPAN who participated in the meeting said that this statement of the Prime Minister shows that India has linked the import of explosives, which are essential for development work in Nepal, with security interests and that it is seen on the basis of strategic interests.

“Earlier, we understood that the Chinese contractor would only have a policy of non-cooperation,” he said. “However, after raising suspicions about the use of explosives, it became clear that India started looking at Nepal’s development projects in connection with its security strategy.”

According to him, the most essential substance for development is called ‘Civil Explosive’. It is not imagined that it will be used elsewhere. Road, hydropower and tunnel projects under construction in Nepal are affected when India restricts the export of such explosives.

In Nepal, these explosives are mainly used for digging tunnels, breaking large rocks and digging mines. It is especially used for digging tunnels for large hydropower projects, highway tunnels, and for road construction and mining in difficult areas.

Projects and industries can get such explosives in two ways. They can directly purchase from the Nepali Army, or after getting permission from the Ministry of Home Affairs and Defense, they can also import by themselves with a ‘No Objection Certificate’ through the Indian Embassy.

The small amount of explosives provided by the army is not enough for the projects. To import by yourself, you have to complete various procedures through the Indian Embassy.

Even when trying to import by themselves, the Indian embassy is doing activities that take a long time in the process of the permit itself and until it is not given. The construction of large projects in Nepal has started to be affected after India almost banned the import of explosives imported from Nepal due to the suspicion that the Chinese contractor company has used and stored the explosives wrongly.

India has completely stopped the supply of explosives imported from India to be used in projects involving Chinese investment and Chinese contractors. Such projects have not been able to get a ‘No Objection Letter’ (NOC) for the supply of explosives from the Indian Embassy.

This has affected the digging of tunnels in hydropower projects involving various Chinese contractors. Officials say that due to India’s behavior, Chinese contractor companies will have to be prohibited from participating in open competition in Nepal’s development projects.

Not only the private sector is building, but the projects involving Chinese contractors selected through open competition through global tenders by the government are also benefiting from this style of India. An official of the Ministry of Energy says, “It seems that Chinese construction companies have to be stopped when contracting large projects to be operated in connection with India.” The Public Procurement Act does not allow that.

Even the work of tunneling on the Kathmandu-Tarai Madhesh Expressway, which is being built by the Nepali Army with the involvement of a Chinese company, is also affected by the problem of explosives supply. The Nepali Army has been saying that there is no shortage of explosives, but the supply is low.

Although the import of explosives from China has started, the builders and project promoters are being harassed due to the high cost. Explosives are imported from India under the SAFTA facility. However, explosives imported from China do not have such facility. Due to this, when the project is made by bringing expensive explosives from China, the cost will increase and the construction period will be extended. Although the import of explosives from China has started, there is a problem of stopping for a long time at the Rasuwagadhi customs.

North-South Corridor, various strategic road projects, Siddhababa tunnel projects are affected due to lack of explosives. There is a shortage of explosives in the under construction Sanjen, Tanahun, Upper Trishuli, Langtang-Bhotekoshi, Khimti 2nd, Nupche Likhu, Middle Tamor, Kabeli hydropower projects. Various cement industries are also suffering from lack of explosives for mining.

According to energy promoters, the quality of the current explosives supplied by the army is not as good as the imported ones. Currently, projects worth about 3,000 megawatts are under construction across the country. Although some projects have passed the stage of using explosives, explosives are essential for many.

In this way, after taking the explosives, they should be stored and used under the direct supervision of the Nepali Army. The project takes the construction site from the customs point to the skirting of the army and keeps the explosives safe in the bunker of the army for the duration of the construction. India is creating a barrier to import by raising unnecessary suspicions about the use of such safe explosives.

Ganesh Karki, Chairman of Independent Energy Producers Association of Nepal (IPPAN), says that the construction of many projects has been stopped because it took a long time to get the NOC from the Indian Embassy. “Earlier, it used to take a while, but now it is taking a lot of time,” he said, “I don’t know why, but we have informed the Prime Minister, the Chief Secretary, and the Minister of Energy about this problem.”

According to President Karki, the country that announced to buy 10,000 megawatts of electricity in 10 years has obstructed the construction of the projects. He said that all the hydropower projects that are being built now have to build tunnels, and there is a danger that the projects will not be built if we do not create a comfortable environment for supplying explosives from India.

“This problem should be solved even if it is through diplomatic initiatives,” said Karki, “but the projects have been affected for a long time because of the explosives that are not used for construction work.”

Barriers to investment and exports

In recent years, India has been looking at and dealing with the development projects under construction and the completed projects, including those proposed by Nepal, from the point of view of its strategic interests. Due to this behavior of India, there are many examples of development projects getting into trouble.

Due to the policy taken by India while increasing its dominance in hydropower by undertaking large projects, the investment of third countries including China in Nepal’s hydropower is becoming completely discouraged. Chinese companies that came to Nepal for hydropower development have already started returning after losing their projects.

In the initial agreement on long-term electricity trade signed during Prime Minister Pushpa Kamal Dahal’s visit to India on 31May-3 June 2080, it is mentioned that India will buy only electricity that is invested by Nepal and India. Even though Nepal, which is under the pressure of wasting electricity during the rainy season, made such an agreement in the hope of securing the electricity market, India is still creating various disruptions in the electricity trade.

Recently, India has started asking not only for the equity investments of the promoters of the hydropower projects proposed for the export of electricity, but also for the details of the investments made by banks and financial institutions in the consortium and the details of the investments within the banks involved in it.

This has led to the situation that despite the construction of hydropower projects in Nepal, electricity from the projects invested against Indian policy cannot be exported.

Even in India’s international electricity trade procedure, it is mentioned that ‘even if borders are connected, electricity from projects in which individuals and companies have investment or control from countries that do not have a bilateral agreement on cooperation in the electricity sector will not be imported’. India has not signed a bilateral agreement on cooperation in the power sector with bordering China and Pakistan. It seems that it has adopted a clear policy of not buying electricity produced from projects made with China’s investment.

 India is not even helping Nepal’s electricity to reach the third market. There is no option to use India’s roads and infrastructure in the electricity trade with Bangladesh and SAARC and BIMSTEC countries. For that, India’s permission is required and there is an Indian provision that its nodal agency will take a commission as well. Bangladesh and Nepal, who are ready to accept India’s conditions, have not yet agreed on a trilateral agreement to allow India to take Nepal’s electricity to Bangladesh, despite efforts for a long time.

Moreover, even if the electricity trade with Bangladesh starts in the future, it is certain that it will be controlled by India. Due to the lack of electricity market, it is certain that the investment of third countries in hydropower will not come.

India is not accepting to buy electricity not only from Chinese investments in Nepal, but also from projects built by Chinese contractors. Not only the Upper Tamakoshi hydropower project built with indigenous investment, India is also blocking the electricity in Bhotekoshi, which was repaired by a Chinese construction company.

Indian activities ranging from blocking explosives to affecting the development of hydropower projects, closely monitoring the investment of Nepali banks, disliking the involvement of Chinese contractor companies in construction, and even withholding export permits by asking for many documents, have increased the risk that India will not grant export permits even when Nepal builds projects with domestic investment. Energy producers say that such Indian policies and trends are hindering the development of hydropower.

“Non-cooperation” to the airport”

The behavior of Pokhara and Bhairahawa International Airports built by Nepal also clarifies the strategic ‘move’ that India is showing in development projects. India does not want to connect with Nepal’s new international airports.

However, Pokhara and Bhairahawa airports cannot be operated commercially without connecting tourists from China, India and other countries through direct flights. However, India is not in favor of issuing permits to these two airports for its support and expansion of the commercial flight network here.

To some extent, India did not even allow flights from Pokhara to its country because it was built with Chinese loans. On 1 Jan 2022, Buddha Air requested permission to operate an international chartered flight from Banaras to Pokhara.

According to the Civil Aviation Authority of Nepal, Buddha Air sought permission to fly from Pokhara to Banaras (Varanasi) and then Delhi and Dehradun international airports.

Buddha Air, which is currently flying on the Banaras route from Kathmandu, planned to fly from Pokhara to the tourist cities of India and sought permission from the Directorate General of Civil Aviation (DGCA) with the consent of the authority. However, India is not ready for this.

India is reluctant to allow international flights to its cities. So far, India has been avoiding Buddha’s proposal by replying that it is in the process of decision.

The Nepali side understands that the Indian side is reluctant to grant flight permission because the airport was built with Chinese loans. On top of that, another problem has been added when China ‘falsely claims’ that this airport is a project under BRI.

India is showing a different attitude that Nepal has made a project by taking a loan from China, it should be treated as a project made on loan.

This type of treatment by India towards projects and companies involving Chinese investment, technology and technical and construction companies is not new. India has not yet given a ‘Letter of Authorization’ to Nepal’s Himalayan Airlines for flights to India, even though it has been requested for a long time.

India is also not ready to provide the much-needed new air routes for the two new international airports of Pokhara and Bhairahawa. Prime Minister Pushpa Kamal Dahal’s visit to Prachanda last month has made it clear how reluctant India is about the air entry points and routes of Bhairahawa, Nepalgunj and Mahendranagar. India has not allowed Bhairahawa’s Gautam Buddha International Airport, which was built with the involvement of Chinese contractors, to connect with the Indian city through Nepali Airlines. Even though Nepal Airlines wanted to fly to Delhi from Bhairahawa, India did not accept it.

By stopping the permission to use the ‘Instrumental Landing System’ (ILS) added by Nepal at the Bhairahawa Airport, India has increased pressure on Nepal to follow its policy in development projects.

It is the understanding of the government officials that India is trying to discourage the activities of Chinese contractors in Nepal because of the involvement of Chinese contractors.

Former Director General of Nepal Civil Aviation Authority, Sanjeev Gautam, says that after the construction agreement, loan agreement and foundation stone laying of Pokhara Airport, when China falsely claims that Nepal has signed the BRI, there is a risk that India will not cooperate in the operation of the airport.

According to him, when the project involving Chinese contractors is also linked with China’s strategic BRI program, the development projects have started to fall under the grip of strategic conflict and self-interest. “China’s claim has added to the concern about the future of the airport that can bring in millions of Indian tourists to Pokhara,” he says, “The same problem has been seen in Bhairawa.”

“Same style on the railroads”

It is no secret that India has placed its strategic interests at the center of the inland railway to be built in Nepal. Contrary to Nepal’s request, India has also conducted the final location survey of the Kathmandu-Raxaul railway using the ‘broad gauge’ technique. Nepal has taken a policy to build the Kerung-Kathmandu railway line in standard gauge along with the construction within its own country.

However, India, which showed interest in studying the Raxaul-Kathmandu railway with a grant, did not accept Nepal’s proposal to study based on standard gauge. Because of this, the government has conducted a study of the railway connecting Kathmandu based on the old technology in use in India.

Experts have warned that if the other railways in the country are of standard gauge and the railways towards the Indian border are of broad gauge, the problem of ‘break of gauge’ may arise.

Broad gauge is the traditional railway technology of India. Now the standard gauge technology has come into use all over the world. India has also started converting some railways to standard gauge with the help of foreigners.

Infrastructure expert Suryaraj Acharya, who is of the opinion that the Kathmandu Raxaul railway should be built on standard gauge technology, says that many technical problems will arise in the future if DPR is entrusted to other countries. He is of the opinion that the government should take political decisions on technical matters including gauge, speed, technology and standards of railways.

Acharya told Online Khabar, “The feasibility study of the Raxaul-Kathmandu railway would have cost a few crores at most. If India had said that it could not make the DPR in standard gauge, Nepal should have said that it would make it by itself.” According to him, when using a traditional gauge, the difference in the uphill grading inside the tunnel can prolong the alignment. A memorandum of understanding was signed between PAL and India on 1st September 2019 for the preliminary feasibility study of ‘Raxaul-Kathmandu Broad Gauge Railway’. Since then, experts have questioned the government’s agreement.

If we use this technology, we will be completely dependent on India to run the train, tomorrow the train will also have to be bought from India as it is now for Janakpur-Jayanagar. We should also depend on India for spare parts and technology’ says infrastructure expert Acharya, ‘using standard gauge, tomorrow we can easily buy trains from the global market.’

Acharya, an infrastructure expert, says that since Raxaul-Kathmandu has a north-south link railway, India may have looked at it from a strategic point of view. “If such strategically important railway technology is used in a way that depends on one country, instead of benefiting from the railway, Nepal may face a situation where it will have to face losses and complications”, says Acharya.

Source: Online Khabar