Nepal – the country of the Buddha and the Mt. Everest

Peace comes from within. Do not seek it without – Buddha

Nepal to seek US$ 5b credit during Wen visit

Posted by Ram Kumar Shrestha on December 12, 2011


KATHMANDU, Dec 13: Nepal is seeking a credit line of US$ 5 billion (about Rs 400 billion) from the northern neighbor for implementing large scale infrastructure projects, mainly in hydropower, when Chinese Premier Wen Jiabao visits Nepal next week.

The government is also preparing to request China to expand the list of items that Nepal can export at zero duty to the northern market and sign a bilateral investment protection and promotion agreement (BIPPA) to lure and secure more Chinese investments into this country.

The projects for which the government is hoping for Chinese assistance are Pokhara International Airport, West Seti Hydropower Project (750 MW), Budi Gandaki Hydropower Project (600 MW) and Nalshyagugad Hydropower Project (400 MW).

“These are clearly identified as feasible large scale projects and can help the country fulfill its longer-term interests,” said a government source, disclosing Nepal´s endeavors.

Besides, the Ministry of Finance (MoF) also had formally requested Chinese assistance for developing these projects, at different intervals a few months ago.

Officials said harnessing the potential of the West Seti — a large storage project– will alone need investments of US$ 1.60 billion. Though the government had initially planned to develop it with loan assistance from the Asian Development Bank, its fate had been in limbo after an Australian company failed to execute the project following local protests. 

Budi Gandaki is also a reservoir-based storage project and its development is estimated to cost US$ 1.70 billion. Nalshyagugad, located in the far-west, has a capacity to produce 400 MW of power and is estimated to cost US$ 400 million.

The development of Pokhara airport into an international facility is estimated to cost US$ 175 million. However, as this includes an estimated US$ 30 million for acquiring land, something that the government itself will invest in, the Ministry of Finance has sought only US$ 150 million for the airport construction.

Among these major projects, the Ex-Im Bank of China is already studying the feasibility of investment in Pokhara Airport. Talks on Pokhara Airport are hence more advanced than for other projects.

“We are pushing the two governments to sign an aid agreement for at least this project and seeking to garner a clear commitment for supporting the other projects as well,” said the source.

Apart from these, the government is also going to request China to help develop either an underground (metro) train in Kathmandu Valley or a railway line linking Kerung-Rasuwa with Lumbini.

“Both these are crucial projects. Hence, we are trying to get Chinese support for at least one of them during the visit,” said the source.

Likewise, the government is also wants China to help Nepal develop a cross-border (open track, blacktop) road network along the Simikot- Hilsa (85 km), Jomsom-Korala (80 km) and Khandbari-Kimanthanka (80 km) sectors to facilitate movement of goods and people.

It is also requesting China to upgrade the existing ring-road in Kathmandu Valley to eight lanes. China has already signed a memorandum of understanding for upgrading 9 km of the 27-km road.

The government will likewise request China to expand the list of items for which it has granted duty free market access. The list at present includes items in 431 product lines, but largely excludes commodities of export interest to Nepal. “We will request the inclusion of items of our export interest,” said the source.

The two sides are also mulling the signing of a BIPPA in order to secure Chinese investments and lure more investments from the northern neighbor.

“As a draft of this agreement was exchanged only recently and we are still holding negotiations on it through diplomatic channels, it would be too early to predict whether a BIPPA will be signed during Wen´s visit,” said a senior official at the Ministry of Industry.

However, Minister for Finance Barsha Man Pun, speaking at a program in Rautahat, said the draft exchanged was no different from what Nepal signed with India and the two governments will sign it during the Chinese premier´s visit.

@My Republica

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