Nepal’s Railway Dream And Rivalry

Nandalal Tiwari


Ninety years after Nepal had its first railway lines, Nepal’s railway dream has revived vigorously. In 1927, Nepal had about 53km long railway transport. There were two lines, one connected Janakpur with Jainagar in India and the other stretched between Amlekhgunj and Raxaul in India. Instead of expansion of the railway in the country, Nepal’s rail network has shrunk ever since. The railway dream was rekindled just a decade ago when the then Prime Minister Pushpa Kamal Dahal ‘Prachanda’ urged the Chinese leaders during his official visit to China to extend the railway to Nepal from Tibet of China. It had been only two years that Tibet was connected with mainland China by railways then. Now, the railways have already been extended to Shigatse and China has a revised plan to extend the railway line to Keyrong, a town in China near Nepal-China border, by 2022.
In its election manifesto in 2017, the left alliance, comprising the CPN-UML and CPN-Maoist Centre which now leads the government with nearly two-thirds majority, made commitment to the people that it would construct railway lines between Kathmandu and Keyrong within five years. As per agreements reached between Nepal and India a few years back to construct more railways line connecting Nepal and India, there were assumptions that the railways would only link with the east-west railway.
But, following the agreement between Nepal and India to build railway lines from Raxaul of India to Kathmandu, Nepal’s capital city, during state visit of Prime Minister KP Sharma Oli to India in the first week of this month, things have come as surprise. It is likely that Kathmandu will be a meeting point for the railways from China and India in near future.
A part of the joint statement, issued on April 7 during PM Oli’s visit to India reads, “with the objective of expanding connectivity to enhance people-to-people linkages and promote economic growth and development, the Prime Ministers of India and Nepal agreed to construct a new electrified rail line, with India’s financial support, connecting the border city of Raxaul in India to Kathmandu in Nepal. As a first step, it was agreed that government of India would, in consultation with the government of Nepal, carry out preparatory survey work within one year, and the two sides would finalize the implementation and funding modalities of the project based on the Detailed Project Report.” Although it is not clear whether the Raxaul-Kathmandu railway will be built under Indian grant or loan, it is clear that India will provide financial assistance for the construction.
In less than two weeks since the Nepal-India agreement on railways, China has agreed to prepare detailed project report (DPR) of the Keyrong-Kathmandu railway and also Kathmandu-Pokhara-Lumbini railway. This Nepal-China agreement has been reached during Nepal’s Foreign Minister Pradeep Kumar Gyawali’s official visit to China from 17-21 April when he also held meeting with Chinese Vice-President Wang Qishang.
As in the case of Raxaul-Kathmandu railway, financing modality of the much-talked about Keyrong-Kathmandu railway is not clear. Nepal has urged China for providing grant to construct the railway while China is yet to make any concrete response.
It is very likely that during Indian Prime Minister Narendra Modi’s visit to Nepal which is expected to be held within May this year, he may declare that India would provide grant assistance to construct the Raxaul-Kathmandu railway. It is a matter of constructing about 120km of railway and Nepal has been an age-old friend of India. As evidenced by the huge trade deficit, amounting almost 6 billion USD a year, India is reaping a good benefit from trade with Nepal and the construction of the railway would further enhance the trade. Moreover, there is another strategic interest related to India’s river linking project that aims to provide irrigation facilities to such dry and desert areas as Rajasthan of India.
A part of the joint statement during PM Oli’s India visit reads, “The Prime Ministers of India and Nepal recognised the untapped potential of inland waterways to contribute towards overall economic development of the region. Taking cognizance of their geographies and noting the development of inland waterways in both countries, the two Prime Ministers took the landmark decision to develop the inland waterways for the movement of cargo, within the framework of trade and transit arrangements, providing additional access to sea for Nepal. This new initiative would enable cost effective and efficient movement of cargo. The Prime Minister of Nepal noted the enormous impact the additional connectivity would have on the growth of business and economy of Nepal.” Of course, this ‘landmark decision to develop the inland waterways for the movement of cargo, within the framework of trade and transit arrangements, providing additional access to sea for Nepal’ will be helpful for India’s river linking project and for this India has to offer some grant assistance to ensure that Nepal does not step back from the decision.
There is nothing wrong if Nepal’s two neighbours compete to offer development assistance and grant. What Nepal needs to do is be prepared to use the offer in Nepal’s interest and benefit. Railways link with China and India will undoubtedly boost Nepal’s tourism in an unprecedented manner. Nepal’s present economic condition is not so strong as to finance about 4 bln USD project like the Kathmandu-Keyrong. But it has to build such infrastructure to change what PM Oli recently said ‘the face of the country’.

It is very likely that financing modality of the Keyrong-Kathmandu railway will be discussed and most probably finalised during PM Oli’s visit to China, proposed for May this year. For multifaceted reasons including for trade diversification, trans-Himalaya railway is more important for Nepal at the moment. It is understandable that China wants such a railway link to expand it as China-Nepal-India Economic Corridor. Chinese Foreign Minister Wang Yi reiterated this during his official talks with his Nepali counterpart. However, it is unlikely that India will agree to it anytime soon as long as it has reservations about the BRI. Therefore, Nepal should make necessary preparation to start the Keyrong-Kathmandu railway even if China does not provide the grant assistance for the construction as expected.

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