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International relations

Nepal hitches railway to Chinese standards in blow to India

Himalayan nation will use a Beijing-favored gauge except at southern border

Nepal's extant rail link with India will be one of few parts of the network to use its southern neighbor's favored broad gauge. (Photo by Yuji Kuronuma)
Nepal's existing rail link with India will be one of few parts of the network to use its southern neighbor's favored broad gauge. (Photo by Yuji Kuronuma)

KATHMANDU -- Nepal will use Chinese gauge standards for a planned nationwide rail network, its transport minister told Nikkei, in a move seen intertwining the Himalayan country more deeply with its northern neighbor on the economic and security fronts.

The decision will likely sting for India, which sandwiches Nepal to the south. India uses a wider gauge it has pushed for Kathmandu to adopt, as it tries to build influence in the landlocked nation.

Nepal's only existing railway, a 30 km route from the southeastern city of Janakpur to Jayanagar across the Indian border, was opened in the 1930s and has lain mostly dormant under a reconstruction effort since 2014. The government is considering building a line spanning the country lengthwise from east to west, as well as a northern route linking it with China.

A construction plan will be complete "within six months," said Raghubir Mahaseth, Nepal's minister of physical infrastructure and transport. The government has decided to build the east-west and northern railways "in standard gauge model," the minister continued, referring to the 1,435 mm track width also favored by China.

The 1,676 mm measure used in India will be applied to five routes in the south of Nepal -- including the Janakpur railway, which until 2014 used 762 mm tracks but has been replaced with broad-gauge tracks. But only lines along the Indian border will use that gauge, the minister added, with the standard width to be employed everywhere else.

Nepali Minister of Physical Infrastructure and Transport Raghubir Mahaseth. (Photo by Yuji Kuronuma)

China has been pushing for the construction of a trans-Himalayan railway link using the standard gauge, reaching from Lhasa in the Tibet Autonomous Region through Kathmandu to northern India. New Delhi has pushed back against Beijing's plans, instead urging Nepal to use the broad gauge south of Kathmandu.

Minister Mahaseth recounted having asked the Indian government and railway operators for "about three [to] four months, 'why don't you design your [railway in] standard gauge?'"

The China-friendly government of Nepali Prime Minister K.P. Sharma Oli, which took power in February 2018, has sought to reduce economic reliance on India while cozying up to Beijing and its Belt and Road infrastructure ambitions. Decisions on Nepal's northern link with China may be made at April talks in Beijing, the transport minister said, adding that China could provide funding "maybe in loan, maybe in grant, maybe in both."

Most goods that arrive in Kathmandu are shipped by truck from Kolkata in eastern India. "If there is a railway and containers, transport capability will drastically improve," said an expert with an international aid organization.

But some express more cautious views toward Nepal's linking up with China. The northern line connecting the two countries is expected to cost $2.6 billion to build, and Mahaseth put the cost of the east-west line at around $7 billion.

"Someone has to foot the bill -- either you purchase the railway tickets or you purchase the freight volume," noted Srikanth Kondapalli, a professor at New Delhi's Jawaharlal Nehru University, voicing a widely held concern that the rail link "is not a viable project" in investment terms.

Foreign debt equates to about 20% of Nepal's gross domestic product -- a far lower ratio than some countries that have gotten into trouble over debts to China incurred through Belt and Road, such as Sri Lanka's nearly 60%. Mahaseth showed confidence that borrowing costs would not be a great burden, noting that "many international banks" including the Asian Development Bank and the World Bank offer Nepal interest rates around 1%.

But the Himalayas have been a flashpoint for Indo-Chinese tensions. In the summer of 2017, Chinese and Indian military forces were locked in a two-and-a-half-month standoff in the region bordering the two countries and Bhutan. Some have expressed wariness over Nepal's cooperation with China on railways because the trains could facilitate the transport of military personnel.

"This railway line -- which may turn into a white elephant -- [is] similar to the Hambantota Port and some other mega projects," said Amit Bhandari, a fellow with Mumbai-based think tank Gateway House, referring to a port Sri Lanka was forced to hand over to China after it was unable to repay debts incurred in construction. "I think this is where the real risk to Nepal, and hence to India, lies -- that it borrows from China to build unviable, unsustainable projects, and is then forced to hand over assets in return."

Arun Budhathoki in Kathmandu and Nupur Shaw in New Delhi contributed to this report.

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