Nepali Prime Minister K.P. Sharma Oli (L) with Indian Home Minister Rajnath Singh after his arrival at Indira Gandhi international airport in New Delhi on Friday. Photo: AFP/MONEY SHARMA
Nepalese Prime Minister K P Sharma Oli (left) with Rajnath Singh, now Indian defense minister, in 2018. Photo: AFP / Money Sharma

Nepal Prime Minister K P Sharma Oli’s visit to India on Friday is widely expected to revive diplomatic and economic ties between the neighboring countries after being strained in the past couple of years.

However, the controversial Budhi Gandaki hydropower project may drive a wedge in the Indo-Nepal relationship.

Oli, on his first visit to India since his Left alliance government came to power in Nepal, will have to consider India’s “red lines” alongside strengthening diplomatic ties, reported the Indian Express.

The Buddha Gandaki project was awarded to China’s Gezhouba Group last year after Nepal joined China’s Belt and Road Initiative under the former government of Maoist leader Pushpa Kamal Dahal. The next government of Sher Bahadur Deuba scrapped the project, citing “irregularities.”

Speculation in the Indian media hinted that the project might go to India’s National Hydroelectric Power Corporation.

But in a recent interview with the South China Morning Post, Oli, who is seen as being fond of China, said: “Political prejudice or pressure from rival companies may have been instrumental in scrapping the project. But for us, hydropower is a main focus and come what may, we will revive the Budhi Gandaki project.”

Nepal is focusing intensely on hyderopower projects to cut its fuel imports, much of which come from India. “Our petroleum usage has been increasing, but we import all of it. We urgently need to develop hydropower to reduce our dependence on petroleum,” Oli told the South China Morning Post.

India is also under pressure to not lose Nepal to China as Beijing progressively increases its influence in the region. However, it has its “red lines.” A senior government official told the Indian Express: “You can’t expect India to buy power from a Chinese-built project.” He suggested that the Chinese can build the dam, but then Nepal should sell the power.

China Telecom Global recently entered the internet service provider business in Nepal, putting a stop to India’s monopoly in the sector.

These issues take on significance as Oli’s ties with India have not been strong in the past few years. He also accused India of trying to topple his government in 2016.

But ahead of Oli’s visit, Nepal’s Foreign Minister Pradeep Gyawali said the trip would focus on building trust with the Indian political leadership.

The trust first dipped when New Delhi imposed an unofficial border blockade on Nepal after promulgation of the country’s new constitution in 2015. The blockade cut down supplies of fuel and medicine among other significant things from India to Nepal. But India has blamed the blockade on Madhesi protesters, who were disgruntled with the new constitution, according to Indian media reports.

There is still ample scope to gauge the strain in Indo-Nepal ties and the 900MW Arun III hydropower project will play a pivotal role in that. Oli and Indian Prime Minister Narendra Modi are scheduled to lay the foundation stone for the project on April 7.

The Arun hydropower project, the largest of its kind being built by India in Nepal, will be constructed by Indian state-run firm Sutlej Jala Vidhyut Nigam (SJVN). The Modi government has already released US$1 billion to SJVN for the project.

The two prime ministers will also inaugurate the Birgunj-Raxaul integrated check-post at the Indo-Nepal border. The post is supposed to facilitate trade and commerce between India and the landlocked Himalayan state.

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