Debate on grant and loan in BRI project

The debate started when Prime Minister Pushpa Kamal Dahal said in the House of Representatives meeting on June 11 that the final homework of project selection is being done to implement the BRI agreement.

Nepal signed the Memorandum of Understanding of BRI in 2017. However, due to the lack of agreement between the parties, the implementation stage has not been reached. Even after 7 years of signing, the BRI project has not been able to move forward because the 'BRI Implementation Plan' has not been decided. The meeting of the 16th Foreign Secretary-level Diplomatic Consultative Mechanism of the two countries held on June 11 in Kathmandu also failed to advance any homework regarding the BRI implementation plan.

Now the ruling coalition and the opposition parties have brought out their views on BRI. Maoist Chairman and Prime Minister Dahal has said that grants and concessional loans can be taken in BRI but there is no condition to take loans. UML foreign department chief Rajan Bhattarai has mentioned that they have agreed on BRI together with their neighbors and should implement it.

Yesterday MCC was brought into controversy and now it is in a state of implementation. At that time we also said that MCC should not be brought into controversy. Therefore, even BRI should not be brought into dispute now. It should be implemented," he said. "We should not show immature diplomatic behavior in international agreements." He mentioned that it is not right to tell Nepal not to take loans directly. According to him, it is necessary to decide how much loan or how much grant to take based on the selection of the project.

The main opposition Congress has said that loans should not be taken for projects under BRI. On Monday, the meeting of Congress office bearers concluded that loans should not be taken for the implementation of projects under BRI. Congress spokesperson and former finance minister Prakasharan Mahat said that loans will not be accepted except in the case of grants.

He commented that the country should not be pushed into further crisis by taking loans when even the grant program is not being implemented. In the case of getting a grant, it also happens when it is taken under BRI. Even if taken in other ways. We are clear that we do not take loans. This is also the conclusion of the Congress," said Mahat. "Our emphasis is on taking a loan if the grant project has not been implemented. In the current situation, the debt cannot be sustained by the country.

In September 2023, during Prime Minister Dahal's visit to China, it was agreed to sign the BRI implementation plan immediately. The Chinese side has been continuously asking to sign the BRI implementation plan. But the signature could not be done after Nepal insisted on grants and concessional loans. "The Chinese side has already sent a written letter to Nepal regarding the said implementation plan," said a foreign affairs official, "The Nepali side has also sent its comments on it to the Chinese side." But it will take more time because there is no agreement between the two sides.''

Prime Minister Dahal made it clear in the House of Representatives that Nepal is not in a position to take a loan. I have had a long discussion with China about the BRI implementation plan. It is still in process. I believe, this process will be completed soon," he said. "Our opinion is clear. Project implementation is only through grants and concessional loans like ADB and World Bank. That is, it is said that it will not go more than 1 percent or 1.5 percent.'' Dahal informed that the BRI implementation agreement will be made without burdening the debt. He made it clear that they will focus on grants when making the agreement. Also, he mentioned that BRI will be carried forward so that the debt does not fall into chains.

RSVP's foreign affairs department chief Shishir Khanal has mentioned that the BRI agreement has not been discussed in the House so far. "When there is no discussion in the House, there are unnecessary discussions outside. As a result, it seems that the tension with our neighboring countries may also increase," he said. He asked what the government is thinking about having a formal information and discussion (Parliament) about the agreement.

Since President Xi Jinping came to power in 2013, China has promoted the One Belt One Road (OBOR) concept. The project, which has been promoted by Chinese investment to connect the world through land and sea routes, has been named BRI since 2015. After that, the road network as well as other areas of infrastructure are also covered.

After the agreement with Nepal, during the then Prime Minister KP Sharma Oli's visit to China in 2019, the Nepali side proposed 35 different projects to the Chinese side. But after China asked Nepal to reduce the number of projects to one digit, Nepal proceeded with nine projects. Due to the non-implementation of BRI, the projects increased in 2019 are being implemented bilaterally by other levels, while some projects have been modified.

These projects include Feasibility Study of Kerung-Kathmandu Railway, Upgradation of Rasuwagadhi-Kathmandu Road, Construction of Kimathanka-Line Road, Road from Dipayal to Chinese Border, Tokha-Vidur Road, Galchi-Rasuwagadhi-Kerung 400 KV Transmission Line, Tamor Hydroelectric Project (756 MW ), Phukot-Karnali Hydro Project (480 MW) and Madan Bhandari University. Out of which, an agreement has been reached to make Fukot Karnali an Indian company.

Similarly, during Prime Minister Dahal's visit to China last year, an agreement has been reached that the Galchi-Rasuwagadhi-Kerung 400 kV transmission line will be modified and lowered to 220 kV and will be moved bilaterally.