Nepal extends horizons towards a strong partnership

On the invitation of his Nepalese counterpart Sher Bahadur Deuba, Indian Prime Minister Narendra Modi visited to Lumbini, the birthplace of Gautam Buddha, on Monday to mark the occasion of Buddha Purnima. This is the second summit-level interaction between the leaders in less than two months. While in Lumbini, Modi and Deuba will laid the foundation stone for a Buddhist Vihar, being built with Indian assistance. We should note that Nepal is important for India in the context of its overall strategic interests in the region, and the leaders of the two countries have often noted the age-old “Roti Beti” relationship.

Modi’s visit to Lumbini would follow a re-energisation of ties after Deuba’s trip to India in April, when four agreements and a number of infrastructure projects were launched.  The four agreements are Nepal officially joining the International Solar Alliance; Indian technical assistance to Nepal’s railway sector; cooperation in the field of petroleum sector; and exchange of expertise between Nepal Oil Corporation and Indian Oil Corporation.

During Deuba’s visit, the two Prime Ministers discussed the unprecedented opportunities for mutually beneficial cooperation in the energy sector. In this regard, a Joint Vision Statement on Power Sector cooperation that spells out the shared commitment as well as opportunities for win-win collaboration in power generation, transmission and trade was concluded.

They had also jointly inaugurated the 90-km-long 132 KVDC Solu Corridor Transmission line and substation built under the Line of Credit extended by India. Both sides agreed to expedite progress in the implementation of the Pancheshwar Multipurpose Project, beginning with early finalisation of the Detailed Project Report (DPR).

Nepal may also hold talks with India for the development of the West Seti Hydropower Project. Earlier, China was to develop this project. There is an increasing realisation among India and Nepal to expedite the process of energy and border connectivity cooperation. Also, in India’s “Act East Policy” and “First neighbourhood policy”, energy is a core component.

Nepal appreciated the fresh approvals granted to Nepal Electricity Authority for the export of substantial amount of power to India. Nepal further invited greater participation of Indian companies in its hydropower development projects. The progress made in 900 MW Arun-III hydro-electric project in Nepal was also noted.

India welcomed Nepal’s decision to join the International Solar Alliance and became the 105th country to be a signatory to the Framework Agreement of the ISA. Modi and Deuba had also inaugurated passenger rail services between Jaynagar in India  and Kurtha in Nepal. The Hindu pilgrimage centre of Janakpur Dham, considered to be the birthplace of Ramayan’s Sita, will be one of the main attractions of the Jaynagar-Kurtha section rail link between the two special neighbours. This link will be the first broad gauge passenger rail service in Nepal. The beginning of the Jayanagar-Kurtha rail line is a part of priority to trade and cross- border connectivity initiatives for a smooth, hassle-free exchange of people between the two countries. The link is part of an overall strategy for improved border management, planned and integrated development of border areas and infrastructure in a selective and phased manner.

The Prime Ministers reviewed the progress in implementation of Indian projects in Nepal, including the cross-border rail-link projects connecting (a) Jayanagar-Kurtha- Bijalpur-Bardibas (b) Jogbani-Biratnagar (c) Raxaul-Kathmandu. India and Nepal are mulling at least five different cross-border railway lines. Nepal assured its full support in resolving bottlenecks and facilitating the time-bound completion of all India-assisted projects, including the National Police Academy at Kavrepalanchowk, the Integrated Check Posts at Nepalgunj and Bhairahawa and the projects under the Ramayana circuit.

The countries welcomed the recent conclusion of the G-to-G Agreement to facilitate the long term supply of fertilizers from India to Nepal and the renewal of the Five-Year General Supply Agreement for supply of petroleum products from India to Nepal.

Energy trade is mutually beneficial to both countries. The trade enables Nepal to sell the surplus energy it produces and opens up an opportunity for it to reduce the burgeoning trade deficit with India. It also ends Nepal’s asymmetric dependence on India for energy. Nepal imports all fossil fuel energy from India. In the first six months of the current fiscal year 2021-22, Nepal imported around $1 billion worth of diesel, petrol, and liquefied petroleum gas. It is also important to highlight that in a historical cross-border supply, first transnational fuel pipeline connecting Motihari (INDIA) to Amlekhgunj (later to be extended to Chitwan-Kathmandu) with $3.2 billion support extended by INDIA is operationalised.

It is estimated that Nepal can save over Rs1 billion annually in transport cost. This is expected to generate additional revenue for the government, reduce technical loss, oil theft and road deterioration, would make oil supplies cleaner and cheaper. This pipeline is also expected to reduce the long queues of trucks carrying petroleum products at the Birgunj border. Nearly 1,500 trucks transporting petroleum products to Nepal daily.

India and Nepal also launched Indian RuPay card in Nepal which would open new vistas for cooperation in digital financial connectivity, and is expected to facilitate bilateral tourist flows as well as further strengthen people-to-people linkages between the two countries.

Further, Nepal requested India to provide three additional air connectivity from Mahendranagar, Nepalgunj and Janakpur, and also requested an agreement on near-border operation for the Chinese-constructed Gautam Buddha International Airport, Bhairahawa.

Nepal became an energy surplus country (during monsoon) from July 2021. As a result, it started selling 39 MW of electricity to India via the Indian Energy Exchange. However, there is an “unprecedented opportunity” to expand mutually beneficial bilateral cooperation in the power sector. Nepal and India signed a Joint Vision Statement on Power Sector Cooperation in this context. The agreement highlights development of cross-border transmission infrastructure, and bi-directional power trade based on market demand. Based on this, India has allowed Nepal to export an additional 325 MW of electricity from July 2022.2

The Joint Vision Statement on Power Sector Cooperation, which was issued during Deuba’s visit could also form a key stepping stone to sub-regional energy trade between Bangladesh, Bhutan, India and Nepal (BBIN).

Recently, India also announced its next Ambassador to Nepal, to take over after Vinay Kwatra assumed office as India’s Foreign Secretary. He is an official with knowledge of regional dynamics, especially China, to head the mission in Nepal. Recently, Nepal has also appointed its new ambassador to India.

“Modi’s talks with his Nepal counterpart Deuba in Lumbini, Nepal on May 16 will have a comprehensive agenda to further expand cooperation in multiple areas including hydropower, connectivity, trade and investment, Foreign Secretary Vinay Mohan Kwatra.

“Return visit in so close succession is a reflection of the closeness of our high-level exchanges as well as of the upward trajectory in our mutually beneficial partnership. The entire scope and landscape of the India-Nepal partnership is very wide and extensive.”

It is hoped that Modi’s visitwould be a value addition and an important chapter of India-Nepal partnership as it has reshaped high-level political engagement between the two countries. It has also brought normalcy to Nepal’s geostrategic debate by bringing India back into the fold.

Indi-Asian News Service