rising, Nepal wants to convert Chinese loan into grant

Pokhara International Airport (PIA) PIA Facebook page

When a new airport was inaugurated in one of Nepal's major cities last year, it was expected that it would play a major role in the development of the country. Besides, relations with China will rise to a new level. Because China paid for that airport, they also built it.

But the Pokhara airport has become a symbol of something else, seen as a trap for China's international infrastructure projects. China spends a lot of money on such infrastructure, but the quality of construction is poor. As a result, countries that borrow to undertake such projects, sink into debt.

According to Economic Times, on Thursday, Nepal's one-month-old government formally offered China to convert the $216 million loan taken for the airport project into a grant. If that is done, the Himalayan country will be able to get out of this debt. Nepal's new government is headed by the country's largest Communist Party.

Pokhara airport has been going through various problems since its inception. In January 2023, a domestic plane bound for Pokhara crashed into a riverbed just weeks after its launch, killing 72 people. The airport failed to attract any international airlines. As a result, raising construction costs is uncertain.

Over the past year, Nepal's anti-corruption agency and a parliamentary committee have been investigating the construction of the airport.

According to a New York Times report last year, Chinese construction company CAMC Engineering inflated the construction cost of the airport while underestimating Nepal's effort to ensure construction quality.

But if Beijing responds to Nepal's request, it would be another sign that China's ties with the new government in Kathmandu have strengthened.

Last July, Nepal's largest communist party formed a coalition government with the Nepali Congress. Congress is the largest party in Parliament. KP Oli is the head of the government. After coming to power, his government wasted no time in getting closer to China.

Binj Basniat, a researcher at Thailand's Rangsit University and a retired Nepalese military general, said China would likely convert the loan for the Pokhara airport into a grant. Because Beijing wants to strengthen relations with the communist government of Nepal.

Binj Basniat feels that China can get more benefits by keeping Nepal's request. In his words, 'the investigation into corruption will be over soon. Nobody talks about it anymore.'