Nepal’s newly elected prime minister, Pushpa Kamal Dahal ‘Prachanda’, inaugurated on January 1, 2023, the Pokhara Regional International Airport (PRIA), built with the Chinese assistance in country’s western tourist hub of Pokhara.
A flagship project of Nepal-China Belt and Road Initiative (BRI) cooperation, PRIA was constructed with a US$ 215.96 million soft loan agreement Nepal signed with China in March 2016.
China CAMC Engineering was awarded the construction contract. China’s Exim Bank agreed to provide 25 per cent of the loan without interest and set the interest rate at 2 per cent per year for the remaining amount, with a 20-year payback period.
Important Features of PRIA
- PRIA is Nepal’s third international airport after the Gautam Buddha International Airport in Siddharthanagar which was opened near the Indian border, in 2022 and the Tribhuvan International Airport (TIA) in Kathmandu.
- Both the Chinese side and the Nepalese side have stated that the airport will be instrumental in increasing both tourist traffic and international trade to and from the landlocked country of Nepal.
- PRIA is also very close to India, particularly cities in Uttar Pradesh such as Gorakhpur and Lucknow. It is also not all that far from the strategic Siliguri corridor.
- The apron of the airport can only handle eight propeller planes at a time.
- It is a diversion airport for the main airport in Kathmandu in times of fog, etc.
- It is a public airport at an elevation of about 2625 feet above mean sea level.
- Its runway is 2500m long and 45m wide.
India’s Concerns on PRIA
Nepal joined the Chinese BRI back in May 2017 when Prachanda was heading the government in alliance with the Nepali Congress, but not a single BRI project went into completion since then. The earlier Prime Minister, Sher Bahadur Deuba in diplomatic interactions with Chinese authorities, had communicated to them that his government preferred only grants and not loans, from China to build mega projects. However, since the left-dominated government under Prime Minister Prachanda has come to power in Nepal again, China has nudged Nepal to expedite on the completion of BRI projects.
Fears of a Debt Trap
The aforementioned views of Prime Minister Deuba were guided by fact that the Nepalese economy in recent times have been staring at a crisis and there was an apprehension of Nepal getting saddled by too much debt resulting in a debt trap.
India is also worried by the question as to whether Nepal would be able to pay back China because if not, a repeat of the Hambantota Port disaster is possible. The famous Hambantota Port of Sri Lanka was also built with financial support from China. In 2018, however, after failing to pay back the loan, Sri Lanka was forced to lease out nearly 70 per cent control of the port to Chinese companies. Therefore, Chinese vessels, including submarines and warships of the People‘s Liberation Army Navy (PLAN), visit Hambantota regularly, mainly to refuel or pick up supplies. What bothers India is the regular movement of PLAN within an uncomfortably close vicinity to the country‘s coast.
If Nepal fails to pay back loans to China, PRIA could well become the next Hambantota for the People’s Liberation Army Air Force (PLAAF). The strategic location of the PRIA vis-à-vis India could create multiple problems for the Indian Air Force (IAF).
Another concern is that the Gautam Buddha International Airport at Bhairahawa has not done too well in attracting international carriers since it started operating in May 2022, which puts even bigger question mark on the commercial viability of PRIA in the long term. Though PRIA is located at the entry point to the Annapurna trekking route and several important Himalayan destinations, there are disadvantages and constraints associated with the financial viability of PRIA, particularly till the time regular flights from India are not started.
Adding to it, the prospect of Nepal getting swayed by the Chinese push of expediting on other BRI projects without ensuring their commercial viability, which may push Nepal even deeper into the Chinese debt trap. Ultimately, Nepal could succumb to the Chinese dictates on handing over complete or partial control over PRIA to Chinese companies.
Way Forward
China is pushing harder into South Asia with its BRI and other initiatives at a time when Sino-Indian ties are at their nadir. The situation calls for innovative solutions from the Indian geo-strategic establishment to relook and revamp India’s foreign policy in South Asia and in the Chinese neighbourhood.
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