Chinese aid

In a true spirit of friendship the Chinese government has pledged Nepal crucial aid-- a mix of soft loan and grant-- for infrastructure development. Under a framework agreement signed by visiting Chinese Vice-minister for Commerce Fu Ziying and Finance Secretary Rameshwore Khanal, China has agreed to provide a soft loan of Rs 7 billion through the Export-Import Bank of China for construction of the 60-megawatt Upper Trishuli 3A hydropower project. The Chinese government has also agreed to provide a grant assistance of Rs 547 million to be utilized for mutually agreed projects that will be discussed and decided between the two governments.



There is one more piece of good news, especially for Kathmanduites: The Chinese government has agreed to provide grant assistance to upgrade the Valley Ring Road (a 9.5 km stretch in the first phase) to a four-lane two-way main road and a four-lane two-way relief road along with a two-way bicycle path and two-way pedestrian path.



Completion of the Upper Trishuli hydropower project will go a long way in alleviating the country´s chronic power shortage. Just as important will be the expansion of the Ring Road, given the way traffic-jams along this road have become an everyday affair. With the rapid expansion of urban areas in the Valley the Ring Road has actually become part and parcel of the inner city. Seen from a national perspective, power and roads are critical infrastructure for the economic development of the country. A recent World Bank study cites power shortage and lack of transportation networks as the two key bottlenecks in doing business in Nepal.



And yet there is little investment-- domestic or foreign-- in these areas and both bilateral and multilateral donors have shied away from making such investments. Only two countries-- Japan and India-- are currently carrying out road constructions in Nepal--Sindhuli-Bardibas (Japan) and Hulaki Rajmarga (India). Though the country is reeling under 14-hour a day load-shedding, there is hardly any investment by donors in the power sector.



The Chinese pledge to invest in both power generation and road extension should be seen in this context and welcomed whole heartedly. The blame for lack of investment in infrastructure should, however, fall squarely on ourselves-- on our political instability and our forever-quarrelling politicians who fail to agree even on developing infrastructure projects. The Chinese aid also signals the growing capacity of China to assistance her poorer neighbors. As China and India head towards becoming the world´s largest and possibly second largest economies, their ability to assist next-door neighbors will also increase immensely. And it will be in the best interests of China and India to assist Nepal, for a pocket of extreme poverty in their backyard can be a source of instability for both. Nepal, however, cannot seize such opportunities unless we set our own house in order.

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