Interestingly, Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari had pressed the government to endorse the bilateral agreement as it is last week. “He (Adhikary) pushed for the endorsement of the agreement because he wanted to get it signed during Indian Finance Minister Pranab Mukharjee´s Nepal visit, which has now been cancelled,” said a highly placed source.[break]
However, Adhikary´s efforts had failed after top officials managed to convince Prime Minister Jhalanath Khanal about the long-term liability and negative impact that Nepal could suffer if BIPA was signed as it is.
Concerned officials have been protesting the inclusion of provisions that threatened to subject unnecessary liability on the state. Despite all this, the Ministry of Industry had forwarded the draft agreement to the Cabinet for endorsement some one-and-a-half years ago on personal insistence of Minister Mahendra Yadav.
“We will have to set aside huge money every year to compensate the Indian joint venture companies that may suffer non-commercial loss -- damage or loss inflicted due to banda or strikes or other abnormal situation. It would bring long term economic impact to the country,” said the source.
However, the Financial Committee of the Cabinet last week assessed that the proposed agreement needs further negotiations and subsequently sent back the draft of BIPA to MoI.
India has been pressing for the signing of BIPA for the last one decade, stating that Indian multinationals here are facing growing insecurity due to labor unrest and frequent strikes by different groups. BIPA has always been one of the major agendas during the each bilateral trade talks between two countries in the past.
Nepal has signed the BIPA with France, Germany, Britain, Mauritius, Qatar and Finland, which are not making significant investment in Nepal. BIPA with India, Canada and UAE are in the pipeline.
Nepal has been deferring the signing of the BIPA ever since India proposed it in 1998 due to its far reaching implication, leading to rounds of failed talks on it in the past as both the countries have already exchange the draft of the pact. India had first made the proposal for the BIPA when the Maoist cadres attacked Indian multinational Colgate Palmolive during Maoist insurgency in Nepal. Indian officials are insisting that Indian investment in Nepal will not be secure unless the pact is signed.
“Though provision of World Trade Organization requires national treatment to foreign companies, risk of bearing huge compensation to the non-commercial loss has been deterring us to sign the BIPA,” said the source.
Responding to the Indian proposal, the government had principally agreed to sign the BIPA for the protection of Indian investment in Nepal in 2001. As per the BIPA, Nepal has to treat Indian companies as the national companies, guarantee not to nationalize them, give compensation in case of nationalization of those companies and make legal environment to seek compensation for non-commercial losses.
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