Home / Nepal / China won a large contract from Nepal, which was left with debt and an expensive airport

China won a large contract from Nepal, which was left with debt and an expensive airport

THE NEW YORK TIMES – A sweltering June morning, the new international terminal airport of Pokhara, the second largest city in Nepalcame to life with the arrival of a Sichuan Airlines flight from China.

A water cannon submerged the plane, an Airbus A319, the first international plane to land at the airport since its opening six months earlier. A crowd gathered in the arrivals area to greet the passengers and wish them a “warm welcome” to the “Land of Everest” with their posters.

The first to arrive were Chinese athletes and officials who came for a dragon boat race. Your flight was chartered and financed by Beijing. Like almost every other aspect of the airport, even the first batch of international passengers got help from China.

The celebration masked a disturbing reality: The expensive airport, built largely by Chinese companies and financed by Beijing, was a diplomatic victory for China and a windfall for its state-owned enterprises. For Nepal, it was already a “white elephant” burdening the country with debt for years to come.

After the airport was built, Beijing began declaring that it was part of the Chinese president’s signature infrastructure campaign. Xi Jinping, which distributed about $1 trillion in loans and grants worldwide. The designation, which Nepal quietly rejected, put the airport in the middle of a diplomatic tug-of-war between China and China. India.

In Nepal, China, CAMC Engineering, the construction arm of Sinomach, a state-owned conglomerate, imported construction materials and earthmoving machinery from China. Built in Chinese design, the airport is packed with Chinese-made security and industrial technology. Chen Song, China’s ambassador to Nepal, said the airport “embodies the quality of Chinese engineering.”

The international airport has raised prices significantly and does not receive enough passengers for the country to pay off loans Photo: Rebecca Conway/The New York Times

Continues after announcement

But a study of New York Timesbased on interviews with six people involved in the airport’s construction and an examination of thousands of pages of documents, found that China CAMC Engineering repeatedly dictated commercial terms to maximize profits and protect its interests while dismantling Nepalese surveillance of his work.

This left Nepal on the hook for an international airport, at a significantly inflated price, without passengers having to repay loans to the Chinese lender.

Sign a 20-year loan

Located in the foothills of the Himalayas, Pokhara is a picturesque destination for tourists drawn to Nepal’s natural beauty. On a clear day, three of the world’s ten highest mountains are visible from the city, making it a hub for trekkers in the Annapurna Mountains.

In 2011, a year before China officially agreed to lend the money for the airport, Nepal’s finance minister signed a memorandum of understanding to support CAMC’s proposal before any bidding process had even begun.

The Chinese loan agreement allowed only Chinese companies to bid on the work. CAMC’s winning bid of US$305 million, nearly double what Nepal had estimated the airport would cost, drew the ire of some Nepali politicians, who called the price outrageous and the tender process fraudulent. CAMC then lowered the price by about 30% to $216 million.

China and Nepal signed a 20-year agreement to build the airport, which began work in 2017 Photo: Rebecca Conway/The New York Times

Continues after announcement

China and Nepal signed a 20-year agreement in 2016; a quarter of the money would be an interest-free loan. Nepal would borrow the rest from the Export-Import Bank of China, a state-owned lender that finances Beijing’s development work abroad, at an interest rate of 2%. Nepal has agreed to begin repaying the loans in 2026.

Construction began a year after the loan agreement. In 2018, Murari Gautam was one of the first external engineers and consultants hired to help the Civil Aviation Authority of Nepal oversee the Chinese contractor. He had spent most of the previous decade working in Saudi Arabia and Qatar, where he served as an engineer building the soccer stadiums for the 2022 World Cup.

Dragon boat racing in Nepal; athletes who play the sport were the first to arrive at the country’s new airport Photo: Rebecca Conway/The New York Times

When he started working, he immediately noticed warning signs. Nepal’s aviation agency should have teams of national and international experts as consultants, which is essential for a project of this magnitude, he said. But key roles were vacant and the positions that were filled relied on recent graduates with almost no experience.

The original construction budget allocated $2.8 million for Nepal to hire consultants to ensure CAMC met international construction standards, according to the documents. As the project progressed, the Chinese company and Nepal reduced this allocation to $10,000, using the money elsewhere.

Gautam said CAMC had started work before the consultants were on site and the work done by CAMC was not up to international standards. CAMC completed the ground work for the approximately 2,500 meter long runway, but had no documentation that they had tested the density of the soil.

Gautam said no one on the Nepal side “knew how the foundation of the runway was built”. Without sufficient soil density, the road may become potholed or full of cracks and potholes in the future. There were other problems, he said. CAMC designed the airport’s drainage system without considering historical rainfall data in Pokhara and the nearby sloping topography, abandoning standard practice in international construction.

Continues after announcement

Gautam said he had pressed CAMC for further information or documentation. But CAMC bypassed consultants to deal directly with aviation agency officials, who were reluctant to push and had little construction experience, he said.

In November 2018, CAMC sent a brusque letter to the Nepalese agency warning that the project would be delayed due to “unnecessary reviews” by Nepalese consultants.

Pokhara, at the foothills of the Himalayas, is a picturesque destination for tourists attracted by Nepal’s natural beauty Photo: Rebecca Conway/The New York Times

That month, Gautum quit in frustration after a year on the job. He said that in his experience it was not uncommon for construction companies to try to cut costs to maximize profits, but that he was surprised that there was “no oversight” from Nepal. As a result, he said, the contractor succeeded in inflating the cost of the project — double the market price by his estimate — and “quality was compromised.”

On 1 January 2023, Pushpa Kamal Dahal, Prime Minister of Nepal, officially opened the airport. Local headlines that day, however, were about a tweet from the Chinese Embassy in Nepal declaring Pokhara Airport as the “flagship project” of cooperation between China and Nepal’s Belt and Road Initiative, even though work on the airport preceded China’s infrastructure program.

As the airport struggles to generate the income needed to repay its loans, Nepalese government officials have requested China convert the loan into a grant, according to local media.

Continues after announcement

When Dahal visited Beijing in late September, the two countries issued a statement expressing “satisfaction” with the completion and operation of the Pokhara airport. China has agreed to open more flights and routes to Nepal, including Pokhara. However, the statement did not mention any plan to waive Pokhara airport loan.

Check Also

Indian producer Guneet Monga to lead Women in Film India Chapter

Indian filmmaker Guneet Monga will lead the India chapter of the Women In Film initiative, …

Leave a Reply

Your email address will not be published. Required fields are marked *