Debt hole: China-built Pokhara international airport may become Nepal’s Gwadar Port

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NEW DELHI: Nepal’s very expensive Pokhara international airport is shaping up to be an economic albatross for the cash-strapped nation and has saddled it with debt to creditors in Beijing for years to come.
The fate of the airport strongly parallels that of Gwadar Port in Pakistan which was built under China’s Belt and Road initiative (BRI). The multi-billion dollar port has failed to bring in investment and prosperity in the region, and has left Islamabad with a crushing debt that nearly pushed it into default.

While Nepal’s Pokhara international airport has not been built under China’s BRI, Chinese banks offered a lion’s share of the funds and a Chinese firm built the infrastructure.

Like almost every other facet of the airport, even the first batch of international passengers had relied on China’s favour.

No international flights
Nearly 6 months after being inaugurated, the first international flight landed at the airport from Sichuan China. The passengers were athletes and Chinese officials who had come for a good-will dragon boat race. Their flight had been chartered and funded by Beijing.
China had forecast an estimated 280,000 international passengers traveling through the airport by 2025.
As of now, there are no international flights.

Chinese debt trap
Nepal acquired the land to build the airport in 1976 but the project remained stalled — mired in political turmoil, bureaucracy and money problems — till 2013 when the Civil Aviation Authority of Nepal signed an agreement with China CAMC Engineering for the construction of the airport.
Construction started in April 2016 and the estimated cost was around $305 million, out of which the Export-Import Bank of China provided $215 million as loan. The Asian Development Bank provided $37 million in loans and grants and the OPEC Fund for International Development provided a $11 million loan.

The airport was part of China’s ambitions to establish its own sphere of influence as an alternative to American hegemony. To China, few developing nations offered the geopolitical allure of Nepal, its neighbor to the south with close ties to India, an emerging rival for regional dominance, said a New York Times report.
After the airport’s construction, Beijing began declaring that it had been part of the Belt and Road Initiative, President Xi Jinping’s signature infrastructure campaign, which has doled out an estimated $1 trillion in loans and grants around the world.
Not part of BRI, says Nepal
China’s claims, however, have been quietly rejected by Nepal.
Nepal foreign minister NP Saud recently said that the “project implementation plan of the BRI is at a stage of discussion between Nepal and China. Not a single project in Nepal under the BRI has been executed. The project implementation plan of the BRI is still under consideration.”.
China’s overseas development projects are facing criticism for costly and poor-quality construction that leaves borrower nations awash in debt.
The Pokhara airport highlights the pitfalls for countries that import China’s infrastructure-at-any-cost development model, which spins off money for Chinese firms, often at the expense of the developing country, said the NYT report.
In Nepal, China CAMC Engineering imported building materials and earth-moving machinery from China. The airport, built to a Chinese design, is packed with security and industrial technology made in China. Chen Song, China’s ambassador to Nepal, said it “embodied the quality of Chinese engineering”.
Without the necessary passengers to repay loans to its Chinese lender, Nepal is bound to struggle when loan repayments start in 2026.

Similarities to Pakistan’s Gwadar Port
Pakistan owes its “all weather friend” China at least $10 billion debt for the construction of the Gwadar port and other projects that have been built by Beijing under the multi-billion China-Pakistan Economic Corridor (CPEC), which is part of the BRI.
“China is diligently building an international network of coercion through predatory economics to expand its sphere of influence,” experts have said, adding that nations around the globe are discovering the hard way that China’s economic “friendship” via OBOR can come at “a steep cost” when promises of investment go unfulfilled and international standards and safeguards are ignored.
During the construction of the port, both China and Pakistan were confident that multi-billion dollar investment deals would be signed within a few years of the port opening but all-round deterioration in the Pakistan economy and with political uncertainty writ very large, all these investment plans are stuck.
Pakistan’s fate is fast becoming gloomy, reported Financial Post.
The Gwadar projects are also facing other constraints and everyday new issues are cropping up, including shortages of water and electricity under its short-term strategy. These shortages have so far slowed down the implementation and development of the project.

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