Exclusive | Nepal leader vows to revive Chinese dam project, open to review pact over Nepalese soldiers in India

New communist prime minister says extending Tibet rail to Kathmandu will spur trade, seeks to widen options beyond India

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Nepal's prime minister Khadga Prasad Sharma Oli wants to lower the country’s dependence on oil. Photo: AFP

Published: 6:30pm, 19 Feb 2018Updated: 2:54pm, 20 Feb 2018

Nepal’s new communist prime minister will restart a Chinese-led US$2.5 billion hydropower project that was pulled by the previous government considered friendly towards India, and wants to increase infrastructure connectivity with Beijing to ease the country’s reliance on New Delhi.

He also wants to “update” relations with India “in keeping with the times” and favours a review of all special provisions of Indo-Nepal relations, including the long-established practice of Nepalese soldiers serving India’s armed forces.

“Political prejudice or pressure from rival companies may have been instrumental in scrapping of the project. But for us, hydropower is a main focus and come what may, we will revive the Budhi Gandaki project,” Communist Party of Nepal (Unified Marxist-Leninist) leader Khadga Prasad Sharma Oli told This Week in Asia in an exclusive interview, his first since taking office on Thursday.

The contract to build a dam on the Budhi Gandaki river in central-western Nepal turned into a political hot potato after it was awarded last June to China’s Gezhouba Group by a government headed by Communist Party of Nepal (Maoist Centre) leader Pushpa Kamal Dahal, as part of China’s “Belt and Road Initiative” that Nepal joined the previous month. The next prime minister, from the Nepali Congress, scrapped the project, in a move seen as a concession to pressure from India, which has been wary of a growing Chinese footprint in what it sees as its sphere of influence.

Oli’s UML and the Maoist Centre formed the Left alliance that swept to power in this landmark election, Nepal’s first after the promulgation of its new constitution restructuring the Himalayan country as a federal republic. The two communist parties are also inching towards a merger, which China has always advocated.