Pokhara International Airport, which Nepal insists is not part of China’s BRI, still has all the exploitative BRI aspects
20-10-2023
Most challenges that smaller, poorer nations face, especially the ones involving the predatory actions of giant powerful neighbours on their territories, are compounded by the inability of these small countries to get their voices or their predicaments heard by the wider international community. It is usually the case that a disastrous cocktail of thrift with due diligence, dire economic need brought about mostly by mismanagement and neglect, and an inability to gauge the real intentions of the predatory power, lead the smaller nations into the debt traps that countries such as China excel at setting up for them. Once in the trap, the way out is not only arduous and painful, but there is actually hardly anyone that stands up to tell the tale for them. The New York Times, therefore, deserves appreciation for highlighting this past week how China had ensnared yet another vulnerable and gullible South Asian nation in Nepal, and that too quite astonishingly in a project that Beijing has vehemently been claiming is part of its controversial Belt and Road Initiative (BRI), ignoring all Nepali rebuttals and assertions that the project in question – the Pokhara International Airport – predates even the announcement of the BRI by China.
Nepal had acquired land to build an international airport at Pokhara in 1976, but the project remained stalled due to 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 with an estimated cost of 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. China CAMC Engineering imported building materials and earth-moving machinery from China. The airport, built to a Chinese design, was packed with security and industrial technology made in China. Chen Song, China’s Ambassador to Nepal, had said that it “embodied the quality of Chinese engineering”.
The New York Times reported in its 16 October article titled ‘China Got a Big Contract. Nepal Got Debt and a Pricey Airport’ that “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 started. The Chinese loan agreement allowed only Chinese firms to bid on the work. CAMC’s winning bid of $305 million, almost twice what Nepal had estimated the airport would cost, raised the ire of some Nepali politicians, who called the price outrageous and the bidding process rigged. CAMC then lowered the price about 30 percent, to $216 million. 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 overseas development work, at 2 percent interest. Nepal agreed to start repaying the loans in 2026”.
Pushpa Kamal Dahal alias Prachanda, Nepal’s Prime Minister, officially opened the airport on New Year’s Day this year. In the first 6 months after it was inaugurated, not a single international flight landed at what China had predicted would become a very busy international hub. An international flight from Sichuan in China did finally land at the Pokhara International Airport in June this year, but the composition of the passengers it carried made a mockery of the occasion. The flight had been chartered and funded by Beijing to ferry a group of passengers who were all athletes and Chinese officials visiting picturesque Pokhara for a good-will dragon boat race.
A 2014 feasibility study commissioned by CAMC had projected that the Pokhara International Airport would be able to repay loans from its profits. That forecast, however, was based on an estimated 280,000 international passengers traveling through the airport starting in 2025, whereas as of now there are no international flights. An investigation by The New York Times based 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 had repeatedly dictated business terms to maximize profits and protect its interests, while dismantling Nepali oversight of its work. This left Nepal “on the hook for an international airport, at a significantly inflated price, without the necessary passengers to repay loans to its Chinese lender”. Without the required number of passengers, Nepal is bound to struggle when loan repayments start in 2026. As per estimates, the airport has to pay $3.2 million in annual interest alone, and officials have said that the airport must have an income of at least Nepali Rs 1.5 billion annually, a tall and presently unviable target.
With the airport struggling to generate the income necessary to pay off its loans, local media reports had revealed that Nepali government officials had requested China to turn the loan into a grant. When Prachanda had visited Beijing in late September, the two countries had issued a statement expressing “satisfaction” over the completion and operation of the Pokhara International Airport. China had also agreed to open more flights and routes to Nepal, including to Pokhara. The statement, however, did not mention any plans to waive the Pokhara airport loan.
The New York Times underlined that “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 firms. For Nepal, it was already an economic albatross, saddling the country with debt to Chinese creditors for years to come… 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”. It added, “As dozens of countries, including Nepal, gather in Beijing this week for the 10th anniversary of the (BRI) initiative, 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”.
Experts have drawn comparisons between the Chinese tactics employed in Pokhara and the alarming results that similar approaches had yielded for the local population in the more publicized earlier such examples in Sri Lanka’s Hambantota and Pakistan’s Gwadar. Both became victims of China’s BRI, and the multi-billion dollar infrastructure projects that were built failed miserably to bring in investment and prosperity to the region, and left Colombo and Islamabad with crushing debts. Many experts are convinced that the Pokhara International Airport is at risk of becoming yet another Beijing-created white elephant.
While these aspects of China’s predatory intentions and tactics have by now become well known, the experience with the Pokhara International Airport sheds some more light on the importance that the BRI holds for Beijing’s global aspirations, as well as on the clear absence of ethical or moral considerations in the targeted way in which China goes about exploiting already seriously impoverished nations.
Prior to the Pokhara International Airport’s inauguration, the Chinese embassy in Kathmandu had described it as “the flagship project of the China-Nepal BRI cooperation”. On 21 June, when the first international flight landed in Pokhara, Chinese Ambassador Chen Song reiterated that “Today, we have achieved an important milestone with the successful landing of an international flight. This achievement falls within the framework of the BRI project”. The envoy’s assertion of the airport’s BRI status despite strong Nepali objections prompted The Kathmandu Post, a leading English-language newspaper in Nepal, to publish an article with the headline: “China envoy again packs a geopolitical punch as new Pokhara airport suffers”.
The Chinese assertions also prompted a section of Nepali lawmakers to ask Foreign Minister Narayan Prakash Saud whether the airport was indeed a part of the BRI. Saud confirmed in parliament that no project under the BRI had thus far been implemented in Nepal. The Foreign Minister added, “As BRI implementation plan is under discussion between the two sides, no project under the BRI is yet to reach the implementation stage. I would like to clarify this fact”. As The New York Times noted, “For Nepal, the airport’s association with Belt and Road is fraught because India has looked askance at the Chinese initiative — a problem for an airport struggling to attract international flights. So far, no Indian airlines plan to serve Pokhara”.
Despite Nepal’s Foreign Minister unequivocally stating his country’s position regarding a project being undertaken within Nepalese territory, Ambassador Chen insisted on sticking with the Chinese stand when he told The New York Times that China would “not force the name” on Nepal, “but we will go with our own plans”. Such strong positioning would suggest that setbacks to the BRI, no matter the scale or location, are where China’s soft underbelly lies.
Former Nepali diplomat Dinesh Bhattarai believes that China’s tendency to keep every project – old and new – which is being implemented with Chinese assistance under the BRI has increased the geopolitical risks to such projects. He said, “I am not sure why China is keeping every project in the basket of BRI when there is no such bilateral agreement. I wonder if it is designed to convey a certain message to those powers who are against the BRI”. Other Nepali experts say that the forced and incorrect inclusion of projects under the BRI would only invite adverse scrutiny from China’s rivals, complicating the implementation of the Chinese-funded projects.
The New York Times investigations unveiled some unappealing aspects of how Beijing views and treats BRI recipients. Murari Gautam, one of the first engineers and outside consultants brought on to help the Civil Aviation Authority of Nepal oversee the Chinese contractor in the Pokhara project, revealed that CAMC had started work before any consultants were in place, and that the work CAMC had done did not meet international standards. CAMC completed earth-filling work for the 8,200-foot runway, but it had no documentation that it had tested the soil density. Gautam said no one on the Nepal side “knew how the foundation of the runway was built”. Without proper soil density, the runway could become bumpy or littered with cracks and potholes in the future. There were other problems, he said. CAMC designed the airport drainage system without taking into account historical rainfall data in locations across Pokhara and the sloping topography near the site, forgoing a standard practice in international construction. Without such considerations, Gautam felt that the airport was at risk of flooding during heavy rains. There was also no paperwork ensuring the quality of Chinese-made building materials or information on the Chinese vendors providing the components, he said, contrary to the stipulations in CAMC’s contract with Nepal. Gautam further disclosed that the contractor had inflated the cost of the project massively — to double the market rate, by his estimate — and that “quality had been compromised”.
The human element, or the absence of it, was also highlighted by The New York Times. It said, “In late 2022, as the project neared completion, Zhu Zhanfeng, the contractor’s project site manager, was feeling boastful. He said in an interview that Pokhara would have ‘the first modern airport in Nepal’ that adhered to the ‘Chinese standard’. There was no mention of the fact that three years earlier, Mr. Zhu had struck and killed a pedestrian in Pokhara after a night of drinking. According to a police report, an officer at the scene suspected that Mr. Zhu was drunk when he struck Deu Kumar Tamang, who was walking in a crosswalk around 11 p.m. on July 2, 2019, with his Toyota Hilux, a pickup truck. Mr. Tamang died on impact from ‘blunt force injury to the abdomen’, according to the autopsy”. The victim was poor, and lived with his family in a shack in a rural mountain village. CAMC offered the family some money and a coffee shop in the new airport, but it argued in court that the victim had thrown himself at the car rather than the car hitting and killing him. CAMC used the might of the State to ensure that Zhu served just 50 days in prison before being exonerated of all wrongdoing. Since Zhu’s release, Tamang’s family has never heard back from CAMC about the agreed upon compensation or the airport coffee shop. The victim’s brother, Nabin Tamang, lamented, “Killing someone is a serious crime. They treated this like a minor business transaction”.
As the examples from across the region unfold, China’s scant regard for the devastating implications of its greedy and exploitative policies on local populations, especially those belonging to Least Developed Countries (LDCs) such as Nepal and Afghanistan, is becoming palpably clear.
