Nepal and China have reached an agreement to promptly finalize the Belt and Road Initiative (BRI) Implementation Plan, as Beijing pushes for Kathmandu to accelerate the implementation of BRI projects.

In a delegation-level meeting held between Deputy Prime Minister and Foreign Minister Narayan Kaji Shrestha and his Chinese counterpart Wang Yi in Beijing on Tuesday, the two countries have renewed their commitment to expediting BRI projects by expeditiously signing the BRI Implementation Plan.

Highly-placed government officials said the signing of the Implementation Plan is anticipated to occur during the forthcoming high-level visits from Beijing to Kathmandu over the next few months.

During Prime Minister Pushpa Kamal Dahal's visit to Beijing in September 2023, leaders from Nepal and China had agreed to finalize the BRI Project Implementation Plan promptly. However, the signing was delayed due to reservation of the Nepali side on the proposed BRI Implementation Plan shared initially by the Chinese side in late 2019.

Sources familiar with the issue said there were also differences between Prime Minister Pushpa Kamal Dahal, who is also the chairman of CPN (Maoist Center) and then coalition partner, Nepali Congress (NC), regarding the BRI Implementation Plan. The NC then led the finance and foreign ministries– two key ministries involved in the negotiations.

With the recent political realignment, wherein Prime Minister Dahal severed ties with the NC and formed a new alliance with the UML and other leftist and fringe parties, Prime Minister Dahal has taken fresh initiatives to expedite the signing of the BRI Implementation Plan, sending his deputy in the party to China for negotiation. Both finance and foreign ministries are currently held by Prime Minister Dahal's own party.

Despite Nepal signing the BRI agreement on May 12, 2017, progress of BRI projects has stagnated over the past seven years due to the delay in signing the Implementation Plan. The delay has been attributed mainly to disagreements over funding modality and geopolitical concerns of Nepal’s southern neighbor. Nepal has demanded grant-based projects over those reliant on concessional loans amid concerns of debt trap.

Initially, Nepal submitted 35 projects for BRI development, a number later reduced to nine following suggestions from the Chinese side. The projects proposed by Nepal to be developed under BRI include Kathmandu-Kerung Railway, Rasuwagadhi-Kathmandu Road Upgradation, Kimathanka-Hile Road and Dipayal to South of China Road. Tokha-Bidur Road, Galchhi-Rasuwagadhi-Kerung 400kv Transmission Line, Tamor Hydropower Project, Madan Bhandari Science and Technology University and Phukot-Karnali Hydropower are also among those projects proposed by Nepal to develop under the BRI.

Amid prolonged delay and funding uncertainties, Nepal signed a Memorandum of Understanding (MoU) between NHPC, an Indian government enterprise, and Vidhyut Utpadan Company Limited (VUCL), a Nepalese government company, to develop Phukot-Karnali Hydropower in June 2023. The actual construction work of the hydro project is yet to begin.

Lately, China has emphasized the urgency of signing the BRI Implementation Plan, asserting its necessity for extending economic cooperation with Nepal and fulfilling its past project commitments. Projects like the Kathmandu Ring Road Improvement Project have languished amid this impasse.

In a meeting with visiting Deputy Prime Minister and Foreign Minister Shrestha in Beijing on Tuesday, Wang Huning, a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee and Chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), also called for promptly concluding BRI negotiations, according to sources. He also sought cooperation of Minister Shrestha in expediting agreements signed during Chinese President Xi Jinping's visit to Nepal in 2019.

Meanwhile, Nepal and China have agreed to reopen 14 traditional trading points closed mainly after the outbreak of COVID-19 pandemic in 2020 and explore elevating bilateral mechanisms to ministerial levels–something similar to the Joint Commission that Nepal has with India.

DPM Shrestha's current nine-day official visit to China includes meetings with secretaries of the Chinese Communist Party from Chongqing, Sichuan, and Lhasa provinces, focusing on various aspects of Nepal-China relations. Shrestha is scheduled to return home on April 1, according to the Ministry of Foreign Affairs.