Nepal inks energy pact with China to reduce dependence on India

Oli- Xi

In a major geo-political shift, Nepal has inked a fuel supply deal with China to reduce its reliance on India. The deal was signed during a visit by Nepali Prime Minister K.P. Sharma Oli to Beijing, after months of uneasy relationship with New Delhi, which is the only fuel supplier to the landlocked Himalayan country at present. As bilateral relations with India soured, China came to the rescue Nepal with a deal to supply one third of the country’s energy needs. The deal is significant as it indicates towards Kathmandu in a subtle shift diversifying its trade away from India. “Both sides agreed to conclude a commercial deal on the supply of petroleum products from China to Nepal”, the two countries said in a joint statement. Nepal also inked a transit and transportation treaty that includes access to Chinese ports as well as the possible construction of rail links between the two countries.

Nepal’s acute reliance on India was underscored by a recent months-long border blockade by demonstrators from its Madhesi community as they were protesting against a new constitution. The blockade resulted in severe shortages of gas, medicines and other vital supplies, and the situation forced Nepal to turn to its northern neighbour China for fuel. The event prompted Kathmandu to accuse India for imposing ‘unofficial blockade’ on the borders as New Delhi has close links with Madhesis. India has denied those charges. Nepal is heavily dependent on India, through which around 65% of its trade passes.

Nepal is actually caught between the world’s two most populous countries, it must pull off a subtle balancing act. Experts are view that it will be very difficult for Nepal to ignore neither India nor China. “China has respected our sovereignty and supported our development endeavours. Our two nations have been all-weather friends, friends at times of distress as well as at the time of comfort,” Mr Oli said in a speech at Renmin University.

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