Can Nepal afford an ‘$8 billion’ rail line from Lhasa to Kathmandu?

On September 9, Zhang Jiadong, a professor at Fudan University in China said the proposed Nepal-China cross-border Lhasa-Shigatse-Kerung-Kathmandu railway could cost around $8 billion.

The railway will be more than 500 kilometers long and the cost, even by Chinese standards, is not cheap, the professor said, citing a preliminary study.

“This cost is only a preliminary estimate as a large-scale survey is yet to be done. Once the project construction begins, the cost could rise further,” Zhang wrote on the university’s website while discussing the railway project cost.

Nepali officials who earlier worked closely with the Chinese side and held several rounds of negotiations on the project, said if Nepal agrees to build the rail from Kerung to Kathmandu, then it will have to invest in the Nepal section. The total length of the line will be 599.41 km, with 527.16 km section falling in China and 72.25 km in Nepal. The section from Kerung (Lake Paiku) to Kathmandu will be 170.41 km long.

“From Shigaste to Lake Paiku on the Chinese side, the topography is plane and stable but from Kerung onwards into Nepal, the topography is steep, which will increase the construction cost,” said Madhusudan Adhikari, former secretary at Ministry of Physical Infrastructure and Transportation, adding, “On our side of the border, barely two percent of the railway line will be laid on the surface of the ground.”

Adhikari has held several rounds of talks with the Chinese side which had first received the report of the Nepal-China cross border railway in 2018. The pre-feasibility report stated that the complicated terrains and laborious engineering will be the most significant obstacles to building a cross-border railway line between Kerung and Kathmandu.

The Chinese have already started a feasibility study of the project on their side of the border. Also, China had promised to fund the feasibility study on the Nepali side for which Nepal has already given its nod, and several understandings have been reached on the projectsince the Chinese President Xi Jinping visited Nepal in October, 2019.

A senior official at the Department of Railway, however, told the Post that there has been no progress as of now on starting the feasibility study on the Nepali side.

Also, during the meeting between Foreign Minister Narayan Khadka and his Chinese counterpart Wang Yi in Qingdao in August, China had announced a feasibility study of the Kerung-Kathmandu railway on Chinese grant. On returning to Kathmandu after the meeting, Khadka said the construction of the Kerung-Kathmandu railway will be funded under China’s Belt and Road Initiative.

“To conduct the feasibility study for the Kerung-Kathmandu railway, in 2018, the Chinese used to say that it will cost around one billion RMB or around Rs18 billion. Now the investment cost must have gone up. So we first need to study whether the benefits outweigh the investment and if we can recover the investment,” said Adhikari.

The China-Nepal Cross-border railway starts from the Shigatse Station of Lhasa-Shigatse Railway in Tibet, passes through Lhaze, Sagya, Dinggye and Tingri to Kerung County (where a railway port station will be set up in Kerung Town), before reaching Seqiong village on the Nepal-China border, says the feasibility report of the proposed project, Prof Zhang wrote in his personal blog.

He further mentioned that the Kerung-Kathmandu section of the railroad is located in the collision and splicing zone along the Eurasian Plate.

“It has 6 major geological problems, i.e. the problem of hard rock burst and the large deformation of soft rocks under extremely high stress, the problem of the fault effects of the deep active fractures, the problem of high intensity seismic area, the problem of high ground temperature and heat damage, the slope stability problem as well as the debris flow and water erosion.”

Historically, it is one of the most difficult and risky railway construction projects in the world, as it encounters almost all the historic geological problems, claims Professor Zhang.

Balaram Mishra, former Director General at the Department of Railway, said it would cost around $3-3.5 billion to construct the railway from Kerung to Kathmandu based on current estimates.

“During a virtual meeting with the officials at the Ministry of Physical Infrastructure and Transportation last year, the Chinese side had informed us that it would take at least 48 months or four years to complete the project’s feasibility study,” a senior official at the ministry said.

“Once we will have a full report, we will begin working on the investment modality. It will be premature to speculate on it now. As there is yet to be a proper study, it is hard to say if the project will be economically feasible,” the official added.

The 2018 study of the project seen by the Post says the total length of the new Shigatse-Kathmandu line of the China-Nepal Cross-border Railway Corridor will be 599.4km, and the proportion of bridges and tunnels will be 59.7 percent of the length.

“The cross-border freight volume undertaken by the China-Nepal Railway is mainly the goods exchanges between northwest China, southwest China and south China regions and Nepal, and China-Nepal Railway also undertakes a part of transit goods exchanges between China and India,” the feasibility study said.

Adhikari, meanwhile, said that if China wanted to do business with India via Nepal through the railroad, then China would need another kind of agreement.

Nepali officials said the survey and study have not been smooth on the Chinese side owing to the Covid pandemic.

Another Nepali official, who had earlier worked and negotiated with the Chinese on the rail project, said Nepal should invest in the project so as to have some ownership, otherwise, the Chinese could change the alignment and divert it toward Sikkim, India.

“If we put in some money while conducting the detailed feasibility study, it will give us ownership of the project,” said Ananta Acharya, another former director general at the Department of Railway.

“If we are not ready to invest in the project or to find a financing modality, the Chinese railway that will reach Shigatse soon will be diverted towards Sikkim, India,” said Acharya. “Sikkim is close to Shigatse so if we backed out and India and China came together, the railroad would be routed towards India as the two countries have huge trade and commerce. Nepal should thus quickly take a decision on the project”.

During the Nepal visit of Chinese Foreign Minister Wang in March, the two sides had signed an agreement on a technical assistance scheme for the China-Aid Feasibility Study of China-Nepal Cross-Border Railway Project. Nepali technicians will also help with the feasibility study, according to the agreement.

“If not up to Kathmandu, the Chinese are determined to bring their rail up to the Nepal-China border,” said Nishcal Nath Pandey, director, Centre for South Asian Studies (CSAS), adding, “Then it would would be up to us whether to bring the railroad to Kathmandu.”

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