Modi woos Nepal in race for resources with China

Energy was high on the agenda as India's new prime minister, Narendra Modi, began a two-day visit to Nepal on Sunday, eager to reclaim lost ground from China in the race for resources.

A vast network of fast-flowing rivers through the Himalayas leaves huge untapped hydropower resources at Nepal's disposal, and New Delhi has spent years encouraging Indian investment with an eye on the country's water resources.

But proposals to develop joint ventures between India and Nepal have stalled due to disagreements over perceived threats to Nepalese sovereignty, allowing China to step into the breach.

A recently leaked draft plan to develop the hydropower sector using Indian investment sparked anger in Nepal, with politicians and commentators saying it would grant India exclusive rights to Nepal's water resources.

"Nepalese politicians want India to pay attention to them, but they are also fearful that given a chance, it will take over their resources, being a bigger, more powerful country," said Lok Raj Baral, former Nepalese ambassador to India.

India has traditionally exerted huge influence in Kathmandu, leaving many in Nepal wary of New Delhi and eager to embrace Beijing, whose investment they do not see as politically motivated, Baral said.

Stalled Indian projects include a hydropower agreement to develop Nepal's Karnali river signed by Kathmandu and Indian infrastructure giant GMR in 2008.

Meanwhile, Beijing is funding a 60-megawatt power plant on the Trishuli river, already under construction, and a $1.6 billion, 750-mW joint venture on the Seti river, due to be completed by 2019.

"Despite geographic proximity, cultural intimacy, economic interdependence and shared political values, India has stumbled in Nepal," wrote C. Raja Mohan, columnist for the Indian Express.

Citing a growing perception in Nepal that "India promises, China delivers", he wrote that "India's record of project implementation in Nepal is awful".

But India's new government has made clear its desire to refocus attention on its near neighbors. Modi's visit to Nepal follows a June trip to Bhutan, where he announced a new hydropower plant.

Sujeev Shakya, author of Unleashing Nepal, told AFP: "It's time for India to let go of its Sinophobia.

"It makes more sense for Delhi and Beijing to work together."

A focus on cooperation rather than competition would give a bigger boost to trade and enable greater regional growth, he said.

Agence France-Presse