Nepal looks to lessen dependence on India with China port deal

KATHMANDU (Reuters) - China will allow landlocked Nepal to use its ports for trading goods with third countries, a senior official in Kathmandu said on Wednesday, potentially ending India’s decades-long monopoly over the impoverished country’s trading routes.

A prolonged blockade of its border crossings with India last year by protesters demanding changes to a new constitution left Nepal desperately short of fuel and goods, throwing into sharp relief its dependence on routes into its southern neighbour.

Nepal’s prime minister K. P. Oli signed an agreement with his Chinese counterpart Li Keqiang during a visit to Beijing this week to give Nepalese traders access to land routes and ports in China, commerce ministry official Rabi Shankar Sainju said.

“This is a historic agreement for Nepal,” Sainju told Reuters. “This cannot be an alternative to the Indian port but it is an additional route to boost our trade.”

The routes and ports that Nepal, sandwiched between China and India, can use would be decided by officials from Kathmandu and Beijing soon, he said.

China is vying to increase its influence in Nepal, challenging India’s long-held position as the dominant outside power.

Beijing this week also agreed to consider building a railway into Nepal, supply petroleum products and to start a feasibility study for a free trade agreement.

Nepal, still trying to recover from two devastating earthquakes last year, adopted its first post-monarchy constitution in September hoping this would usher in peace and stability after years of conflict.

But protesters blocked trucks coming in from India, leading to acute shortages. Nepal blamed New Delhi for siding with the protesters, a charge India denied.

Nepal currently uses the eastern Indian port at Kolkata for trade but officials said this is has become congested. India has offered to allow Nepal use of a second port.

The Federation of Nepalese Chambers of Commerce and Industry said Nepal lacked the roads and railways to reach Chinese ports located more than 3,000 kilometers (1,875 miles) from its border.

“Theoretically it is a good thing. But we have to do a lot of work before we can actually use the Chinese route,” senior official Bhawani Rana said.

Editing by Tommy Wilkes and Richard Balmforth