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Oil can bring people closer, this is certainly the idea of India, which inaugurated last week with his Nepali neighbor, a pipeline that will transport through the mountains two million tons of Indian crude per year. It is the first cross-border pipeline in South Asia, and has both an energy and a strategic objective: New Delhi wants to regain favor with Kathmandu, increasingly attracted by its neighbor, China.
From our regional correspondent ,
The idea was launched in 1996 but took a long time to take shape. The project is then relaunched in 2014. But in 2015, a diplomatic scramble blocks its implementation: Nepal then publishes its new Constitution, but the provincial delimitation displeases the inhabitants of the Madhesh region, border with India and whose population is ethnically very close to the Indians. New Delhi is indirectly putting pressure on Kathmandu to correct this cutting and halt the delivery of oil to Nepal. The country is asphyxiated, and Kathmandu is furious that New Delhi interferes in his business. As a result, Nepal is turning to China.
A dominant position in India
For decades, Nepal has been dependent on India. This country is landlocked - its entire northern border with China is blocked by the Himalayas. The majority of its industrial products and oil come from India. But the regional context has changed: China continues to nibble the old Indian meadow: Sri Lanka has passed under economic and strategic Chinese and Bhutan, whose diplomacy is supposed to be managed by New Delhi, is on the point to turn to Beijing. Seeing this quarrel between India and Nepal, China is considering the impossible: cut into the largest mountains in the world to expand the road to Kathmandu, or even build a railway line to replace the big Indian brother. Faced with this danger, New Delhi is redoubling its efforts: and the construction of its 69 km pipeline is completed in just 15 months, much faster than expected. Indian crude oil will now be transported more quickly and uninterruptedly, and this should lower the price of Nepalese oil by about 2%.
Relations between China and Nepal continue to grow
But that will not stop China from moving forward. It is already investing everywhere in Nepal: its companies build academies for its police and army or hydroelectric dams, and they do it much faster than Indian firms. At the beginning of 2017, Chinese investment promises were twice as big as Indian ones . The risk for Kathmandu is now indebtedness: these major works are generally financed by contracting commercial loans with China. However, Nepal may have trouble repaying them, which would put the country in a position of dependence on Beijing. This same scenario took place in Sri Lanka and Colombo had to give up the exploitation of one of its strategic ports to a company close to the Chinese Communist Party.