India may trump China in Nepal’s energy sector

Subject

Nepal's hydropower resources.

Significance

Nepal’s giant neighbours India and China are competing to build new dams and transmission lines in the landlocked republic, where the economically feasible hydropower potential is estimated at some 43 gigawatts. While the new government recently said it would restore a previously cancelled contract with a Chinese company to build the Budhi Gandaki hydropower plant, a separate Chinese firm may withdraw from an agreement to build the West Seti dam. Separately, India has regulations such that it will not buy power from Nepali plants that are Chinese-owned.

Impacts

• The ruling Nepal Communist Party is likely to see increasing internal tensions over the next year.
• Political uncertainty in Sri Lanka will intensify strategic rivalry between India and China in the Indian Ocean.
• Mutual mistrust of US President Donald Trump could propel Delhi and Beijing towards deeper economic cooperation.