China EXIM bank chief shares experience of construction of Pokhara airport

Dr Zhao Liang holds PhD in Economics at the Institute of Finance, Chinese Academy of Social Sciences. He is Senior Manager of Sovereign Business Department (Concessional Loan department) of the EXIM Bank of China with focus on Nepal and Sri Lanka.

This special issue was published at Tsinghua University’s Institute of International and Regional Studies as part of the case study. The objective is to allow practitioners and policymakers to share their experience overseas. It was first published on September 18, 2022.

This is a summary of some of the key aspects of Zhao Liang’s remarks about his experiences during Pokhara airport development.

The article is divided into three sections.

In the first section, Zhao Liang discusses the struggles of Pokhareli people’s dream for an international airport while comparing the situation of Tribhuvan airport. He says:

“The airport is divided into two parts: international and domestic. The space in the waiting hall is cramped. If the international terminal is considered “simple”, then the domestic part is basically an old-fashioned long-distance bus station.” 

Zhao Liang proceeds to talk about his nervousness while flying around Pokhara due to poor infrastructure. The entire flying experience made it an uneasy trip as Zhao Liang remembered how his female colleague, a year ago, suffered a plane crash while heading to Nepal. He describes it as “horror of plane landing” & is surprised that Pokhara domestic airport is called “primitive” compared to the “backwardness” of Tribhuvan airport. When there was rainfall, he was stranded at Tribhuvan airport for the whole day when heading to Pokhara because small planes were out of service. Nepal’s “backward” development has seriously affected tourism in Pokhara which he justifies as need to have an international airport.

In the second section, Zhao Liang describes the implementation process for Chinese financing and launch of the project. He starts with the contractual process:

“In May 2014, the Civil Aviation Administration of Nepal signed a project business contract with China CAMC Engineering Co., Ltd., and the Ministry of Finance of Nepal, as the sovereign borrower, applied to the Export-Import Bank of China for a preferential loan for foreign aid. As the country manager of the Export-Import Bank of Nepal, I started the nearly 8-year struggle process of “project due diligence – loan approval and signing – construction implementation – acceptance and delivery”. Since then, the Nepalese have decided to choose the Chinese capital, use Chinese technology, and refer to Chinese standards to realize their century dream..”

For Zhao Liang, the significant step was meeting Wu Chuntai, the Chinese Ambassador to Nepal and Peng Wei, the commercial counselor to the Embassy of China in Nepal who introduced the significance of Pokhara to the working group of EXIM Bank of China. He recounts suggestions that Embassy gave him:

“Counselor Peng Wei reminded us that the Nepalese are not an easy “negotiating opponent” and we must be prepared to fight a “tough” and “protracted” battle.”

For Zhao Liang, Peng Wei’s statement would turn out to be true as he stated “unimaginable difficulties” in the entire negotiation period. Language barriers and  limited knowledge of Chinese financing were stated as major challenges during the project. External shock as the April 2015 earthquake posed a delay in the financing process as well. He states:

“On the day of the negotiation, the Nepali side deliberately selected personnel from different departments to form an ad hoc committee. However, due to the problem of information transmission, it took a long time to get the personnel together. More than a dozen members of the committee are basically composed of joint secretaries or subordinate secretaries of various departments……….Although the members have their own professional knowledge, they obviously have no understanding of China’s loan business and process. I was familiar with it, so I spent a lot of time just introducing the basic situation clearly and answering the questions of the committee members. It took a day of talks. On the second day, the committee members began to negotiate on the loan conditions, loan process and even the specific content of the agreement according to the agreement. The negotiation process was extremely difficult, partly because some committee members had too strong a “Nepalese English accent”, and sometimes had to ask to repeat it, or other committee members relayed it.”

In the third section, Zhao Liang talks about the developments on agreement and construction of the airport. In March 2016, PM Oli went to China to sign an agreement of the project with Premier Li Keqiang. The construction process started in April 2018 with a combination of Chinese technicians and Nepali laborers. The employment of Nepalis consisted of locals and Nepali who studied in China.

In the post-loan inspection period, Zhao shared some interesting moments outside of the construction area. When he felt ill during on-site inspection, the Chinese medical doctors told him that Pokhara has high metal content which is prone to acute gastroenteritis and infectious diseases such as dengue fever during the rainy season. Zhao urged for increasing safety standards of its workers.

The Chinese medical team were based in Chitwan but they regularly go to construction sites of various Chinese-funded enterprises for free consultations and ensure the health and safety of its workers.

Zhao Liang also stresses on the need to properly understand Chinese companies and China’s loan policy process. From China’s side, lack of internationalization in design consulting, and lack of English language competency became key drawbacks for handling effective negotiations. Finally, he concludes in positive note saying:

“The Pokhara International Airport project is just a microcosm of the economic and trade cooperation between China and Nepal. I believe that with the opening of Pokhara Airport , the dreams of the Chinese and Nepalese people will be realized together, and I also firmly believe that the “trans-Himalayan multi-dimensional interconnection network construction” between China and Nepal will surely achieve greater development.”