Trapped in Geopolitics

Nepal’s development projects are no longer decided only by budgets and blueprints. Infrastructure that should move on the country’s needs and technical logic now carries diplomatic weight. The Nagdhunga-Sisnekhola tunnel shows how deeply this change has taken hold.

Set to open around mid-April this year, the tunnel was meant to be a simple fix for a daily headache: the choke point at Kathmandu’s western gateway. Japan provided concessional loans for the project and construction moved quality. The remaining work should have been routine. But the final step, picking a company to operate the tunnel for five years, has turned into a geopolitical test.

The tunnel story is not an isolated case. It reflects what is now happening across hydropower,  transport links, and telecom. India remains Nepal’s dominant electricity buyer. Its policy of refusing power tied to Chinese investment or contractors has cooled Chinese participation in export-oriented projects. The result is visible in stalled approvals, withdrawal of Chinese developers, and a steady march of Indian state-owned firms into important river basins.

China, meanwhile, continues to pursue projects with long-term strategic value, even if commercial 
returns are uncertain. The United States, through the MCC, has focused on transmission and cross 
border power trade that fits neatly with India’s market position. None of this is secret. The costs appear as delays, policy reversals, and a growing habit inside the state of asking not “does this work?” but “who will be angered?”

Telecom shows the squeeze most clearly. Nepal’s 5G rollout has been stalled for years as the 
state-owned operator, Nepal Telecom, locked into aging systems and a vendor ecosystem dominated by Huawei. A recent tender for procurement of a billing system has become a proxy battle. Decisions on 5G now carry the weight of foreign security concerns and diplomatic signaling. While all this unfolds, customers bear the brunt through weak service, outages, and lost trust in state capacity. If Nepal wants to regain control, the fixes are difficult but clear. First, procurement and regulation must be strengthened so that the government can defend its decisions on clear technical, security, and financial criteria, not whispered preferences or informal pressure.

Second, it needs to build real economic diplomacy capacity. That means a coordinated team across foreign affairs, finance, energy, and line ministries that negotiates early and does not wait until the projects reach the last mile.

Third, Nepal needs to diversify partners and markets where possible by pursuing neutral capital 
and investment from sources, Gulf states, and pushing harder for multiple electricity export routes. Finally, it should treat technology and critical infrastructure as national security issues in practical terms—through vendor diversity, data governance, and resilience, not slogans.

Nepal cannot stop big-power competition. But it can stop allowing that competition to paralyze 
projects it urgently needs. The goal is not to pick a camp. It is to build institutions strong enough that Nepal, not outsiders, sets the terms.

Madan Lamsal
[email protected]