The Chinese government will be providing Nepal with a Rs 2 billion grant to go either towards pursuing the cross-border railway or two internal railway links, according to the Governmental red book released on Tuesday.

Though no formal agreement with China on a grant has been reached, the fourth meeting of the Nepal-China railway talks, to be held in China within this month, will ascertain where exactly the money will go.

Director General of the Department of Railways Balaram Mishra said that it was uncertain whether the money will be spent towards preparing a detailed project report for the cross-border Kerung-Kathmandu Railway or towards conducting two feasibility studies for the Kathmandu-Pokhara and Pokhara-Lumbini Railways.

“I too learned from the red book that Rs 2 billion as a grant from China was allocated to our department,” Mishra said. “But it is not certain where the grant will go. We are holding a meeting with the Chinese side within this month, after which we will be in a position to say something.”

A detailed project report also confusingly called a feasibility study by the Chinese for the Kerung-Kathmandu Railway and feasibility studies of both the Kathmandu-Pokhara and Pokhara-Lumbini Railways will now be carried out with the Chinese grant.

Preparing a detailed project report for the Kerung-Kathmandu Railway itself is a multi-billion-rupee project that is expected to be completed within two years.

China conducted a feasibility study for the Kerung-Kathmandu-Pokhara-Lumbini rail project at its own cost. In December last year, the National Railway Authority of China handed over the feasibility study report of the Kathmandu-Kerung Railway to Nepali officials and had agreed to prepare a detailed project report of the cross-border Railway.

Earlier, the Ministry of Finance had officially requested the Chinese government to provide a grant to conduct the feasibility study and survey for the Railway lines, which have captured the Nepali imagination ever since KP Sharma Oli became prime minister last year and Beijing included the projects in its Belt and Road Initiative.

The cross-border Railway project, which is an important component of the Trans-Himalayan Multi-dimensional Connectivity Network between Nepal and China, was recently incorporated into the Belt and Road Initiative at the Second Belt and Road Forum for International Cooperation.

The Initiative has been touted by China as an ambitious plan to link the region infrastructurally, but some in Nepal and the West have cautioned about a possible debt trap.