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Europe Day is a powerful reminder of the day, 75 years ago, when Europe chose cooperation over conflict. In the aftermath of a war, we chose peace. And that choice became the foundation of the European Union.

Today, more than ever, that choice continues to guide us. In a world full of uncertainties, people across the globe are suffering because of climate change, conflict and inequality. The need for a just and lasting peace in Ukraine has not diminished. Conflict in the Mideast continues to bring misery to millions. Closer to us, an increasingly hostile climate threatens lives and livelihoods.

There are currently more live conflicts than at any time since World War II. Despite, and perhaps because of these conflicts, Europe Day should inspire us today to believe in and work for peace and unity.

The European Union remains a strong voice for peace, and we are proud to call Nepal a trusted and valued partner in that journey. Together with our member-states, under the Team Europe approach, we stand alongside Nepal in its efforts to pursue the transitional justice process in the spirit of reconciliation and permanent peace. As a trustworthy friend, we also stand with Nepal in its efforts to avert climate crises and respond to natural disasters.

In its challenging quest for prosperity, Nepal can also count on the EU. Nepal’s graduation from Least Developed Country status in 2026 means it needs to attract investment to foster economic growth. This is not an easy task when migration has become the path of choice for so many Nepali youth. But a solid commitment to improving the investment climate is crucial for realizing Nepal’s considerable economic potential and creating the business and employment opportunities young people need to build the future Nepal.

The European Union is supporting Nepal’s prosperity agenda through its “Global Gateway” initiative, together with the European Union member-states and European Development Finance Institutions. Global Gateway can support Nepal’s progress and narrow the investment gap through smart, clean and secure investments in quality infrastructure and connectivity.

In a rapidly changing, increasingly fragmented world, international cooperation has turned into global competition. The EU also needs to become more strategic and resilient. But we stand firm on the universal values we have built together with the UN since 1945, and on our commitment to multilateralism. As global challenges grow, so does our determination to remain a reliable, consistent, and principled partner. So tonight, as we celebrate Europe Day here in Nepal, let us also celebrate what connects us. The friendship between our peoples. The commitment to a more peaceful and just world. The belief—borne out of our own experiences—that cooperation can overcome even the toughest challenges.

The author is the EU Ambassador to Nepal

The steel industry is one of the largest producers of greenhouse gases and is responsible for nearly 7-9 percent of global carbon dioxide (CO₂) emissions, primarily due to its extensive application of fossil fuels like coal in conventional blast furnaces. As global warming intensifies, economies worldwide are confronted with the necessity to decarbonize and align with international climate regulations, for instance, negotiations in COP 26 conference to limit the rise in the global temperature to 1.5 degrees Celsius. Green steel has thus emerged as a revolutionary solution for industrial decarbonization, offering a cleaner option to conventional steel manufacturing. Unlike traditional steel, which is produced using coal, green steel is produced using processes that avoid or minimize carbon emissions by utilizing renewable energy sources such as green hydrogen powered by clean electricity. By investing in green hydrogen production, Nepal can be a front-runner in South Asia's clean energy transition, reducing its dependence on fossil fuel imports and enabling a circular economy.

Conventional vs green steel

Over the last two fiscal years, Nepal’s coal imports have risen to meet growing industrial demand, led by steel production. Coal imports during FY 2023-24 totaled about 1.17m tons, from 1.09m in FY 2022-23. From an environmental perspective, 2.83m tons of carbon dioxide was emitted by the coal imports in FY 2023-24. Moreover, conventional steelmaking is a significant source of greenhouse gas emissions—releasing up to 1.8 to 2.9 tons of CO₂ per tonne of steel by employing the conventional blast furnace–basic oxygen furnace (BF-BOF) route. At the same time, electric arc furnace steel (to which the Nepali industry is increasingly shifting) yields around 0.6 tons of CO₂ per ton, especially using scrap or sponge iron. Green steel, manufactured from green hydrogen as a reducing agent rather than coal, is almost carbon neutral. It is reported that around 50 kg of hydrogen is required to produce 1 tonne of steel. Nonetheless, green steel production is initially very costly due to the high price of green hydrogen and renewable infrastructure. 

Import trends

​Nepal has approximately 83 registered iron and steel industries, with 54 specializing in Thermo-Mechanically Treated (TMT) bar manufacturing. The country’s steel melting capacity has significantly increased over recent years, crossing 2m tonnes per annum. In FY 2023-24, Nepal’s total steel and iron market was estimated to be more than $1.12bn and is expected to increase in the upcoming years. Nepal obtains 80 percent of its necessary raw iron materials from India through imports that include MS billets, steel sheets and MS wire. Steel melting capacities in Nepal have grown beyond 2m tons per year during the last few years. In fiscal year 2023-24, Nepal’s sponge iron imports increased by 55 percent year-on-year, reaching a total of around 800,000 tonnes, from 500,000 tonnes in FY 2022-23. Moreover, the total import of iron and steel for FY 2023-24 was reported to be around 1.8m tonnes, and that for FY 2022-23 was reported to be around 1.6m tonnes, highlighting the importance of steel industries in Nepal. 

Nepal’s iron ore reserves

Nepal is aggressively upgrading its iron ore mining capacity to increase local steel production and reduce reliance on costly imports. Nepal has around 10 major iron ore deposits and several minor occurrences across the country, with a total estimated reserve of approximately 208m tonnes, which is expected to be sufficient to meet the country’s steel demand for the next 100 years. Thosey in Ramechhap district is believed to be the oldest iron and steel ore deposit discovered in Nepal with the mine being established in 1893 at Ekan Phedi which was later relocated to Thosey. 

Some of the most extensive reserves lie in the Jhumlabang deposits of Rukum East and the Dhaubadi reserves in Nawalparasi East. Jhumlabang is the biggest iron ore deposit that contains around 200m tonnes of hematite ore in 100 hectares, and Dhaubadi has around 99m tonnes in the same hectare. Moreover, Dhaubadi Iron Company Limited has sent iron ore samples from the Dhaubadi deposit in Nawalparasi to China for a detailed analysis. 

Preliminary results indicate that producing sponge iron is the most feasible option based on the ore’s composition. Currently, the company is in the process of preparing a detailed project report (DPR) to move forward with commercial production. Other deposits at Thoshe (Ramechhap), Labdi Khola (Tanahun), Jirbang and Chitwan provide more chances to boost national production. To utilize these resources, the government has initiated mining development projects at the Jhumlabang and Dhaubadi sites. Major companies like Jagdamba Steels, Jay Ambe Steel, Narayani Ispat and Sarbottam Steel have contributed to this growth through substantial investments. 

A technological impediment

Nepal faces a severe technological barrier since it needs modern reduction systems based on hydrogen together with advanced electrolyzers to produce green hydrogen for steelmaking. The technologies possess substantial capital requirements along with specialized expertise that Nepal currently does not possess. The steel sector of Nepal depends heavily on blast furnace technology, which requires coal as a reduction agent to operate. 

Moving toward green steel operations demands extensive facility upgrades, which both require enormous funding and take a significant amount of time. The government must provide full-scale policy backing for the transition through green hydrogen production subsidies or tax breaks along with R&D funding and industrial regulatory standards that encourage sustainable practices in the industrial sector. Progress in clean energy and industrial decarbonization will face delays because of insufficient permanent policies. Private investors face challenges securing investments for green steel projects as they are reluctant to fund long-term initiatives that depend on unproven new technologies. 

The path ahead

The potential exists for Nepal to establish itself as a sustainable steel production leader through hydropower resource utilization together with its local iron ore reserves. Nepal can reduce its carbon footprint and establish a circular economy by confronting these barriers, decreasing its need for imported coal and iron ore. 

​According to the white paper, Nepal’s estimated installed hydropower capacity is expected to be 28,500 MW by 2035, while the peak demand only reaches 7,581 MW, leaving a surplus of around 21,000 MW. Without proper planning, more than half of the surplus electricity could go waste, which would create a loss of more than Rs 5trn per year. However, if only 10,000 MW of surplus electricity were used, it could generate 1500 kilo tonnes of green hydrogen annually, which could in turn generate around 30m tonnes of green steel, which is well above the expected steel demands. Moreover, 30m tonnes of green steel could generate a yearly revenue of Rs 22.5trn. Producing 30m tonnes of steel using conventional processes would mean consumption of 23m tonnes of coal and release of more than 50 million tonnes of CO2 in the atmosphere. Hence, by strategically utilizing its surplus hydropower and iron ore, Nepal has a unique opportunity to lead in green steel production, significantly reducing carbon emissions and generating substantial revenue.

Recently, President Ramchandra Paudel presented the policies and programs of the government for the fiscal year 2025-26 in a joint meeting of the House of Representatives and the National Assembly. The presidential address has emphasized the government’s commitment in various areas, including strengthening the democratic republic, economic development and good governance. The policy document, which carries a lot of commitments from the past, comes at a time when the country is in an economic crisis, preceding the budget for the fiscal 2025-26. 

Statute amendment 

The policy document envisages amending the Constitution by strengthening its strengths and correcting its shortcomings through consensus, in the line of a promise that the two largest parties in the Parliament had made while forming the current ruling coalition nine months ago. The idea is to strengthen the democratic republic. 

Amid a slump, the document aims to fulfill the national aspiration of ‘Prosperous Nepal, Happy Nepalis’ by ushering in political stability, good governance, development and social justice for a socialist-oriented economic and social transformation based on democratic values. 

Government-run programs, per the document, will focus on entrepreneurship development, production, productivity and job creation. 

The pledge to abolish/merge redundant structures is very much there as part of a commitment to stop wasteful spending. 

A carbon-free Nepal

On the energy front, the document has something big as it aims to prioritize energy development, especially renewable energy (solar, wind and hydrogen) and also develop multipurpose and reservoir-based hydropower projects. 

What’s more, the document pledges to make Nepal a net-zero carbon emission country by 2045. 

Good governance

Good governance is on priority, at least on paper, in line with a constant commitment to control corruption and end impunity. 

The document has a vision of linking most of the government services with “Nagarik App” as part of its effort to ensure good governance through digital platforms. It envisages a “digital ecosystem” for the development and expansion of the latest information technology, something which is expected to contribute to good governance. 

First and foremost, the app itself needs to undergo updates with the mention of the contact person, the person’s email address, etc for it to be able to be a tool for good governance. 

A healthy Nepal

Under the Healthy Nepal Campaign, the document aims to develop all aspects of the public health delivery system by adopting both preventive and curative methods. It has a vision for collaboration between the federal, provincial and local levels to provide quality basic health services to all citizens. It aims to develop a health system on the basis of population, geography and disease burden to realize this vision. 

Economic shocks 

For a large part, the policy document focuses on economic development and transformation, which is natural, given that the document forms the basis for the budget.
 
Nepal’s exports to developed countries will be affected after its graduation from the club of least developed countries to the grouping of developing countries. An evolving international trade system that is under pressure from the United States’s trade policies and China’s retaliatory policies poses challenges for Nepal. Although the external sector is doing good, the internal economy is not improving as expected. The government has to borrow money to meet its expenses as it has failed to meet revenue targets, which is not an enviable situation. The government should closely monitor evolving global trade scenarios and make suitable changes in its policies to minimize the shocks on the national economy.  

National security and foreign policy 

The document lays emphasis (once again) on effectively mobilizing all security agencies, including the Nepali Army, for national sovereignty, geographical integrity, national independence, national unity and national interest. It also outlines a vision for pursuing an independent foreign policy on the basis of the Charter of the United Nations by upholding the principles of non-alignment, Panchasheel, international laws and principles of world peace. The document aims to deepen relations with neighboring countries on the basis of mutual benefit and respect. What’s more, it has a vision to use economic diplomacy as an important tool for promoting aid, investment, labor market, tourism and trade.

Lastly, let’s hope that the government will be able to implement the policy document and usher in peace and stability in the country.

Mero dukha ma roi dine, mero khushi ma ramaai dine,

Sabai bhanda maathi chha, mero euta saathi chha…

That tribute to friendship, set to an unforgettable tune—which I rashly attempted at our National Day (“King’s Birthday Party”, KBP) last week—comes from Sugam Pokharel. To my mind, it beautifully captures the relationship between the UK and Nepal. This year, when I came to write my KBP Speech, it inspired a metaphor about two old friends trekking together.

The UK and Nepal have been travelling together for more than 200 years. We have come to a fork in the path. One track goes straight on. It would take us forward but gain no height. It represents Nepal’s existing business model, reliant on remittances and grant aid. The steeper path would take us more swiftly—up the hill—beyond which lie global capital markets.  

The UK recommends the steeper path—a shorter route to the happy and prosperous Nepal we all want to see. Together, we have mapped out the ascent, fixed some ropes. These include Government achievements such as a positive Sovereign Credit Rating, Nepal’s first international bond (supported by $22m from British International Investment), and important economic reforms backed up by legislation.

Which is just as well. Because the UK has been looking down the apparently easier path and sees several obstacles. Landslides—triggered by things like Russia’s invasion of Ukraine and global trade disputes. We are going to have to climb. The exercise will be good for us!

Here are some of the topics which—being old friends—we discuss amicably along the way:

The national budget

Nepal has a modest supply of provisions but never uses as much as it could. The UK is Nepal’s strongest advocate. But our arguments for climate finance and other benefits are undermined when Nepal does not use its own resources; and use them well.

Concessional international loans

Nepal’s rucksack is full of World Bank and ADB resources. The UK helped procure those entitlements and urges Nepal to take advantage of them. Currently, these sources of finance are largely untouched.

Education

The UK is a big fan of what we call Trans-National Education. We mean any kind of connection between providers in Nepal and abroad which allows Nepal’s young people to get the education they deserve without leaving the country. At affordable prices. The UK has lots of TNE to share. We think it would reinforce Nepal’s economy. It might even attract the other country’s students to this beautiful land.

The diaspora

Many brilliant Nepalis living in the UK are making huge contributions. But the UK doesn’t want them to lose touch with their roots. We want them to help develop Nepal. For this, the UK hopes Nepal will recognise the equivalence of qualifications obtained at British universities. Nepal’s current arrangements seem designed to prevent its children ever investing here.

The last part of the ascent is the steepest. Nepal’s progress is attracting global attention. In London—for example—financiers are starting to talk about Nepal as a destination for investment. They have a sentimental attachment, refreshed by a spectacular visit to Nepal by the Duke and Duchess of Edinburgh. Since then, the UK media and dinner party conversations have been reminding the British public about Nepal’s friendliness and beauty, our proud Gurkha ties, as well as its status as the UK’s “first ally in Asia”.

As well as beauty, these private financiers are coming to understand that Nepal is a land of investment opportunities. But they will not bring their money here until they know they can repatriate their profits. Even the famous Sherpa known as Dolma Impact Fund has had trouble doing that.

This is the altitude we are at today. Close to the summit, beyond which it will be much easier going, downhill all the way to The City of London.

Perhaps it is the rarified air. But my old friend seems conflicted. I recognise the signs. The UK had doubts when we opened our economy to foreign investment. We worried about competition. Loss of control. In practice, however, we found that foreign investment brought not just jobs, but also technology transfer, productivity gains and other good things besides. It is now our life blood. So, let’s continue this journey together.

The author is the British Ambassador to Nepal