The Investment Board Nepal (IBN) will soon achieve another milestone in brokering a deal with a foreign investor with the signing of project investment agreement (PIA) with Hongshi Shivam Cement, a Nepal-China joint venture, on Sunday.

This is the third major agreement that the IBN, a government agency formed to promote investment, is signing since its establishment. Previously in 2014, the Board had signed project development agreements with developers of 900MW Upper Karnali Hydroelectric Project and 900MW Arun-3 Hydroelectric Project. Both these agreements were signed when Radhesh Pant was the CEO of the Investment Board.

Since Pant stepped down as the CEO, the Board had not been able to sign any such deal. The signing of PIA with Hongshi Shivam Cement will, thus, provide the Investment Board and the incumbent CEO Maha Prasad Adhikari something to cheer about.

The Investment Board was planning to seal the deal with Hongshi Shivam during Chinese Vice Premier Wang Yang’s visit to Kathmandu, which concluded on Thursday. But this could not happen at that time. It is said the government did not want to enter into any deal with China at that time as Prime Minister Sher Bahadur Deuba was about to visit India.

This is the first time the Board is signing a PIA with a foreign company. The PIA basically reminds the government and the foreign company about their obligations, and protects the interest of foreign investors in Nepal.

Once the PIA is signed, Hongshi Shivam Cement, despite being a foreign joint venture, will receive the treatment of a domestic company in Nepal. The PIA will also oblige the government to help the company acquire the land it needs, and build access road and transmission line to the factory and mining sites, according to Investment Board Spokesperson Uttam Bhakta Wagle.

Hongshi Shivam Cement is building a cement plant in Nawalparasi at a cost of around Rs37 billion, which is the largest Chinese investment in Nepal’s cement industry and the second largest after Nigeria’s Dangote Cement, which entered Nepal with a $550-million foreign direct investment pledge.

The Nepal-China joint venture company has already started construction of the factory at Sardi in Nawalparasi district. “It has currently deployed 500-600 Nepalis and 500-600 Chinese workers at its factory site,” said Wagle. If things go according to plan, it will start commercial production by May 2018.

The cement factory will have a daily cement production capacity of 6,000 tonnes (120,000 bags). It plans to double the output to 12,000 tonnes per day in the next five years.

Hongshi Shivam’s foray into the domestic market means that its products will replace cement imported from India. The company also plans to export cement produced at its plant to India, Pakistan and Sri Lanka.