"Nepal is the actual stakeholder," said Modraj Dottel, spokesperson of Nepal's culture ministry that governs Lumbini, the town in southern Nepal that is the destination of thousands of pilgrims and Buddhist scholars worldwide, and a Unesco-declared World Heritage Site. "How can we own a deal struck in a third country without the formal consent of the actual stakeholder?"

The unambiguous official rejection came after reports in the Chinese media earlier this month that a Hong Kong based NGO, the Asia Pacific Exchange and Cooperation Foundation, had signed a memorandum of understanding with the UN Industrial Development Organisation for a $3 billion project to develop Lumbini into a "Buddhist Mecca", complete with hotels, an international airport and other tourism-related infrastructure.

"We had no formal intimation of the MoU and read about it in the media," Dottel told TNN. "If UNIDO and the Foundation come to Nepal to implement their plan, we will not entertain it." Alarmed by the reports, Nepal's foreign ministry held a meeting Wednesday to discuss the MoU and rejected it as a groundless plan that ignored the host country.

Since the announcement of the MoU, the Foundation has been under media glare in Nepal, which has been less than flattering. The Nepali media has specially highlighted the fact that the Foundation's members include Maoist chief Pushpa Kamal Dahal Prachanda and his b?te noir, ousted crown prince Paras Bir Bikram Shah.

The Chinese interest in Lumbini has been growing. The Foundation plan virtually tried to hijack an earlier, and more modest, scheme proposed last year by the Beijing Zhongtai Jinghu Investment Company headed by former Chinese ambassador to Nepal, Li Debiao. The more upfront Beijing company held talks with the Nepal government for a Rs 8 billion construction project in Lumbini and was given the goa-head to proceed with some of its components.