Investment Board (IB) that was assigned to develop procedures and select
investors for 14 mega projects has put six projects, including five
hydropower and Kathmandu Metro Railway (KMR) project, in its priority
list and has started informal talks with potential investors for their
earliest implementation.
It has also asked different government agencies that were looking after
those projects to forward it all the documents related with them. “We
have also invited the interested investors for informal discussions,”
said a senior IB official.
He told Republica that the IB has prioritized Tamakoshi III (650MW),
Upper Karnali (900MW), Upper Marsyangdi (600MW), Arun III (900MW), West
Seti (950MW) and KMR for immediate action. The government had handed
over 14 projects to the Board in May, asking it to speed up their
implementation in a fast track mode.
“All the 14 projects are national-pride projects and equally important
for us; we prioritized them just for the sake of convenience and to
remain focused,” said the source.
Under the fresh initiative, the IB is soon holding informal talks with
the Chinese hydropower developer - Three Gorges - to take forward the
West Seti Hydropower project. Similarly, it would also hold talks with
Satluj Jal Vidyut Nigam Ltd (SJVN) and GMR Ltd - the two Indian
developers that have expressed interest to invest in the remaining 4
hydropower projects.
“We had received their expression of interest after we endorsed a
template of new Power Development Agreement (PDA) few weeks back,” said
the source.
Both the Indian companies had expressed dissatisfaction over the PDA
that the government proposed earlier, and stopped works at their
respective projects. GMR has been developing Upper Karnali while Satluj
has been working on Arun III.
Confirming these developments, Radesh Pant, CEO of the IB, said the
board was dealing with the mega projects on project-to-project basis so
that it could make a substantial progress for their earliest
implementation.
“Investors are interested on those projects. Still, it will take a lot
of time and careful touch to make these projects happen.”
In order to consolidate its work, the IB has written to the Ministry of
Finance (MoF) to furnish it all the documents related to West Seti in
order to start a formal negotiation with Three Gorges.
“Presently, the discussion is being held informally,” the source said,
“The formal negotiation will start once we reach at a point from where
we can move forward positively. If everything moved well, we will be
able to sign a formal agreement on those projects by coming two months.”
Apart from the six prioritized projects, the IB is holding coordination
meetings with all the government agencies which were leading the
remaining eight projects, including 76-km Kathmandu-Tarai fast track,
Nijgadh international airport, and project to upgrade Tribhuvan
International Airport.
“The board is also closely working with all the concerned offices of the
government in order to know the current status of the projects and move
from those points,” said the official.
In a bid to promote exports of medicinal herbs in international
market, the government is preparing to seek assistance from Enhanced
Integrated Framework (EIF), an initiation of World Trade Organization
(WTO), for the collection of medicinal herbs and setting up herbs
processing center.
The Ministry of Commerce and Supply (MoCS), which is entrusted to carry
out the implementation of Nepal Trade Integration Strategy (NTIS) 2010
-- a blueprint to boost export -- is preparing to submit a proposal to
this effect to the EIF in order to get its assistance for improvement of
forward and backward linkages -- that establishes a mechanism to
trickle down the returns of the product.
“Medicinal herb is the third product, after ginger and pashmina, for
which we are seeking EIF assistance to develop backward and forward
linkages,” Toya Narayan Gayawali, joint secretary at the MoCS, told
Republica on Tuesday.
USA, France, Germany, Vietnam, Singapore, Japan, Italy, Russia, Belgium
and South Korea have been identified as major destination countries for
Nepali medicinal herbs.
According to Gyawali, the ministry is seeking EIF assistance to add more value to Nepali medicinal herbs.
The government has already received Rs 110 million from EIF to enhance
production and processing of ginger. Similarly, the government is
working on registering trademark of Nepali Pashmina in the international
market. “We will closely work with the Ministry of Forests and Soil
Conservation in order to implement the activities that we have planned
to promote exports of medicinal herbs,” added Gyawali.
According to the statistics of Trade and Export Promotion Centre (TEPC),
Nepal exported medicinal herbs worth Rs 710 million in fiscal year
2010/11.
The nation´s economy would grow at an average of 5.2 percent over the
next three fiscal years till 2015 even if the situation in the country
remained the same, Institute for Integrated Development Studies (IIDS)
-- a Kathmandu-based think tank -- forecasted on Monday.
The agency, which has predicted the growth rate this year to remain at
4.6 percent, has attributed the higher growth to recent improvements in
spending of capital expenditure.
“Capital spending over the past few years has consistently grown by 8
percent annually. This will spur private investment and enable the
country enjoy an average growth of 5.2 till 2014/15,” reads a report
that IIDS unveiled on the day.
The report has estimated the agriculture and non-agriculture gross
domestic product (GDP) to average at 4.9 percent and 5.2 percent
respectively over the next three fiscal years. For this year, it has
projected agriculture sector to grow at 4.2 percent and non-agriculture
sector to expand by 4.5 percent.
“Considering the recent growth trend, we assume the capital expenditure
will reach 15 percent of the annual budget by the end of 2014/15,” the
report states.
IIDS has also predicted inflation to average at 6.3 percent over the
next three fiscal years. Though the forecast portrays better picture
than the existing situation, IIDS has suggested that the central bank
and the government to put in more serious effort to contain inflation.
“The inflation exerts pressure on common people´s daily lives. It should
be handled with due care,” said Dr Bhavani Dhungana, one of the experts
who released the forecast.
The report also sheds light on why key sectors of economy such as
agriculture, industry, international trade and services have been
performing weakly in recent period. “Input shortages, irrigation
deficiencies and low allocation of budget in the agriculture sector have
been adding woes to the sector,” the report said.
IIDS has urged the government to efficiently manage public resources and
fine tune the capital budget so that it could contribute for better
growth.
As for the declining contribution of manufacturing sector in the GDP,
the report suggests the government to do away with existing weaknesses
like low investment in the industrial sector, technological
backwardness, infrastructure shortage and slow growth of small and
medium scale industries, among others.
The Ministry of Industries (MoI) has set up a new unit to implement
recommendations made by a high-level taskforce formed to recommend
measures to give a new lease of life to sick industries.
According to a ministry official, the unit was formed after the cabinet
approved the report of the high-level taskforce formed by the government
about six months ago. The taskforce was led by Dipendra Bahadur
Kshetry, vice-chairman of National Planning Commission (NPC).
“The unit will focus on implementation of recommendations made by the taskforce,” the official said preferring anonymity.
The taskforce has recommended host of relief packages such as bank loan
restructuring, extension of the bank loan payment date, waiver of
interest among and tax, among others.
The government, however, has yet to name the industry eligible for the relief package.
“The unit will also come up with a certain criteria to identify sick industries,” the official said.
Approving the report of the taskforce, the cabinet had delegated the
authority to identify sick industries to a committee at the MoI.
Distribution of relief packages will begin after publishing the names of sick industries in Nepal Gazette, the official said.
The taskforce, in its report, has named 26 firms in the list of sick industries.
“The technical committee under the MoI will study whether or not those
firms meet the criteria of sick industries,” Anil Kumar Thakur, joint
secretary at the MoI said.
This means sick industries will not get any relief from the government in this fiscal year as well.
The government had first incorporated a specific program to revive sick
industries in the budget for fiscal year 1994/95.
The government had boasted it would help 50,000 youths create own jobs
over this fiscal year with Youth Self-Employment Program (YSEP).
However, records show the program has so far catered to only 3,343
youths with just 3 weeks left for the completion of the fiscal year .
Such mediocre achievement of the program, which was designed largely to
enable urban youth get jobs, indicates the program was a complete flop.
As a result, it fared badly in containing urban poverty, which contrary
to rural poverty, grew over this fiscal year.
According to data compiled by Ministry of Finance (MoF), the urban
poverty jumped by 5.91 percentage points since 2003/04 to 15.46 percent.
Rural poverty, on the other hand, has decreased by 7.19 percentage
points to 27.43 percent over this period.
“The drop in rural poverty is attributed to positive impact of
remittances inflow and relatively better performance of Poverty
Alleviation Fund (PAF) Nepal,” said a MoF source.
The report that MoF is incorporating as a part of the Economic Survey
for 2011/12 says the government has failed largely in addressing urban
poverty because it has failed to create jobs. “Performance of
government´s targeted YSEP remained dismal. And it also failed to
encourage private sector investments,” reads the report.
Records of YSEP Secretariat show, the government had approved Rs 2.89
billion in the fiscal year 2011/12 for the implementation of programs,
under which banks were assigned to issue collateral-free loans of up to
Rs 200,000 to each aspirant self-employee.
However, as of date, the secretariat released only Rs 785 million and
the banks supposed to use them to issue collateral-free loans have
invested only about Rs 335 million.
Referring to such cases, MoF admitted the government had failed to
address poverty largely because it lacked a clear policy framework and
well-designed and executable programs.
“The main reason behind high poverty is lack of opportunities in the job
market. And we have no policy that deals with job creations,” reads the
report. “The public sector has very limited jobs opportunities and
private sector too has not been able to expand to create jobs.”
According to the report, some 400,000 Nepalis enter into job market
every year. While some 300,000 of them eventually leave the country for
foreign employment, only a few thousands are absorbed in the formal
sectors. “Unemployment rate at present stands at 2.2 percent, but if we
look at the rate of under-employment, the number suddenly jumps to 30
percent,” said the MoF source.
Given the situation, the MoF report has stressed on the need to
formulate a clear policy on job creation and better design the targeted
self-employment schemes. “Our incentives to the industries and private
sector should be aligned as per the thrust of this policy if we are to
achieve the desired poverty reduction. Otherwise, we will continue to
fail,” said the source.
Under the ongoing Three-Year Development Plan, the government has
targeted to lower poverty incidence at 21 percent by the end of 2012/13.
Presently, the poverty incidence stands at 25 percent.
The government is preparing to enact Railway Bill through ordinance,
envisioning formation of an autonomous body to construct and manage the
railway, and provide fresh impetus to develop mass transportation.
The government has already assigned numerous firms to carry out
feasibility study for East-West railway system and develop underground
Metro train system in the Kathmandu Valley.
“We forwarded a draft of the bill to the Ministry of Law and Justice
(MoLJ) for its consent on Friday,” said a source at the Ministry of
Physical Planning and Works and Transport Management (MoPPWTM). “We will
submit it to the cabinet for enactment through ordinance as soon as we
get MoLJ´s consent,” the source told Republica.
Among others, the bill envisages a Railway Board (RB) to look after all
the development and management of the railway in the country. It
proposes that that board will be chaired by the Minister for Physical
Planning Works and Transport Management.
The board will be executing the national-pride projects such as
east-west railway, Jayanagar-Bijulpura railway and Kathmandu-Pokhara
railway and Kathmandu Metro Railway (KMR). “These are the projects that
government has already planned,” the official said.
The board can expand and add other projects in the future, if it deems necessary and feasible.
As per the act that has been sent to the MoLJ, the seven member board
comprises secretary of the MoPPWTM, finance secretary, commerce
secretary, home secretary and two railway experts, .
“The enactment of bill will lead to the dissolution of Department of
Railway (DoR) and Nepal Railway Company Ltd,” one of the officials at
the MoPPWTM said. As the DoR was established without any legal
provision, it can be dissolved through cabinet decision.
Tulsi Prasad Sitaula, secretary at the MoPPWTM has confirmed that the
ministry has pushed for the enactment of railway Bill through ordinance.
“This act is necessary to carry out the railway projects. Though we
have Railway Act 1961, it has become obsolete,” he said.
According to the draft bill, the government will also set up a special
fund to support the operations of the RB. It hopes the RB to be
self-dependent in the long run.
Central Carpet Industries Association (CCIA) -- the umbrella body of
carpet producers -- has requested the government to treat it carpet
industry as a ´sick industry´ and provide facilities accordingly.
According to a press release issued on Friday, CCIA has sought the
support of Federation of Nepalese Chambers of Commerce and Industry
(FNCCI), an apex body of the private sector, to lobby with the
government in this regard.
“Carpet industry has been hit hard by the shortage of skilled workforce,
diminishing international market and weak promotional activities,”
Lanka Man Roka, president of the CCIA, said in the release.
The CCIA officials, who reached FNCCI office on the day, also requested
FNCCI to help them establish the brand of Nepali carpet in the
international market.
“The industry, which was one of the largest foreign currency earner in
the country, has lost its market potentiality. There should be specific
measures to revive the industry," Roka said in an interaction with FNCCI
officials, according to the release.
