Govt all set to revive Birgunj Sugar Factory

The government has appointed Raj Kumar Singh of Asanpur-3 in Siraha as the chairman of Birgunj Sugar Factory.
Once the seven-member gets complete shape, the government will ask it to identify was for reviving the factory that has remained closed for almost a decade, Yam Kumari Khatiwada, joint secretary at the Ministry of Industry (MoI), told Republica.
According to Khatiwada, the board has Ministry of Finance (MoF), Ministry of Agriculture Development (MoAD) and MoI as members. Similarly, other three members should be appointed from amongst experts in industrial and agriculture sectors.
"We have already asked MoF and MoAD to send their representatives in the board. The MoI will appoint the remaining three members very soon,” she added.
Apart from exploring ways to bring the factory back into operation, Khatiwada said the board will also suggest ways to get rid of 193 employees who have refused the government´s golden handshake scheme. The board will also suggest the government whether or not to hand over management of the factory to the private sector.
Meanwhile, Public Enterprises (PE) Board has suggested the government to hand over the factory to the private sector. “The formation of full-fledged BoD of Birgunj Sugar Factory is line with our recommendations,” Bimal Wagle, CEO of PE Board, said.
Earlier in 2009, the then finance ministry Babu Ram Bhattarai, who is now the Prime Minister, declared that he wanted to see the factory back into operation.

Income mobility as drivers of welfare

In this paper, Loungani develops an analytical framework for the estimation and welfare-theoretic evaluation of individual income dynamics that takes into account these different drivers of income mobility.

Abstract

This paper develops a framework for the quantitative analysis of individual income dynamics, mobility and welfare. Individual income is assumed to follow a stochastic process with two (unobserved) components, an i.i.d. component representing measurement error or transitory income shocks and an AR(1) component representing persistent changes in income. We use a tractable consumption-saving model with labor income risk and incomplete markets to relate income dynamics to consumption and welfare, and derive analytical expressions for income mobility and welfare as a function of the various parameters of the underlying income process. The empirical application of our framework using data on individual incomes from Mexico provides striking results. Much of measured income mobility is driven by measurement error or transitory income shocks and therefore (almost) welfare-neutral. A smaller part of measured income mobility is due to either welfare reducing income risk or welfare-enhancing catching-up of low-income individuals with high-income
individuals, both of which have economically significant effects on social welfare. Decomposing mobility in its fundamental components is thus seen to be crucial from the standpoint of welfare evaluation.

Energy ministry opposes govt attempt to empower NIB

Protesting the government preparation to delegate more authority to the Nepal Investment Board (NIB) to enable it to handle mega projects independently, the Ministry of Energy (MoE) has written to the Office of the Prime Minister and Council of Ministers (OPMCM) to rethink the move.
The OPMCP in preparation to forward a proposal to the cabinet to empower the NIB has been collecting comments from different line ministries.
The OPMCM has received a letter from the MoE, which has clearly urged the government to rethink its move stating that NIB lacks necessary human resources and expertise to independently handle hydropower projects of above 500 megawatts.
"The letter from MoE explicitly asks us to do a rethink before submitting a proposal -- that will delegate more authority to the NIB to handle mega projects -- to the cabinet for approval," a high level official at the OPMCM said in condition of anonymity.
The OMPCM had sought comments from all the concerned ministries before submitting a proposal to delegate authority to the NIB to facilitate implementation of 14 select projects including five mega hydropower projects, namely, Tamakoshi III (600 MW), Upper karnali (900 MW), Upper Marshyangdi (600 MW), Arun III (900 MW) and West Seti (750 MW).
The source, however said, other ministries have not shown any strong reactions regarding the proposal to strengthen NIB. "However, the MoE has asked the OMPCM to rethink before taking any decision stating that it would weaken the government´s implementation capacity regarding mega projects if more authority is delegated to NIB, which is lacking in institutional capacity," the source further revealed.
Meanwhile, officials at the MoE said that handing over projects to the NIB would not be practical without boosting its its capacity and human resources. "NIB doesn´t have technical know-how, lacks in institutional capacity and required human resources, whereas the ministry has experience of 30 years in implementing hydropower projects besides a department, Nepal Electricity Authority (NEA) and qaualified human resources under it," a high level official at the MoE told Republica.
"There should be tremendous improvement in NIB´s institutional set up and human resources capacity if it wants to capacitate itself to implement mega projects. It will be a mistake if the government decides to ignore the institutioanl capacity of the MoE and delegate more authority to a new-born institution," the official said.
NIB, set up under the Investment Board Act- 2011, has long been seeking more teeth to handle mega projects independently.
The government in May last year had handed over 14 mega projects such as Second International Airport in Nijghad, Kathmandu-Tarai Fast Track, Project to upgrade and manage Tribhuvan International Airport (TIA), Waste Management Project, Fertilizer Company and the aforementioned five hydropower projects among others.
However, Tulsi Prasad Sitaula, secretary at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM) said that the ministry has no objection if NIB finds investors for project development. "But NIB is not the implementing agency for the selected projects," Sitaula said.

Minister Jha off to India to discuss regional trade

A team of government officials and businessmen led by Ministry of Industry Anil Kumar Jha left for India on Friday to attend a program titled ´South Asia Economic Integration: On a New Path of Progress and Hope´.
Issuing a press statement, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said Minister Jha will address a special session of the program that will hold discussion on ways to unleash regional potentiality through cooperation. FNCCI President Suraj Vaidya is also scheduled to address the program organized by Confederation of Indian Industries (CII).
Additionally, business delegation of FNCCI will also hold a meeting with officials from Federation of Indian Chambers of Commerce and Industries (FICCI) in New Delhi on January 31.
"The meeting between officials from FNCCI and FICCI will focus on bilateral trade, renewed Transit Treaty and developing infrastructure for energy trade," the statement said, adding that the FNCCI officials will also approach French, German and British investors in India to put their money in Nepal.
FNCCI Vice President Pashupati Murarka, energy expert Gyanendra Lal Pradhan, executive member of FNCCI Shekhar Golchha and President of Non-Resident Nepalese Association Jiba Lamichhane are also in the delegation.

Govt agencies join forces for cleaner Valley

Three government agencies have come together to make the Valley greener and cleaner after the road expansion drive leaves the roads wider and more open.
"The Ministry of Urban Development (MoUD), Kathamandu Metropolitan Office (KMO) and the Ministry of Forest and Soil Conversation (MoFSC) have come up jointly with plans to make the Valley more beautiful," said Krishna Hari Banskota, secretary at the Office of Prime Minister and Council of Ministers (OPMCM).
Secretary Banskota, who is also coordinator of the road expansion program, said that the three different agencies concerned, namely MoUD, KMO and MoFSC, have come up with different plans for a building code for the front part of roadside buildings, 24-hour cleaning service in the Valley, and planting of trees on the roadside and in open spaces.
"The joint initiative of the three line agencies will make the Valley greener and cleaner," Banskota said.
However, the agencies are still working on how they can jointly carry out the task of making the Valley more beautiful and add a flavor of greenery to the roads that are now wider, according to Banskota.
"We will soon come up with proper plans and implement them," Banskota said, citing high-level officials from agencies such as MoUD and KMO, after inspecting the road expansion work on Saturday.
According to Banskota, Valley denizens whose houses are on the roadside should comply with the building code that the government or the local body -- KMO -- develops.
A team of officials including Tulasi Prasad Sitaula, secretary at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM), Kishore Thapa, secretary at MoUD, and Kedar Bahadur Adhikari, executive officer at KMO, among others, had inspected the progress made so far under Banskota´s leadership.
According to Banskota, various road sections, such as Dillibazar-Bhatbhateni-Bhairavnathgan (3.3 km), Kamalpokhari-Maitidevi (1 km) and Gairidhara-Baluwatar (1 km), have been blacktopped.
Similarly, the Chabahil Chowk (150 meters), Anamnagar-Kalikasthan (700 meters), Naniganj-Gairidhara (300 meters), Gairidhara-Chhateganesh (280 meters), Gairidhara-Police Headquarters (300 meters), Maitidevi-Setopul Sadak (320 meters), Bhatkekopul-Chabahil Ganeshsthan (500 meters) and Bhatbhateni-Bishalnagar (700 meters) road sections have already been blacktopped.
Meanwhile, Secretary Banskota has asked all the agencies concerned, including Kathmandu Upatyaka Khanepani Limited (KUKL) and Nepal Electricity Authority (NEA), to speed up the task of replacing water pipes, electricity poles and transformers. "The road expansion should be completed as soon as possible," Banskota said.
Furthermore, Banskota said that the Department for International Development (DfID) of the UK is ready to demolish its compound wall to support road expansion in Lalitpur.

MoI outsources task of conducting audits of 30 firms

The government has outsourced the job of conducting due-diligence audits of around 30 firms waiting to be declared as ´sick industries´.
The Ministry of Industry (MoI) outsourced the task to four chartered accountants as it lacked expertise on evaluating financial status of those firms.
"Four chartered accountants from the Association of Chartered Accountants of Nepal (ACAN) are currently trying to identify the actual financial status of the firms that are waiting to be tagged as sick industries," Bishnu Dhakal, under secretary at the MoI, told Republca.
The MoI outsourced the job as a technical committee, formed to identify sick industries and recommend facilities for them, required complete financial details of those firms.
The technical committee, which has the ultimate authority to identify and recommend facilities for sick industries, is now working with the team of chartered accountants to chart out financial support required by the firms.
More than 30 firms filed applications at the MoI to get status of sick industries almost a year ago.
"The chartered accountants will conduct audits of those firms and prescribe financial support they require from the government for recovery." Dhakal said. "Additionally, they will also carry out study on what pushed them to the verge of collapse."
Earlier, the Council of Ministers had approved the terms of reference of the technical committee, providing it more teeth to finalize the task of identifying actual sick industries.
"The ministry will prepare a list of sick industries and support they need to rebuild themselves after carefully analyzing their financial status," Dhakal said.
The government had earlier announced to provide relief package to sick industries through its Immediate Relief Program 2011/12.
The MoI was assigned to identify actual number of sick industries after the Sick Industries Rehabilitation High Level Task Force prepared a report with recommendations to revive sick industries in 2011.

NIB seeks more teeth to implement 14 mega projects

The government is preparing to authorize the Nepal Investment Board (NIB) to independently handle 14 mega projects after the latter faced implementation hurdles due to lack of cooperation from different line ministries.
The NIB officials have long been seeking more teeth to ensure smooth functioning of project implementation.
"The Office of the Prime Minister and Council of Ministers (OPMCM) is soon forwarding a proposal to the cabinet that envisages delegating more authority to NIB,” a source at the OMPCM told Republica. The source said lack of cooperation from line ministries prompted the government to take the fresh move.
“NIB has already asked the OPMCM to delegate more power to it for implementation of the projects,” the source said.
The NIB, which is chaired by the Prime Minister, is presently taking necessary decisions regarding the implementation of these mega projects.
The meeting of the board of directors of the NIB had decided to take over 14 mega projects including 5 hydropower projects such as Tamakoshi III (650 MW), Upper Karnali (900MW), Upper Marsyangdi (600MW), Arun III (900MW), West Seti (950 MW) in May.
NIB also has been overseeing Kathmandu-Terai Fast Track, a project to upgrade Tribhuvan International Airport, Nijgadh International Airport project and waste management project, among others.
Confirming the fresh developments, Krishna Hari Baskota, secretary at the OPMCM, said his office was seeking feedback from the concerned ministries on the issue. "We are holding discussion with concerned ministries before forwarding the proposal to the cabinet for approval," Baskota told Republica on Friday.
According to the source, NIB is facing difficulties even in getting the current status of the projects from concerned ministries. For example, NIB had asked Ministry of Culture, Tourism and Civil Aviation (MoCTCA) to provide documents related to Nijgadh International Airport project around a couple of months ago. After the MoCTCA cold-shouldered its request, NIB had to approach Landmark Worldwide (LMW) - the firm that prepared detailed project report of the mega project - for the document.
The source also said the Ministry of Physical Planning, Works and Transport Management (MoPPWTM) is reluctant to let Kathmandu-Tarai Fast Track project to slip out of its hand. In yet another case, Ministry of Energy (MoE) has not given any document related to five mega hydropower projects to NIB.
The NIB officials claim the board reserves the authority to facilitate the implementation of all hydropower projects above 500 MW.
"The ministries have to comply with the decisions taken by the cabinet," the source said. "That is why NIB is seeking for stronger decision from the government to make it mandatory for all line ministries to extend cooperation to it."

Nepal-India power trade deal delayed

Signing of the Nepal-India Power Trade Agreement (PTA) has hit a snag with India seeking more time to study Nepal´s proposal.
Though Nepali officials proposed to discuss the contents of the proposed Memorandum of Understanding (MoU) on bi-lateral electricity trade at the seventh meeting of the Nepal-India Joint Committee on Water Resources (JCWR) being held in Kathmandu, participating Indian officials said they need time to study the proposal.
“Nepal-India power trade agreement is likely to be delayed as Indian officials have sought more time to study the proposal,” said a Nepali official who participated in the JCWR meeting that concluded on Friday.
Nepal had submitted a draft of MoU on PTA to India in 2009 before sitting for talks. The fifth meeting of JCWR held in Pokhara in November 2009 had decided to finalize the draft. The signing of PTA would have paved the way for laying cross-border transmission line and power trade between the two countries.
The Nepali side had also drawn the attention of Indian officials about implementation of the first phase of 400 kV Dhalkebar-Mujaffarpur cross-border transmission line. The transmission line is to be developed and operated by the private sector.
The bilateral meeting dwelled on a host of pending issues such as Pancheshwar Multipurpose Project, Tanakpur Barrage, Tanakpur-Mahendranagar Link Road, Koshi High Dam Project, Gandak Project and Naumure, among others.
“The Indian government needs some more time to review and respond to the terms of reference (ToR) of Pancheshwar Development Authority (PDA) as the Indian finance ministry has offered suggestions on clause 17 regarding exemption of taxes and duties on equipment and materials to be used in the projects,” reads the minute signed by officials of both the countries.
Energy Secretary Hari Ram Koirala from the Nepali side and secretary of the Indian ministry of water resources Dhruv Vijay Singh signed the minute.
Similarly, Indian officials have said it would take some more time for securing forest clearance approval for one kilometer section of the Tanakpur-Mahendranagar Link Road that passes through a forest in Uttrakhand, India. However, the meeting has decided to appoint RITES Ltd India for preparing the Detailed Project Report (DPR) for the remaining section of the road parts.
Meanwhile, Nepali side also demanded that the issue of compensation for 10,306 bighas of private land damaged by the Koshi project be resolved at the earliest.
Nepali side also picked up the issue of crop damages and other problems caused by western main canal of the Gandak Project. However, India refused to discuss the issue further stating that it had already been dropped during the third meeting of Joint Committee on Koshi and Gandak Projects (JCKGP).

IFC suggests reforms

The International Finance Corporation (IFC), a member of the World Bank Group, has recommended a series of reform measures to the government to create an investment friendly environment by removing constraints for private sector development in the country.
The IFC has suggested that the government bring reforms in areas such as the entry and exit process in business, competition, finance, infrastructure and property rights, among others.
“Political instability continues to be an additional barrier for economic growth and investment promotion in the country,” states the reform memorandum prepared by the IFC. “Yet, the government can make many changes which don´t require legislative approval.”
The IFC´s recommendations include 57 measures in different sectors to create a better situation for doing business in the country.
The reform memorandum, discussed on Thursday by representatives of the private sector and government officials including experts, has outlined 30 short-term interventions from the government that could help create better investment climate.
Similarly, the memorandum has also suggested 27 medium and long-term changes to make the situation more conducive for business.
The reform recommendations were developed mainly based on Nepal´s low ranking in the global map in terms of different indicators such as Doing Business Index and Enterprises Survey, among others.

Donors concerned over low expenditure

Nepal´s development partners, including the World Bank (WB) and the Asian Development Bank (ADB), have identified shortfall in capital expenditure and frequent transfer of human resources including government officials and project staffs as the major hurdles for the country´s development.
"Untimely transfer of senior officials from the implementing ministries and project chiefs has affected the progress in the donor-funded projects," Tahseen Sayed, the WB´s country manager for Nepal, said on Thursday.
"It is unfortunate that cases of low capital expenditure in projects are common every fiscal year," Sayed said at a meeting organized to formally unveil the Nepal Portfolio Performance Review (NPPR) 2012.
Kenichi Yokoyama, the country director of the ADB for Nepal, also blamed a sharp fall in capital expenditure for the slowing economic progress of the country.
The government´s data shows that capital expenditure in the first four months of Fiscal Year 2012/13 was limited to 15 percent of total allocation of Rs 63 billion.
The meeting focused on nine different areas such as agriculture, energy, local governance, mutual-accountability, procurement process and management of donor funded projects.

Govt intensifies talks with JICA, ADB for Tanahun Hydro

The government has intensified negotiations with funding partners to finalize terms and conditions for early development of Tanahun Hydropower Project (140 MW).
"We had a negotiation meeting with Japan International Cooperation Agency (JICA) on Wednesday. We discussed most of the issues related to terms and conditions for soft loan,” Madhu Kumar Marasini, joint secretary at the Ministry of Finance, told Republica.
JICA, which has shown interest to provide soft loan of US$ 180 million for the project, is positive about finalizing the agreement at the earliest, according to Marasini.
“However, the negotiations will be lengthy because of the size of the project and multiple funding partners involved," he said.
Marasini said negotiation meeting with Asian Development Bank (ADB) -- another major funding partner - will be held on January 27. ADB is planning to provide soft loan of $150 million for the project.
“We will discuss terms and conditions of the loan and other related issues with ADB officials in the upcoming meeting,” said Marasini.
Nepal Electricity Authority (NEA) will develop the project. Upon completion, it will be the second largest storage-type project in the country after Kulekhani.
“Hopefully, we will be able to sign loan agreements with both the funding partners within a couple of months," said Marasini.
European Investment Bank (EIB) has also pledged to lend $63 million for the project which was previously known as Upper Seti Hydropower Project.
According to finance ministry officials, other partners, including the government, will fill the funding gap for the project that is estimated to cost around $450 million, as per the revised calculation.
The national pride project based in Byas Municipality will start power generation power by 2020 if the construction works begin as planned in 2014.
"It is yet to be decided how much stake the NEA will hold in the project," an NEA official told Republica. "It will be decided after the government signs agreements with all the funding partners."
Separate teams from ADB and JICA had visited Nepal couple of months back to study the project and hold preliminary discussions with the officials concerned.

'NPBCL lacks a convincing payback plan'

Nepal Purwadhar Bikas Company Limited (NPBCL), which is planning to develop the much-touted Kathmandu-Hetauda Tunnel Highway through public funding and institutional investments, does not have convincing plans to repay the investors, government officials said on Wednesday.
"People will get huge benefit from this project and so do the country´s economy," Kush Kumar Joshi, president of the NPBCL, said at an interaction program on Wednesday. He, however, couldn´t elaborate how the company intends to repay the people investing in the project.
Officials of Ministry of Physical Planning and Transport Management said the company, which aims to generate investment from public, should have a clear plan on how intend to repay them. “The company should have a convincing plan to repay the public and institutional investors,” said a ministry official, preferring anonymity.
The company, which aims to collect investment from around 264,000 people, has not developed any framework on how the benefits will be shared among promoters of the company and other investors. "The modality of sharing benefits between promoters and public investors is yet to be decided," Joshi said.
The project, which is estimated to cost Rs 20 billion, will connect Kathmandu with Hetauda with a four-lane road.
The government officials have said the estimated cost is too low and funding sources are not clearly demonstrated in the detailed project report (DPR) that the NPBCL submitted in November 2012.
However, officials of NPBCL claimed that cost estimation was well calculated and funding source is clear as many institutions and people have already expressed commitments to invest in the project.
“The success of the project depends on people´s participation and collective work of local people, domestic contractors, professional institutions and banking sector of the country," Joshi said at the program Society of Economic Journalists, Nepal (SEJON).
The project, which is targeted to be completed within four years, will help the country save Rs 22 billion a year by reducing fuel imports, argue officials of the company.
“Our target is to make people able to travel from Kathmandu to Hetauda and vice versa in 45 minutes,” Lal Krishna KC, vice president of the company, said.

Govt to conduct sector-wise review of dev results

The government has decided to conduct sector-wise review of development results, aiming to get the picture of actual progress in the field in terms of achievements against targets.
For the first time in the decade-long history of portfolio performance review, the meeting of Nepal Portfolio Performance Review (NPPR) 2012 scheduled for Wednesday will review four different sectors -- agriculture, local governance, roads and energy.
"The government has decided to carry out sector-wise review of the development results now onwards to know the actual progress in the field," said Kailash Raj Pokharel, under secretary at the Ministry of Finance (MoF) and the coordinator of the NPPR meeting.
The country, which started receiving foreign aid for development from 1956, had started to conduct the portfolio performance review from 2000 based on themes such as public finance management, procurement, human resources, mutual accountability, and managing for development results.
"The sector-wise review of development activities will help us realize the actual benefit that people received from foreign aid," Pokharel told Republica on Tuesday.
Highlighting the government´s paradigm shift in the methodology of reviewing development projects, Pokharel said the development partners would now get to know the actual output generated by the assistance they provided.
The NPPR meeting that mainly focuses on reviewing projects and programs that are under implementation will also discuss on issues such as coordination among development partners themselves.
"We will review the achievements against targets of 2011 through group works," Pokharel added.
Meanwhile, four development partners -- Australia, Denmark, International Fund for Agricultural Development (IFAD) and United State Agency for International Development (USADI) -- have joined the core membership of the NPPR in 2012.
“Now, 11 development partners have become core members of the NPPR," said Pokharel.
Asian Development Bank (ADB), Department for International Development (UK), European Union, Japan International Cooperation Agency (JICA), United Nations, World Bank and Norway are the other development partners in the core membership of NPPR.
According to the report prepared for the meeting, the overall progress of NPPR 2011 action plan implementation has remained satisfactory. "The progress scenario his highly satisfactory in public finance management, satisfactory in public procurement, moderately satisfactory in human resource management and unsatisfactory in mutual accountability," reads the report.
The report states that internal auditing is weak in public finance management. “Lack of fairness in competitive bidding, absence of procurement plans, frequent staff transfer, inadequate and unsystematic training to the civil servants, lack of result based budgeting system and lack of transparency and predictability are major challenges in implementation of development projects," the report outlines.

Govt to realign Fast Track in Khokana

The government has changed the alignment of the Kathmandu-Tarai Fast Track at Khokana area of Lalitpur in an effort to reduce land acquisition cost. The change in plan includes a reduction in the width of the road by 50 percent to 50 meter.
"The Fast Track will now run along the Bagmati river bank instead of Danuwar village area," Rajendra Raj Sharma, a project manager of the Fast Track, told Republica on Tuesday.
The government has decided to acquire just 800 ropanis of land in the Khokana area to avoid high cost of land acquisition. "The initial plan was to acquire a total of 1,600 ropanis of land within the 8km area of Khokana," Sharma said.
Land acquisition in the Khokana area has been a major hurdle for developing the Fast Track that will connect Kathmandu and Nijghad by a 76km road. "The new alignment of the Fast Track in the Khokana area is a ministerial level decision," Sharma added.
As per the calculation of the government, it will cost more than Rs 5 billion to acquire 800 ropanis of land in the Khokana area. "The actual figure will come out only after a land evaluation committee decides on how much to pay for acquiring the land," Tulasi Prasad Sitaula, secretary at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM) told Republica.
The progress report of the government for the first four months of the fiscal year 2012/13 has categorically identified land acquisition as a major problem for the project development. As of now, 63km track opening of the Fast Track has been completed.
Additionally, the government has yet to conduct environment impact assessment (EIA) of the 8.5km area in Khokana. The quarterly report that was presented in the meeting of National Development Problem Resolution Committee does not include the progress report of the Fast Track.
Meanwhile, the government has short-listed three Indian firms for developing the Fast Track, namely, Reliance Infrastructure, Larsen & Tourbo (L&T) and Infrastructure Leasing & Financial Services (IL&FS). As per the cost estimation of Asian Development Bank (ADB) in 2008, the project is estimated to cost Rs 67 billion.
A total of nine companies, including Nepali, South Korean and Indian firms had shown interest in the construction of the project.

Govt failing to track status of 74 P1 projects

Although the government has put infrastructure development in its high priority, it is failing to track progress status of 74 priority-I (P1) and three national pride projects.
The 28th meeting of the National Development Problem Resolution Committee (NDPRC) chaired by Prime Minister Babu Ram Bhattarai on Sunday couldn´t show how 27 percent of 282 P1 projects and three national pride projects are faring.
"Unfortunately, we haven´t received progress reports of 74 P1 projects and three national pride projects from different ministries,"
Dipendra Bahadur Kshetry, vice-chairperson of the National Planning Commission (NPC) said, presenting status of 751 projects that are currently under implementation.
More than 50 percent of the P1 projects that have not reported their status are under the Ministry of Physical Planning, Works and Transport Management (MoPPWTM). According to the Kshetry, other P1 projects that have not submitted progress report fall under Ministry of Industry (MoI), Ministry of Energy (MoE) and Ministry of Federal Affairs and Local Development (MoFALD).
The implementation situation of 17 national pride projects is quite dismal. The government has just made 35 percent financial and 40 percent physical progress on the national pride projects over the first four months of 2012/13.
The government officials have highlighted different reasons such as land acquisition, weak coordination among line ministries, lack of cooperation from the Ministry of Finance (MoF) and NPC as the major reasons behind slow progress of national pride projects.
Speaking at the meeting, Chief Secretary Lila Mani Paudel said political parties were creating hurdles in land acquisition at the local level. “Local leaders of different political parties are forcing the government to set higher evaluation rate for land acquisition,” he added. “We can´t speed up project implementation unless such tendency is brought to an end.”
Paudel said implementation of donor funded projects is affected due to improper use of resources. “Unnecessary parachute-consultants, expensive vehicles and lack of transparency are putting some of those projects in jeopardy," Paudel said, adding: "It´s high time we forced our donor agencies to follow our own procurement policy."
The government has even failed to keep track of projects that were already planned and started by previous governments. The dismal performance of the concerned agencies to implement national pride projects such as Kathmandu-Tarai Fast Track, Mid-Hill Highway, East-West Railway, Postal Highway, North-South Highway, Melamchi Drinking Water Project, and Bhairawa Regional Airport, among others drew attention of the attention of Prime Minister Dr Babu Ram Bhattarai.
"It´s unfortunate that even the implementation of national projects have remained quite disappointing," Bhattarai said in the meeting. "I ask all the ministries and top level officials to work in time to implement the national pride projects."
In yet another setback to the government, capital expenditure over the first four months of 2012/13 remained at just 15 percent of total Rs 62 billion. "The capital expenditure is pretty low as most of the high level officials from different ministries are busy in foreign visits and not paying attention to development activities," Finance Secretary Shanta Raj Subedi said. "The recurrent expenditure is high in almost all the ministries."
Finance Minister Barsha Man Pun said none of the ministry has made appreciable progress. “We have to focus on capital expenditure," Pun said in the meeting.

Govt tells NPBCL to clarify financing for tunnel project

The government has asked Nepal Purwadhar Bikas Development Company (NPBCL) to revise its detailed project report (DPR) on Kathmandu-Hetauda tunnel highway and clearly demonstrate the sources of finance for construction of the project.
The Ministry of Physical Planning, Works and Transport Management (MoPPWTM) after studying the DPR has asked NPBCL to demonstrate financial sources and rethink the cost estimate of the project. The company had submitted the DPR to the ministry almost a month ago.
"Some points in the report especially about the sources of finance for project construction are unclear," Tulasi Prasad Sitaula, secretary at the MoPPWTM , told Republica. "It seems the estimated cost of the project is based on unrealistic calculation." Sitaula further said that the government has asked the company to make a carefully estimate the cost.
The much-touted tunnel highway, which will connect Kathmandu and Hetauda will be 50 km long. After being convinced by the DPR report prepared by NPBCL, the government is mulling awarding the project to NPBCL under Build-Own-Operate-Transfer (BOOT) Act.
The ministry has also asked NPBCL to limit the concession period just at 30 years. "We have told NPBCL that the government cannot allow NPBCL to operate the project for more than 30 years. They have asked for 35 years but existing law -- BOOT Act -- does not allow this," Sitaula said. According to BOOT Act, the government can give just 30 years to operate project to the contractors.
The company had submitted its report claiming that it would generate money from sources such as public investment, consortium of different business groups, investment from non-resident Nepalis (NRNs) and providing shares to the workers and contractors in return for their labor. "We also are working for generating institutional finance from different public and private institutions," Lal Krishna KC, vice chairperson of the NPBCL said.
The company, which is claiming that it would complete the construction of the project in four years, had submitted the report with cost estimation of Rs 22 billion. "That is initial cost estimation. The cost varies as per the quality of materials that are used for construction and structure of the road that we opt to build," KC said.
The ministry has made it clear that the report should be clear in every single term to make the project implementation smooth and timely. "We will move forth and take a decision after the company comes up with a revised report. Government´s decision will be based mainly on the sources of finance for project development from the company," Sitaula added.

Independent NBF secretariat in the offing

The government and the International Finance Corporation (IFC), a member of the World Bank Group, on Friday signed an agreement to establish an independent secretariat of the Nepal Business Forum (NBF).
The agreement was signed between Krishna Gayawali, secretary of the Ministry of Industry (MoI), and Valentiono S Bagatsing, the IFC resident representative in Nepal.
The secretariat of the NBF, currently located at the IFC office, is being shifted to a new place so that stakeholders can have easy access to the Forum, which, in turn, is expected to enhance effectiveness of reform programs.
The NBF, which came into operation in 2010, is a common platform for public and the private sector, where dialogues on reforms that need to be implemented and ways to boost economic activities, among others, are held. The NBF, which functions through different working group committees, such as industrial investment promotion, export promotion and trade facilitation and infrastructure, among others, also aims at strengthening the capacity of public and private sectors.
Industry Minister Anil Kumar Jha, who was present at the signing ceremony, said the government was always ready to make necessary changes to laws and regulations to uplift the country´s business sector and spur economic growth.
"The first and foremost priority of the government is to boost the confidence of the private sector and accelerate the pace of economic growth," Jha said.
Gayawali said the new independent NBF secretariat will be more effective in conducting open and fruitful dialogues between the private and public sectors.
To promote public-private dialogue, the IFC, the government and the private sector have allocated a sum of US$1 million, of which 15 percent will be contributed by the government, 38 percent by the private sector and the rest by the IFC.
"However, the cost borne by the government will also include non-cash support, like extension of office space," Gayawali said at the signing ceremony.
Private sector representatives, meanwhile, have expressed their commitment to support the independent secretariat of the NBF.
Suraj Vaidya, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and Narendra Kumar Basnyat, president of the Confederation of Nepalese Industries (CNI), said that the NBF played an important role in making public-private dialogue more meaningful.

NIB trudges on through high expectations and enormous challenges

Expectations are high and challenges are enormous, as Nepal Investment Board (NIB) has found out in the more than a year that it has been working to attract investment in big projects.
The NIB, a high level state body founded in late 2011 to facilitate foreign investment for mega projects in the country, is also the focal agency to implement Nepal Investment Year 2012/13, a campaign to lure big investment by creating an investment friendly climate in the country.
While announcing the campaign in July 2011, the government had declared that it would bring in US$ 1 billion in the first six months of the investment year. Then in May 2012, the government handed over 14 mega projects - which included 5 hydropower projects -- to the NIB to deal with foreign investors and implement them on a fast-track basis.
Despite its efforts, the NIB couldn´t live up to the expectations of injecting fresh investment and ultimately creating new job opportunities.
More than a year has gone by since NIB was formed, but not a single mega project has materialized. The template for the Project Development Agreement (PDA) for big projects itself is also yet to be finalized by NIB.
The NIB officials, though, say they are doing their best not to break the promises they made. “We are working seriously to kick-start at least one project that is significant for the country´s development,” Radesh Pant, chief executive officer of the NIB, told Republica.
Despite the deepening political imbroglio and inconsistent government policies, some foreign investors are still vying to grab investment prospects in Nepal.
It is, however, a good sign that investors from countries such as South Korea, France, Germany, Turkey, Brazil, China, India and the USA have shown interest in injecting fresh investment, especially in infrastructure projects like transportation, cement industries, road construction and hydro power.
“We have been able to create some interest among potential investors,” said Pant.
As an underdeveloped nation, Nepal needs foreign direct investment (FDI) in almost every sector of economy to oil the engine of economic growth.
However, Nepal´s current investment climate is not conducive to attracting investment from abroad, or even from domestic sources.
The task of providing instant and smooth services to investors is still not that much impressive despite some efforts to facilitate more investment.
The decade-long Maoist conflict that badly paralyzed the overall development of the country is over. But the situation is still not rosy for investment prospects.
Domestic investors, who are well aware of the economic situation and investment climate of the country, are still not convinced to invest more.
"Most of the investors are in ´wait-and-see´ mood," Pashupati Murarka, vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said.
The NIB has been carrying out the task of implementing projects such as West Seti (950 megawatts), Arun III (900 MW), Tamakoshi III (650 MW), Upper Karnali (900 MW) and Upper Marsyangdi (600 MW), management and upgradation of Tribhuvan International Airport (TIA) project, Waste Management Project and developing the PDA.
The PDA template, which is still to see its finishing touches, is specifically for hydropower projects (above 500 MW). The template -- a base document to negotiate with mega investors -- will prove to be significant for the development of mega hydropower projects in the country.
NIB is in consultation with power developers like Indian giants Sutlej Jal Vidyut Nigam and GMR, and SN Power of Norway, seeking their inputs while developing the template.
NIB is in close communication with a Chinese firm -- Three Gorges -- to take forward the West Seti project that they are conducting technical and financial assessments for.
The country and its prospects are shrouded in political and economic uncertainty, but still the situation can be improved enough to draw new investment. Political stability and policy consistency of the government, local business people say, will create a favorable environment for investment.
“There is no doubt that we will see a flood of investment if the government walks the talk and goes beyond rhetoric and lip service for creating investment climate in the country,” added Murarka.
´Political consensus key for investment´
Nepal Investment Board (NIB) came into existence more than a year ago with the job of luring foreign investment for mega projects into the country amid a worsening investment climate. One year down the line, people´s expectations have been dashed as no substantial progress has been made toward securing even a single mega project. Radesh Pant, CEO of NIB since December 2011, talked with Republica about challenges and prospects of new investments in Nepal. Excerpts
What initiatives have you taken as the NIB CEO to promote investment in Nepal?
Definitely progress has been slow to fulfill the expectations that people had from us. However, we are working on establishing a system and framing policies that are crucial for facilitating foreign investors in our country. The Project Development Agreement (PDA) template that is needed before starting negotiations with developers of mega hydro projects is almost at its final stages.
How are investors (both foreign and domestic) responding to our invitation for investment, given the situation of the country?
After over a year in office as NIB CEO, I have found impressive response from investors who are showing interest in investing in Nepal if policy consistency and investment security is guaranteed.
How do you assess the future for investment in Nepal? Are you satisfied with what has been done so far by NIB?
Though there are many things to do to secure investment for mega projects in Nepal, I am satisfied with what has been achieved so far. We are still optimistic about increased flow of investment in the future given the positive responses from those investors that we have so far approached. However, we have to identify which among them are genuine investors to ensure timely implementation of the projects.
What do you think we need the most to bring in more foreign investment?
Political parties should build consensus among themselves to restore the confidence of investors. I have a long held conviction that there should be agreement amongst political parties to at least create an environment for investment in the projects that are crucial for economic development. There should also be a consistency in the state´s policies towards the economy and investment.

FDI commitment up 60% in 5 months

The foreign direct investment (FDI) commitment went up by an impressive 60 percent in the first five months of the current fiscal year despite the odds faced by the country.
Statistics compiled by the Department of Industry (DoI) show FDI commitment topping Rs 29.9 billion in the five-month period to mid-December.
If the entire amount pledged by foreign investors enters Nepal, around 12,000 additional jobs will be created in sectors such as agriculture, manufacturing, tourism and services.
But since the country does not have an effective mechanism to monitor whether the commitment made by foreign investors was fulfilled, many may not know how much of the amount pledged by them actually flowed into the country.
"The investment commitment always seems encouraging, but the actual flow is quite disappointing," a DoI official told Republica on condition of anonymity because of his limitation to speak with the media.
Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry, also shared DoI official´s view.
"I don´t think all foreign investors fulfill their investment commitments," he said. "But the rise in FDI commitment definitely portrays interest shown by foreigners to come and invest in Nepal, as it costs time and money to register companies here.”
However, this interest shown by foreign investors, according to Murarka, is marred by political instability and other constraints, such as power shortage and labor problems.
The latest DoI statistics show FDI commitment in the energy sector was higher than in other sectors this year.
The FDI commitment in the energy sector stood at Rs 18.38 billion in the five-month period--up 72 percent than in the same period last fiscal year.
"This year, a total of 28 firms expressed commitment to invest in the energy sector, as against 12 in the same period last year," the statistics show.
The response received by the country´s service sector was also impressive, as FDI commitment in the sector surged by 53 percent to Rs 2 billion in the five-month period.
If this commitment translates into reality, a total of 1,976 new jobs would be added in the service sector alone.
Unlike in energy and service sectors, FDI commitment in the manufacturing sector was not encouraging, as pledges made by foreigners to invest in the sector fell by three percent in the review period.
The sector had attracted Rs 6.3 billion in FDI commitment in the first five months of last fiscal year, which dropped to Rs 6.1 billion in the five-month period this year. If the amount pledged by foreign investors enters Nepal, a total of 4,865 jobs would be created.

India cuts power supply by 25 MW

India has unilaterally and without notification cut power supply to Nepal by around 25 megawatts. India had recently promised to provide an additional 55 megawatts for this winter.
"India has cut supply of a total of 25 MW to different points such as Birgunj, Janakpur, Hetauda and Rajbiraj without notifying us," Rameshwar Yadav, managing director of Nepal Electricity Authority (NEA) told Republica on Tuesday.
Nepal was importing around 115 MW from India and was expecting additional 55 MW as agreed during the visit to India by President Ram Baran Yadav in December last year.
"We have been trying to communicate with Indian officials about this sudden cut from the Uttar Pradesh state," Yadav said, adding, "No Indian official is available."
According to Yadav, India has cut power supply without apparent reason. "I don´t think this is the decision of the central government of India but of the state government of Uttar Pradesh."
Interestingly, India has cut down power just a week after President Yadav returned from India. A team of officials had visited India a few days ago purportedly to prepare ground for importing additional 55 MW. "We had a very nice conversation with Indian officials on issues including additional power and transmission lines," Yadav said.
After Monday´s cut in supply, NEA has not yet made any decision to reschedule the load-shedding hours. "We still don´t know whether the cut in supply is temporary or permanent," an official said.
Yadav also said NEA is still trying to contact Indian officials regarding the cut in supply.
NEA officials said the country could see load-shedding up to 20 hours a day if the cut in supply from India is permanent.

'Unfair treaties with India put Nepal's interest at risk'

The topic of water resources--the most crucial issue in the bilateral relations between Nepal and India--has so far been neglected by both the countries and Nepal is bearing the brunt owing to this oversight, experts have said.
"Our bilateral treaties with India are not equitable and we have not been able to reap maximum benefit from our own water resources because of obstruction created by the treaties we signed with India," Prakash Chandra Lohani, former finance minister and vice chairman of the Rastriya Janashakti Party, said on Tuesday.
Speaking at a program organized in Kathmandu, Lohani said that the reason behind this is the laxity shown by Nepali politicians.
"The issues between Nepal and India can´t be dealt just by bureaucrats and diplomats," Lohani said.
Giving examples of Koshi and Gandaki, Lohani said that Nepal has succumbed to India by signing those treaties.
Yubaraj Sangroula, former attorney general, said: “Projects like Koshi, Gandaki and others have been tools of election maneuvers and pseudo-nationalism."
But no politician, according to Sangroula, “has taken those agreements seriously and reflected on how much people have lost in the course of Nepal´s development".
"Looking from a larger perspective, people from all over the South Asian region have not benefited from treaties on water resources," Sangoula said.
He was speaking at the launching ceremony of a book titled ´International Watercourses Law and a Perspective on Nepal-India Cooperation´ written by Surya Nath Upadhyay, former chief commissioner of the Commission for the Investigation of Abuse of Authority (CIAA).
The book that delves into most of the crucial agreements between Nepal and India and international water laws, among other, has argued that the relationship between Nepal and India was never friendly.
"India was never and will never be Nepal´s friend, and we have always lost in most of the negotiations," Upadhayay said.
Additionally, experts also claimed that the recent Bilateral Investment Promotion and Protection Agreement (BIPPA) has a clause that takes away Nepal´s right to use the Indian territory to reach the sea as a land locked country.
"BIPPA is against our national interest but that might not be intentional," Sangroula said. "Such mistake occurs due to lack of technical understanding and our inability to meticulously go through each and every clause."

Govt to seek soft loans to develop two sections

The government has said that it would seek soft loan from bilateral and multilateral development partners, including international investment banks, to develop a section of East-West Electric Railway -- Simara-Bardibas (108 km) -- and Simara-Birgunj (28 km) link line.
Tulasi Prasad Sitaula, secretary at the Ministry of Physical Planning, Works and Transport Management, said this after receiving draft of the detailed project report (DPR) of the mega infrastructure project on Sunday.
“The draft DPR has paved the way for the government to talk with development partners and investment banks for developing the project,” Sitaula said.
A consortium of six consulting firms -- Chungsuk Engineering, Korea Railway Network Authority and Kunhwa Consulting and Engineering of South Korea; Consulting Technocrats of India; and Fulbright Consultancy and Shah Consulting of Nepal -- had prepared the draft.
According to the draft, Rs 120 billion would be required to develop these two sections.
The consortium has also suggested the government to develop the sections in different phases.
“Taking into consideration the high construction cost, it would be practical to develop the project in three phases -- 54 km segment in the first phase, another 54 km segment in the second phase and remaining 28 km in the third phase,” the draft DPR states. “It would take at least five years to construct each phase.”
The railway line will have two cross border links -- Simara-Birgunj-Raxaul and Bardibas-Janakpur-Jayanagar. It will have 11 stations in places such as Bhawanipur, Manahara, Parsauna, Chocha, Chnadranigahapur, Karmaiya, Dhukauli, Jabdi, Barantol and Belgachhi.
Minister for Physical Planning, Works and Transport Management Hridayesh Tripathi said land acquisition, energy crisis and availability of funds were the project´s major bottlenecks. “But we are serious about addressing these bottlenecks.”
Tripathi also said the government would study whether the alignments suggested by report are feasible from the land acquisition perspective. “The alignments should not go through the major towns and where land price is too high,” Tripathi said.
According to the report, the government should acquire 370.5 hectares of land for the project

Govt inks performance contracts for nine infrastructure projects

In its bid to ensure timely implementation of national pride projects, the government on Sunday inked performance contracts with chiefs of nine different projects ranging from Kathmandu-Terai Fast Track and Mid-hill Highway to Postal Highway and North-south Highway.
The performance contracts--that insulate project chiefs and team members from sudden removal or transfer--were signed between Tulasi Prasad Sitaula, secretary at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM) and respective project chiefs.
According to a statement issued by the Office of the Prime Minister and Council of Ministers (OMPCM), Bal Ram Mishra, chief of the eastern part of the Mid-hill Highway project, Umesh Jha, chief of the western part of the Mid-hill Highway project, Mukti Gautam, chief of the Postal Highway project, Devi Shakya, chief of the North-south Highway project and Rajendra Raj Sharma, chief of the fast track project, among others, signed separate performance contracts with the MoPPWTM secretary.
“These contracts make it mandatory for all project chiefs to meet targets set for the fiscal year 2012/13,” says the statement.
Mishra and Jha, for instance, have been assigned to complete tasks of opening tracks, developing bridges and upgrading roads on eastern and western parts of the Mid-hill Highway that connects Chiyobhanjyang in the east and Jhulaghat in the west by a 1,750km road.
OPMCM Secretary Krishna Hari Baskota said the government also has a plan to establish around 25 urban hubs in different parts of the Mid-hill Highway.
Similarly, Gautam has been assigned to complete the task of land acquisition, track opening and bridge construction on the Postal Highway (1,824 km). The highway, being built with the financial support of the Indian government, comprises 125 bridges. According to the statement, the government is also planning to request India to develop bridges on the highway.
The chief of much touted fast track project that connects Kathmandu and Nijgadh, on the other hand, has agreed to complete land acquisition and track opening tasks this fiscal year.
Currently, the Nepal Army is opening the 76-km track, of which 56 km has been opened.
“I am confident that the implementation of national pride projects will be smooth and these performance contracts will allow project implementing teams to work with confidence,” the statement quoted MoPPWTM Secretary Sitaula as saying.
Last week, the government had signed performance contracts with the project chiefs of three irrigation projects, namely Babai, Rani Jamara and Sikta.

Global FDI inflows falls by 17 pc, Nepal's by 30 pc in 2011/12

The foreign direct investment (FDI) commitment fell by 30 percent to US$ 84 million during 2012 compared to a year earlier. The statistics compiled at the Department of Industry (DoI). The whopping decline in FDI inflows has resulted in 17 percent fall in employment generation with creation of only 9,050 new jobs in the country.The decline in FDI inflows was witnessed in crucial sectors of the national economy such as manufacturing and agriculture.

Meanwhile, the scenario of global FDI inflow is also not satisfactory.

• Global foreign direct investment (FDI) inflows declined by 18% in 2012, to an estimated US$1.3 trillion (figure) – a level close to the trough reached in 2009 – due mainly to macroeconomic fragility and policy uncertainty for investors.

• The FDI recovery that had started in 2010 and 2011 will take longer than expected. FDI flows could rise moderately over 2013-2014, although significant risks to this scenario persist.

• The strong decline of FDI flows presents a stark contrast to other macroeconomic variables, including GDP, trade and employment growth which remain in positive territory

• In developed countries FDI flows fell drastically to values last seen almost ten years ago. The majority of EU countries saw significant drops in FDI flows with the total fall amounting to some US$150 billion. Unites States FDI flows also fell by US$80 billion. FDI flows to developing economies, for the first time ever, exceeded those to developed countries, by some US$130 billion.

• FDI flows to developing economies remained resilient, declining only 3%. Flows to developing Asia lost some momentum, although they remained at historically high levels. Latin America and Africa saw a small increase.

• Cross-border merger and acquisitions (M&As) data shows that developed country investors are divesting massively while investors from developing countries are bucking the trend. Their share in cross-border M&A purchases rose to a record 37%.

Govt to hike rent in industrial zones

government has resumed the process of increasing rent of land and building inside all 11 Industrial Estates (IEs). The government´s attempt to jack up rent had failed a few weeks ago following strong protest from industrialists.
The government has given a nod to the Industrial Estate Management Limited (IEML)--that oversees the management of industries inside the IEs--to constitute a committee, incorporating industrialists, to build a consensus on rent hike.
“Our ministry has asked the IEML to initiate talks with industrialists to get their support in this regard,” Krishna Gayawali, secretary at the Ministry of Industry (MoI), told Republica on Saturday.
Earlier, the IEML had unilaterally decided to raise rent in IEs--that house around 6,000 firms on 5,128 ropanies of land--in the range of 400 to 850 percent.
Following this, the Federation of Industries in Nepal Industrial Estates (FINIE), an umbrella body of industries operating in industrial estates across the country, led a protest.
At the same time, the industrialists also labeled the government decision a breach of the agreement between the government and industrialists reached some 15 years ago that emphasized on "bilateral understanding" prior to taking any decision on rent hikes.
As pressure intensified, the ministry directed the IEML not to enforce the decision on rent hike.
Now, the government has once again said “it has no option but to raise rent”. “That´s why we are holding consultations with industrialists,” Gayawali said.
The government, meanwhile, is also mulling over reforming the management of industrial estates to address host of complains from industrialist.
The FINIE had earlier asked the government to handover the property of all 11 industrial estates to the private sector to ensure proper management and optimal utilization of resources.
Around Rs 13 billion has so far been invested in the IEs, where more than 11,000 people are employed.

Govt to appoint directors at Birgunj Sugar

The government has decided to formally appoint board members at Birgunj Sugar Factory to resume operation of state-owned enterprise that has remained closed for the last one decade.
“The Council of Ministers has given a nod in this regard and has forwarded the proposal to its financial committee,” Yam Kumari Khatiwada, joint secretary at the Ministry of Industry (MoI), told Republica on Friday.
The MoI, which acted on recommendation laid by the factory´s ad-hoc board of directors led by Dhurba Lal Rajbansi, director general of the Department of Industry (DoI), had submitted a proposal on appointment of board members at the sugar mill to the cabinet more than a week ago.
“The new board directors will be responsible for carrying out the task of identifying the most effective way to resume operation of the sugar factory,” Khatiwada said.
According to an MoI official, the new board of directors will comprise 7 members, of which four will come from government agencies and three from the private sector.
The MoI took the step after the Public Enterprises (PE) Board gave its nod to resume operation of the factory by roping in the private sector.
“We suggested that the government resume operation of the factory but on condition of handing it over to the private sector since the government has time and again failed to run the factory smoothly,” Bimal Wagle, chairman of the PE Board, said.
The factory that was closed nine years ago still has to deal with 193 former workers who denied the government´s golden handshake offer.
“The new board of directors will also be responsible in settling this issue,” Khatiwada added.
The factory was almost liquidated by the government some nine years ago after it started incurring losses due to problems such as over-staffing and continuous shortage of raw materials, especially sugarcane.
Earlier, in 2009, the then finance minister Babu Ram Bhattarai, who is now the prime minister, declared that he wanted to see the factory running.

NEA staff to agitate against Trishuli III 'A' upgrade

Following the government´s move to upgrade the capacity of Trishuli III ´A´ from 60 to 90 megawatts, employees of Nepal Electricity Authority (NEA) have announced a month-long protest against the decision.
“We are against the government´s decision to upgrade the capacity of Trishuli III ´A´ since this will just create loss for the country and NEA will be in greater trouble,” Janardan Bhattarai, president of NEA Employees´ Association, said at a press meet organized in capital on Thursday.
All five employees´ organizations at NEA, such as NEA Employees´ Union and NEA Employees´ Association, have joined hands to protest the government´s decision.
The month-long protest program that begins Friday will comprise different types of symbolic activities in the initial days. “We will be compelled to increase the intensity of the protests if the government doesn´t roll back its decision,” Bhattarai said.
The government last week decided to increase the capacity of Trishuli III ´A´ through a meeting of the councils of ministers. The decision drew huge criticism from the oppositional parties and from experts.
The run-of-the-river project, which is being developed by Chinese contractor China Gezhouba Group Co. with a US$ 89 million soft loan from the Exim Bank of China, will not help address the power shortage in the dry season, experts claim.
“The government´s decision will just inflict additional losses on the NEA,” Bhattarai said. “This decision cannot be acceptable to us.”
According to NEA officials, the decision has only delayed completion of project.
“The government had awarded the project to China Gezhouba under the Engineering, Procurement and Construction (EPC) model,” Bhattarai said. “It was supposed to be completed by the next 15 months and people would have gotten some relief from the ongoing heafty power shortages.”
He further added that the government´s decision has delayed the project for another three years. Under the EPC model, the contractor designs the installation, procures necessary materials and builds the project.
Earlier, a writ petition was filed at the Supreme Court against the government´s decision. The SC has issued a show cause notice against Prime Minister Dr Babu Ram Bhattarai, the Prime Minister´s Office, the Ministry of Energy, NEA and China Gezhouba, among others.

2.4 MW hydro project in Mustang

Tachhar Hydro Company is developing a 2.4-MW hydropower project in Mustang with an investment of Rs 357 million.
"We are planning to develop the project with the support of locals," said Krishna Kumar Sherchan, promoter of the company, at a public hearing here on Friday. "Around 30 percent of the company´s shares will be issued to the public."
The project, estimated to be completed by 2015, will be a stepping stone for the development of different sectors, including health and education, in the northwestern district of Nepal. "So the project will contribute to overall development of the district," Sherchan said.
Locals, too, are optimistic as the project will create jobs for them.
"Locals should be getting job opportunities during the project development phase and even after its completion," Ananda Lal Sherchan, a former chairman of district development committee, said.

Japan hands over solar power plant to KUKL

Japan International Cooperation Agency (JICA) on Friday handed over 680 KW-capacity solar power plant to Kathmandu Uaptyaka Khanepani Ltd (KUKL).
The energy assistance has come at a time when the water utility company was facing difficulty in operating its deep tube well due to load-shedding. KUKL intends to sell surplus energy to Nepal Electricity Authority (NEA) by supplying it to the national grid.
“Almost one-third of power generated by the plant will be used by KUKL. Remaining will be sold to NEA,” Hari Prasad Dhakal, executive director of the Kathmandu Valley Water Supply Management Board (KVWSMB), said.
According to Dhakal, KUKL will generate revenue of Rs 3.1 million per year by selling surplus power to the NEA.
“It´s a big respite for valley denizens. Now, they would get water supplied by KUKL even during load-shedding,” Kunio Takahashi, Japanese envoy to Nepal, said in the handover ceremony organized at Dhobighat, Lalitpur.
Workers busy in fixing block at the construction site of the project of the Clean Energy by Solar Electricity Generation System on the Aid of Japan Grant in cooperation with Government of Nepal. (Photo: Bikash Karki)
Takahashi handed over the key of solar plant to Kishore Thapa, secretary at the Ministry of Urban Development (MoUD).
This is the first time solar energy has been added to national power grid.
“We are very excited about the project. It´s a good model to replicate in other parts of the country,” Rameshwor Yadav, managing director of the NEA, said.
The plant was installed at an investment of Rs 538 million.
“This is an important project from every perspective. I hope KUKL will make optimum utilization of the project,” said Takahashi.
Inaugurating the plant, Secretary Thapa, said: “The solar plant, even in the small scale, can be useful in addressing the country´s power crisis.” He also requested the private sector to replicate the model in different parts of the country.

BPC shuts Jhimruk Hydropower plant

Butwal Power Company (BPC) has decided to shut its 12 MW-capacity Jhimruk Hydropower in Pyuthan district, after locals attacked the plant inflicting loss of around Rs 60 million on the company.
The company has said it would resume power generation only after the government ensures security at the plant.
The decision means Nepal Electricity Authority (NEA) will lose 216,000 units of power a day at a time when the country is facing daily power cuts of 12-14 hours.
"Jhimruk Hydropower will remain shut until the government makes necessary security arrangement at the power plant,” Pratik M S Pradhan, vice president of BPC, said in a press meet in the capital on Wednesday. "Workers and technicians at the plant are scared; they are not in a position to resume works.”
The locals had attacked the plant after BPC decided to enforce load-shedding in the district following the direction of NEA. “We had imposed six-hour power cut in the district after NEA directed us to do so,” said Pradhan.
BPC, which is generating 21 MW of hydropower from its three plants -- Aandhikhola (9 MW), Khudi (4 MW) and Jhimruk, has also demanded strong action against the people involved in the attack. It has also sought compensation for the loss it incurred.
“The attack has deeply disturbed us,” Ranjan Lohar, CEO of BPC, said in the press meet. He further said the attack had unleashed a situation of panic among hydropower developers. "How can the government expect fresh investment in the hydropower sector when power plants are in constant fear of attacks?”
Meanwhile, Independent Power Producers´ Association Nepal (IPPAN) has condemned the attack on the power plant. "The attack on Jhimruk Hydropower is an attack against the country and its priority," IPPAN said in a statement. “It is unfortunate that the plant was attacked just because it followed the instructions of NEA.”
The association has strongly urged the government to take action against those involved in the attack and provide compensation to the company.
Additionally, IPPAN has requested the government to form a committee to look into the incident.

'Monopoly may rule roost in absence of effective monitoring'

Experts and officials have cautioned that monopoly may prevail in the market if agencies responsible for its monitoring do not carry out their jobs efficiently.
"Government agencies should be effective in insulating consumers from negative impacts of inflated prices of goods and services that mainly result from monopoly," said Dr Posh Raj Pandey, chairman of the South Asia Watch on Trade, Economics and Environment (SAWTEE), during the inaugural session of a four-day workshop on competition, promotion and market protection that kicked off in the capital on Tuesday.
"The government shouldn´t intervene in market operations, but there must be efficient mechanism and institutions to monitor the market effectively," Pandey told the workshop.
The workshop, attended by consumers, officials from monitoring institutions such as the Department of Commerce and Supplies Management, and experts, has raised issues related to weak market monitoring and its impact on people´s lives.
Commerce Secretary Lal Mani Joshi said people were being forced to pay unreasonable prices for goods and services, as the government agencies have failed to monitor the market properly.
It was an irony that the commerce secretary made such a statement as the Ministry of Commerce and Supplies (MoCS) itself is entrusted with the task of carrying out market monitoring activities through its line agencies.
The workshop, organized by SAWTEE in collaboration with the United States Agency for International Development (USAID), was organized to strengthen capacity of officials working in agencies that conduct market inspections.

Policy stability is a key to hydropower development: WB

The World Bank has said policy stability is more important than political stability for hydropower development.
"From a development perspective, political stability would of course be the ideal position. However, the critical electricity needs of the economy can not wait," reads the Hydropower Development Strategy prepared by WB.
The strategy paper that was developed by the World Bank in the request of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) clearly outlines that the challenge for development of hydropower is lack of policy consistency within the political framework.
The strategy paper comes at a time when most of the major power developers have been urging the government to ensure policy consistency before signing project development agreement (PDA).
The paper also dwells on issues related implementation of hydropower projects in the country. "Political parties, donors and private sector should take their respective responsibilities to address implementation issues," the strategy paper obtained by Republica states.
The World Bank has also pinpointed the weaknesses of Nepal Electricity Authority (NEA) - the state-owned regulator of hydropower in the country. "NEA has a conflict of interest,” the paper states, adding, “NEA is both a generator in the market, a developer and the manager of the market.”
The strategy paper implicitly suggests the government to break this situation by establishing separate agencies for generation, transmission and distribution of hydropower in the country.
The government´s plan of establishing a separate transmission company has not been materialized due to unresponsive bureaucracy and hurdles created by the NEA officials.
Additionally, the strategy paper has suggested restructuring the process of doing power purchase agreements (PPAs) with developers. "Medium sized projects are dealt with on a first come first served basis and this can substantially delay the review of more attractive projects," states the strategy paper.
The strategy paper has also recommended reviewing NEA´s generation operations to assess opportunities for improvement in performance. The document, which also has outlined steps to take for short term power crisis management, argues that the government´s plan to develop thermal plants should not be given to NEA.
"The emergency thermal support should be provided through the private sector on a competitive sourcing basis rather than letting NEA to acquire its own plant," the paper highlights.

Extortion creates terror in business sector

Increasing cases of extortions, in the pretext of donations to different political parties, have created terror among the business community, which is facing tough time amid slowing economic activities in the country.
"Extortion targeted at businesspeople have gone up significantly, resembling the situation during Maoist insurgency. It is the result of gross failure of the government to maintian law and order situation," said Suraj Vaidya, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), while interacting with business journalists on Tuesday.
Although Vaidya did not level charges on any particular political party, he made the statement at a time when the CPN-Maoist has ramped up donation drive ahead of its 7th convention scheduled to begin on Wednesday.
"We are receiving threats from political groups at a time when we are talking about creating business favorable environment to lure investment," said Vaidya. "Ultimately, entrepreneurs are forced to give donations to different groups affiliated to political parties."
He also complained of lackadaisical attitude of the government in ending the extortion drive despite attention drawn by businesspeople on different occasions. "The government has become so weak it has failed to control the high-handedness of political parties," he added.
Pashupati Murarka, vice president of the FNCCI, also said extortion has emerged as a major obstacle to doing business in the country.
"We have lost hopes as we did during the Maoist conflict when we were haplessly falling victims to extortion," said Murarka.
Business leaders also questioned the significance of the Nepal Investment Year 2012/13 announced by the government given the worsening business climate.
"Investment environment in the country has worsened despite government´s announcement to lure both domestic and foreign investment to mark the Investment Year 2012/13," said Vaidya.
Vaidya also made it clear that the Nepali business community was keen on increasing investment in the country provided that the government created favorable environment for investment.
"We want to invest. That´s why we have long been asking the government to create a favorable environment by maintaining law and order situation," Vaidya said.
Business leaders speaking on the occasion also blamed acute power shortage, lack of government´s long-term strategy on economic issues and labor unrest for deepening problems. They also said political parties were not serious about the minimum economic agenda proposed by the private sector which was expected to pace up economic activities even during political instability.
BOX
Renewal of transit treaty criticized
The private sector has condemned the government for renewing the Nepal-India Transit Treaty without incorporating new provisions that would have facilitated Nepal´s international trade.
The Ministry of Commerce and Supplies (MoCS) recently renewed the treaty in its existing form as the Ministry of Foreign Affairs (MoFA) disagreed incorporation of new provisions, including introduction of additional lock system for Nepal-bound containers carrying third-country imports.
"We are saddened that the government renewed bilateral transit treaty without making any change to existing provisions," Suraj Vaidya, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said.
He informed that the private sector had anticipated changes to bring into operation Vishakhapatnam port and additional transit routes for overseas trade.
The Nepal-India Transit Treaty is renewed automatically if existing provisions are not amended.

Private sector condemns attack on NBA president

Private sector umbrella organizations have condemned the attack on Rajan Singh Bhandari, president of Nepal Bankers´ Association (NBA) and CEO of Citizens Bank International, by an unidentified group.
Bhandari was attacked on Monday evening while returning home from office.
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the apex body of the private sector, the Confederation of Nepalese Industries, an umbrella organization of domestic industries, and Citizens Bank have all criticized the attack.
"The attack on Bhandari is a ploy against the private sector and professionals. This has created fear in the society," Suraj Vaidya, president of the FNCCI, said, interacting with business journalists on Tuesday. "We are deeply moved by the government´s inefficiency in maintaining law and order situation, and activities of political parties have disappointed us.”
The CNI, issuing a press release, said that the attack on Bhandari was a planned act. "This attack was aimed at destabilizing the banking sector of the country, which is in a better shape than other industries," read the statement.

• Unidentified gang attacks NBA president

CNI has also appealed to the government to identify people involved in the attack as soon as possible and take action against them.
"These types of violent activities set a bad precedent and pollutes work environment," said the statement.
Citizens Bank, in which Bhandari is serving as the CEO, said the attack on a professional banker has created fear in the banking sector.
"We request the government to punish the guilty as soon as possible," said the release that was issued following a meeting of the bank´s board of directors.

CPN-Maoist affiliated workers vandalize Labor Office

Employees affiliated to the CPN-Maoist working at Agriculture Development Bank Limited (ADBL) ransacked the Labor Office of Bagmati Zone and manhandled officials, who denied registering a trade union on Tuesday.
"Around Rs 1.5 million worth of property was damaged in the attack," said Mani Nath Gop, chief of the Labor Office located in Teku, Kathmandu. More than 200 workers were involved in the vandalism.
“They ransacked our office and manhandled us after we requested them to follow due process to get their trade union registered,” said Gop.
According to him, office computers, printers, furniture and other properties were damaged in the attack.
The Kathmandu Metropolitan Police Range Office (KMPRO) has arrested seven people allegedly involved in the attack.
A press statement issued by the KMPRO states Min Bahadur Pandit, Nanda Budha, and Sudin Khanal as those rounded up.
Workers claimed the incident took place after police intervened in negotiations between officials and those who came to register the trade union.
"The official line of our party is not to attack office and people. But the government created the situation for this to happen," Ram Dip Acharya, chairman of the Nepal Trade Union Federation (Revolutionary) affiliated to CPN-Maoist told Republica over phone.

Terms and conditions of Tanahun Hydro to be finalized this month

The government is finalizing terms and conditions with Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) for the development of Tanahun Hydro (140 MW) - the second largest storage-type hydropower project in the country -- in the third week of January.
According to a highly place government official, officials of Ministry of Finance (MoF), ADB and JICA are holding a meeting on January 24 to finalize terms and condition for the development of the national pride project.
Confirming the development, Madhu Kumar Marasini, joint secretary and chief of Foreign Aid Coordination Division under the MoF, said the meeting would be crucial in sealing the deal between the government and development partners for taking the project forward.
“The meeting will finalize most of the terms and conditions associated with the project,” said Marasini.
ADB, JICA and European Investment Bank (EIB) have pledged soft loan to finance the project which was previously known as Upper Seti Hydropower Project.
According to the information posted on the websites of these three donors, JICA, ADB and EIB have pledged US$ 180 million, $150 million and $63 million, respectively, to develop the project.
As per the revised calculation, the project is estimated to cost $450 million.
If the construction of the project begins as planned in 2014, the project, which is based in Byas Municipality, will begin power generation by 2020.
Nepal Electricity Authority (NEA) will implement the project with the soft loans of three development partners. According to the project document, NEA will be the majority shareholder in the company -- Tanahun Hydropower Company Ltd - that has been formed to implement the project.
“It is still uncertain how much stake will NEA hold in the project,” Sher Singh Bhat, spokesperson for NEA, told Republica. “The details of shareholding will be finalized once the government signs the deal with the development partners.”
Separate teams from ADB and JICA had visited Nepal couple of months ago to study the project. Members of the teams also held preliminary discussions with the concerned officials.
Thierry de Longuemar, vice president for finance and administrator of ADB, during his visit to Nepal in November 2012, had stressed the need to develop more hydropower projects in Nepal.

Govt to prepare database of women entrepreneurs

When the government announced a slew of packages for women entrepreneurs in 2010, it received accolades from the business community. Buoyed by the response, the government even went on to announce that it would be more gender-sensitive while promoting the private sector.
Consequently, Industrial Policy-2010 laid down a special provision that promised establishment of a separate cell to facilitate women entrepreneurs and industrialists. It also expressed commitment to promote them through wide range of special programs and packages.
The Ministry of Industry (MoI) then went a step further and announced that it would annually felicitate a woman entrepreneur for outstanding performance.
Two years down the line, it has become apparent that these programs were announced without due exercise. So much so, it has also become clear the government does not even have a simple record of active women entrepreneurs in the country.
“No wonder, all these promises and commitment to recognize women entrepreneurs remained unimplemented,” an MoI official said acknowledging the realty.
But the good news is that the government has finally realized its weakness and has taken a step forward to develop a ground to implement the said programs.
"The ministry is now developing a database of the country´s women entrepreneurs," Bishnu Dhakal, under secretary at the ministry, told Republica. "The programs and plans that focus on women entrepreneurs will be effectively implemented once we know their actual status."
According to Dhakal, the ministry has formed a task force at the Industrial Promotion Division. "The task force is collecting data from all 75 districts in the country," Dhakal said. The task force is directly communicating with district level offices of the Department of Cottage and Small Industries in all districts to compile information on the country´s women entrepreneurs.
Additionally, the ministry has decided to use that database to provide special facilities to women entrepreneurs. "We will be able to identify the outstanding women entrepreneurs in the country through that database," Dhakal said.
Meanwhile, the ministry is also developing a database to figure out the total capital investment made by women in the industrial sector and number of jobs they have generated.

Govt speeds up process of reviving sick industries

Industrialists worried by worsening health condition of their firms can now take a sigh of relief as the government has granted authority to a technical committee to take decisions on providing support to sick industries - a measure aimed at speeding up the process of reviving the country´s moribund industrial sector.
The Council of Ministers this week approved terms of reference (ToR) prepared by a technical committee at the Ministry of Industry (MoI). This decision paves way for the technical committee to directly ask other concerned agencies to provide necessary support to industries identified as ´sick´.
"Finally, we have been authorized to make recommendations for revival of sick industries," Surya Kant Jha, under secretary at the ministry, told Republica.
The technical committee coordinated by Jha was formed a couple of months ago after the ministry was asked to carry out the task of studying actual situation of the industries, identify their problems and make recommendations on support they need.
"Earlier, we were in confusion about jurisdiction of our area of work," Jha said. To quell the confusion, the ministry then prepared a ToR and submitted it to the cabinet.
"As the ToR was approved, the committee is now able to directly ask other concerned agencies such as Nepal Rastra Bank, commercial banks and other government offices to make necessary arrangements to support the firms that need help," Jha explained.
As of now, the committee has recommended that three firms, namely, Shree Nepal Boarders, Birat Leather and Birat Shoes Ltd be declared as sick industries.
"After the government declares them as ´sick industries´ and publishes their names in a gazette, we can ask related bodies to restructure their bank loans, waive off interest or open exit door for them, among others," Jha said.
The government, last year, through immediate action plan-2011, had formed a high level task force under the leadership of Dipendra Bahadur Kshetry, vice chairperson of the National Planning Commission, to prepare a report on measures that need to be taken to revive and rehabilitate the country´s industrial sector. The report has proposed a slew of facilities to the sick industries.
However, all the recommendations made by the report may not be implemented as some of them are not in line with the existing Industrial Enterprises Act 1992.

Govt likely to scrap agreement with Benchmark Ltd

The Benchmark Company Limited (BCL) is likely to lose the contract for developing the proposed 170km Kathmandu-Birgunj Electric Railway as it has failed to complete feasibility study and environmental impact assessment (EIA) on time.
The government had awarded the project to BCL in 2006 under the build-own-operate-transfer (BOOT) model.
"We might scrap the agreement with BCL as failed to complete feasibility study and EIA on time," said Dipendra Bahadur Kshetry, vice chairperson of the National Planning Commission (NPC). "But we will also consider the progress it has made on the project so far before scrapping the agreement.”
According to a highly placed official at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM), the agreement between the government and BCL is expiring on Wednesday. "The company has not even estimated the cost of the project," Tulsi Prasad Sitaula, secretary at the ministry told Republica.
The company submitted its preliminary report on Tuesday to the ministry. "We have asked the company to estimate cost and benefits of the project," Sitaula said. "The government would move ahead only after the contractor company estimates the cost and benefit of the project."
However, the ministry is not authorized to scrap the agreement with the company. "The BOOT committee led by NPC Vice Chairperson Kshetry would take a decision in this regard," said Sitaula.
The government had awarded the project to the company under the BOOT model. “But this project is supposed to be developed under the public-private partnership (PPP) model," Sitaula said. "The project is an important one but the government is not clear whether or not to renew the agreement with the contractor company."
According to Sitaula, the company has tentatively estimated the cost of the project to be Rs 38 billion. "But this is not a well calculated figure," he said. "We have asked them to come up an exact estimate."
Earlier, the government had extended the deadline for the company to submit feasibility study and EIA report by four months. "I don´t see any point in further extending the deadline," the official said.

Enactment of IEA, SEZ law not possible: Minister Jha

The government on Thursday made clear that the enactment of new laws related with the private sector such as Industrial Enterprises Act (IEA) and Special Economic Zone (SEZ) Act was not possible anytime soon, as its priority for now was to put in place laws that would enable it to hold elections and end the long-running political deadlock.
"In the absence of parliament, we can enact laws only through ordinance. And the government´s priority at this juncture is definitely not the bills related to the private sector," said Industry Minister Anil Kumar Jha.
To a delegation of Confederation of Nepalese Industries (CNI) that met with him and requested for the enactment of long-pending bills related with the industrial sector, Jha said enactment of laws such as IEA and SEZ Act was not feasible at this juncture.
Newly elected CNI President Narendra Kumar Basnyat and his team members had reached Ministry of Industry (MoI) on the day to pay a courtesy call to Minister Jha, and in the course, urged the government to endorse at least laws such as IEA and SEZ to boost investment confidence and improve industrial environment.
"The industrial sector is reeling under problems such as acute power shortage and labor disputes," Basnyat said. "Additionally, we also don´t have policies that guard our investment and get some relief package from the government," he stated while requesting the Minister to take some initiatives to normalize the situation.
The CNI delegation had also expressed its disappointment with the minister over the government´s apathy to industries´ concerns such as poor industrial climate, rigid labor law and power crisis.
"We know that lack of parliament and the long-running political deadlock are major concerns, but we still request the government to put in place basic requisites for economic development," said Hari Bhakta Sharma, vice president of CNI.
Addressing the delegation, Minister Jha said that the government was seriously working to provide necessary support to the industrial sector. "Your demands such as subsidy on diesel consumed by industries and enactment of new acts are genuine. But the truth is we are not in a position to fulfill them," Jha said.
During the meeting, businessmen also asked for a separate power grid for the industrial clusters. "We also need subsidy on diesel so that we could optimally utilize our capacity and improve productions."
Businessmen, expressing their worries over labor problems, also asked Minister Jha to take some measures to control unethical behavior of the trade unionists in the manufacturing sector. "We are being intimidated by unreasonable activities of the trade unions affiliated to different political parties, including Madhesi parties," Basnyat said. "The entire production system has been disturbed due to labor unrest."
However, Minister Jha remained mum on the issue.