Sutlej, GMR, SN Power oppose new PDA template

GMR, Sutlej Jal Vidyut Nigam Ltd (SJVN) and SN Power, three international power producers which are working on three hydropower projects with collective generation capacity of 2400 MW, have opposed the government´s new Project Development Agreement (PDA) template, saying that it does not guarantee policy consistency.
They have also raised concerns over the force majeure clause, arguing that it should be applicable not just in case of natural calamities, as provisioned in the template, but also in case of political instability and bureaucratic hassles.
The Investment Board (IB) had unveiled the template of the PDA in June as its basis for negotiations with international power developers.
However, the three developers said they have strong ´reservations´ about the PDA template. "Its provisions are weak and unacceptable," an informed source quoted the senior officials of the three firms as saying during their meetings with IB officials.
During the meetings, they even asked the IB not to apply the template during their PDA negotiations. "Their argument is: their engagement in the country had begun long before the template was developed, and hence, the template´s provisions should not be imposed on them," stated the source.
Radhesh Pant, IB CEO confirmed the dissatisfaction of GMR, Sutlej and SN Power. "Yes, they have expressed concerns over the PDA template. But we have asked them to submit their concerns in detail and in writing so that we could discuss them officially," Pant told Republica.
However, he denied divulging any further details.
The source, however, said the developers have asked IB to categorically cite a provision warranting consistency of policies.
"The PDA template must assure that income tax and bonus provisions, among other things, would remain the same for us throughout the project period. It must guarantee that in case of any change in the rules, it would not apply to us," the source quoted developers´ representatives as saying during the meeting.
The developers have even asked IB to extend the concession period, which is their span of ownership of the projects to be developed under build-own-operate-and transfer (BOOT), to 35 years from 30 years.
"Thirty years would be inadequate to recover the project cost," the developers have told the IB, according to the source.
So much so, SN Power has even warned that it could withdraw from Nepal if IB did not agree to its ´request´. Sandeep Shah, country director of SN Power, could not be contacted for comments.
SN Power, Norwegian power producer that developed Khimti I (60 MW), is working on the project concept of Tamakoshi III (estimated 600 MW) in cooperation with Indian developer TATA Power.
Sutlej, India´s state-owned power producer, which has got approval from the government to invest Rs 82.5 billion for the development of Arun III (900 MW), too has said that it wouldn´t be able to work under the provisions of the PDA template.
"We have already invested so much in the project. The government can´t impose new provisions on us now," the source quoted Sutlej officials as saying.
GMR, another Indian power developer, is working to develop Upper Karnali (900 MW).
IB entrusted to implement hydropower projects of 500 MW and above, had even invited a three-member team of Herbert Smith, British consultant that drafted the PDA template, to Nepal from London last week to convince the developers that the template is in line with the country´s law and international practices, and hence, is ´bankable´.
However, the source said IB´s effort did not pay off. Officials from GMR and Sutlej could not be reached for comment.

Gloomy outlook for nat'l pride projects

Officials have expected gloomy report regarding the progress in implementation of national pride projects during the first quarter of current fiscal year in absence of full-fledged budget unlike last year when the government posted satisfactory implementation report.
“We are likely to get a disappointing report regarding the progress in execution of national pride projects in the first quarter of this fiscal year due to lack of full-fledged budget to speed up works,” Tulasi Prsad Sitaula, secretary at the Ministry of Physical Planning and Works (MoPPW) told Republica.
The government has designated eleven projects as national pride projects to ensure smooth implementation through sufficient budget and other priorities.
Kathmandu-Tarai Fast Track, Mid-hill Highway, East-West Railway, Postal Roads and North-South Highway are among the national pride projects being implemented by the MoPPW.
Similarly, Budhigandaki Hydropower Project, Sikta Irrigation Project, Ranijamara Irrigation Project, Babai Irrigation Project, Tamakoshi Hydropower Project, Melamchi Drinking Water Project, Regional airport in Pokhara and Bhairawa and West Seti Hydropower Project, second international airport in Nijgadh are also among the other national pride projects.
“The progress of these projects last year was satisfactory even though they were not moving as per the schedule. But the implementation of the projects failed to take any momentum during the last three months,” Sitaula said.
However, National Planning Commission (NPC) -- the apex policy making body of the government, which conducted an annual review of all the national pride projects this week, has also said that the progress on all the projects was satisfactory.
Progress reports of all the projects have not been submitted to the ministry as of yet.
“But as per our regular correspondence with the responsible persons from the field, the progress is not exciting,” Sitaula added.
The government has called for expression of interest (EoI) for the Kathmandu-Tarai Fast Track, a 76km express-way that connects Kathmandu with Nijghad. According to NPC, 42 km track has already been completed for construction of the expressway.
NPC report also states that 190km track has been opened for teh construction of Mid-hill Highway.
The Indian government which has agreed to provide assistance for the construction of around 1600 km postal road has said that it would speed up implementation of the projects to accomplish the target of road construction in the Tarai region.
According to Hariom Srivastav, joint secretary at the MoPPW, the Indian government has already awarded the contracts to the developers.

Nepal drops a notch in Doing Business Index

Nepal fell a notch to 108th position this year compared to last year in term of business friendly environment, according to Doing Business Index (DBI)-2013 released last week by the World Bank.
According to the report, Nepal has been ranked 108th among the total 185 economies surveyed.
Nepal ranked 107th in the DBI report of 2012. The report that was published by International Finance Corportation (IFC) evaluated the business friendly situation in different economies across the world on the basis government policies and domestic laws governing the private sector.
The DBI is a key instrument used by international investors to gauge the business environment in a particular country before making investment decisions.The report also found that investors have to spend at least 29 days to complete seven procedures before starting business.
Likewise, registration cost in Nepal stands at around 33 percent of per capita income.
Similarly, the country´s situation in terms of starting business has also worsened over the year. The report shows that DBI has ranked Nepal 105th in terms of starting a new business whereas it was in 100th rank in the DBI report of 2012.

Japan, WB to support hydropower development: FM Pun

The Japanese government, World Bank and International Finance Corporation (IFC) have committed to support Nepal on the development of hydropower sector.
“The government of Japan has said it would soon provide US$ 150 million for developing Tanahu Hydropower development project,” said Finance Miniter Barsha Man Pun.
Pun, who returned from the 67th annual meeting of the International Monetary Fund (IMF) and World Bank group in Tokyo, on Wednesday said that the World Bank and IFC too have shown keen interest to invest in development of transmission lines in Nepal-India border area. He further added that the World Bank was ready to speed up the work of Kabeli Hydroelectric project.
Interacting with the press at the Tribhuvan Internationa Airport, Finance Minister Pun said the government would soon endorse a ´common economic agenda (CEA), bringing all opposition parties on board, for announcing the full-fledged budget for the fiscal year 2012/13.
“We will not bring a full-fledged budget without a political consensus. Rather the government is working on CEA with the help of senior economists,” Pun said.
Pun also said the government was acting cautiously to avoid the confrontation with other political parties so that it could come up with much-needed fiscal policies at the earliest.
The government has formed a team of economists affiliated with all major political parties and also independent experts to develop the CEA. “Our belief is; the CEA developed by the team of economists will be agreeable for all the political parties,” Pun said. “As a finance minister, I also request the top leaders of all the political parties to forge a consensus on full-fledged budget and CEA.”
Former FMs lambaste govt´s new programs
Former Finance Ministers have lambasted the government´s 201-point new immediate programs, citing it as an outcome of intellectual bankruptcy and attempt to mislead public expenditure.
“The economic situation of the country is worsening badly each day. Most of the macro economic indicators are not well performing and investment climate is deteriorating,” a press release issued jointly by a group of former finance ministers including, Dr Ram Sharan Mahat, Dr Praksah Chandra Lohani, Surendra Pandey and Bharat Mohan Adhikari, said.
“The country is in a dire need of a full-fledged budget and that can be brought only through the broader political consensus,” states the statement. “It´s immoral and irresponsible for an acting government to introduce new program that have a long term effect and increase the economic burden to the country.”
Similarly, the group of former FMs has charged the government of distributing cash to its party cadres. “The government is distributing money to the cadres of the parties in the government in name of victims of conflict and marginalized people,” reads the release.
Protesting the government´s move to bring new programs and projects, the group of former finance ministers has warned that no governments in the future would continue those programs.

Development of Kathmandu Metro to cost Rs 330b

The construction of Kathmandu Metro Railway (KMR) would cost Rs 330 billion (around US$ 3.88 billion) and the project can be developed in 10 years, a preliminary finding of feasibility study report of the KMR said.
A consortium of five Korean and two local companies that carried out the feasibility has tagged government´s involvement in the KMR as mandatory if it seriously wishes to successfully develop and operate the KMR.
"The study team has proposed numerous modality of its development. But no matter which modality the government adopted, the team helds the view that government´s subsidy would be crucial to successfully implement the project," Rajeshwore Man Singh, superintendent engineer at the Department of Railway (DoI) told Republica
The feasibility team that shared the preliminary findings of the study with the senior government officials on Monday has further outlined that it would cost Rs 20 to Rs 30 per commuter to travel in the Metro. It did not shed light on recovery of investment though.
"The complete feasibility report is yet to come. but the government has targeted to develop the KMR in ten years period after analyzing the feasibility report,” said Singh.
The government some 10 months ago had appointed Korea Transport Institute, Chungsuk Engineering Company, Kunwa Consulting and Engineering Company, Korea Rail Network Authority and two local companies - BDA Nepal Private Limited and EMRC Private Ltd - to conduct the feasibility study of the KMR. It paid Rs 60.5 million to those firms for completing the task.
The feasibility study report has, furthermore, indicated that total length of the KMR would be around 77 kms, which is some 11 kms longer than what the preliminary inception report reckoned. There would be a total of five railway lines of which one will encircle the existing ringroad, while others will traverse through the Kathmandu city in four directions.
The study has suggested the government to develop two railway lines underground and remaining three lines in ´elevated´ form, that is above the ground. "Elevated lines have been suggested mainly considering two factors: unsupportive underground soil features and heavy cost emanating from necessary land acquisitions," said Singh.
The 27.35 km long Ring Road line, which connects different locations between kalanki, Satdobato, Chabhil and back to Kalanki, will be elevated as per the feasibility report study. Similarly, the lines that connect Maharajgunj and Satdobato and Kalanki to Koteshwore and Gongbu to Kalanki will be elevated.
“Rest of the other lines will be underground,” Singh said.
The preliminary inception report that was approved by the government in March, 2012 too had outlined five major lines to connect the entire Kathmandu through a mass rapid transport system, Metro Railway.
According to the inception report, Line 1 follows the Ring Road, Line 2 goes from Kalanki to Sinamangal, Line 3 connects Koteshwore and Gongabu, Line 4 stretches from Satdobato to Maharajgunj and Line 5 links Balkhu and Chabhil.
The government has planned to develop KMR under build-own-operate- and transfer model, inviting foreign investment. The project has been handed over to the Investment Board of Nepal for speedy development.

Empowering Nepal seminar in Seoul to lure Korean investors

Nepali Embassy in Seoul, Non-Resident Nepalis (NRNs) and Korean Partner House are jointly organizing a three-day international seminar on ´Empowering Nepal - 2012´ in Seoul from Sunday in a bid to lure potential investors from South Korea to put their money in Nepal.
A delegation of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) under the leadership of its President Suraj Vaidya left for Seoul on Friday to take part in the seminar. "The seminar will cover areas such as investment prospects in hydropower and tourism sector in Nepal," FNCCI said issuing a press statement.
The seminar will showcase Nepal as a profitable investment destination to the international investors, shedding light on its laws and regulations. The seminar is scheduled to be addressed by Dipendra Bahadur Kshetry, vice-chairperson of National Planning Commission (NPC), different ministers from the Korean government and private sector leaders.
The seminar would also touch on issues related to the development assistance of South Korean government to Nepal and bilateral trade.
"Officials from FNCCI will hold business-to-business meetings with private sector leaders of South Korea," reads the statement.

Former FMs flay government move for budget san consensus

Former finance ministers have warned the government´s attempt to announce budget for the current fiscal year 2012/13 without a political consensus would invite confrontation in the country.
"Government has no authority to bring the budget unilaterally in the absence of parliament to ensure accountability in budget spending. Prime Minister should shun his personal ´ego´ and let the country move forward through consensus budget,” said former Finance Minister Mahesh Acharya.
Speaking in an interaction in the capital on Sunday, former finance ministers had questioned the government´s intention to bring out budget unilaterally. "Announcing national budget unilaterally shows the government´s intention to ignore the constitution writing process by creating conflict among political forces,” said Acharya, who is also a central working committee member of Nepali Congress.
He stressed on the need to strengthen the politics of consensus at a time when parliament does not exist in the country.
"There is an absence of parliament in the country to make government -- the executive body -- accountable for its activities. But the government is leading the country towards a crisis by moving ahead in an unilateral way and ignoring the other forces," added Acharya.
Similarly, Surendra Pandey, former Finance Minister also echoed similar views.
"We won´t be involved in the process of brining the budget without political consensus. Undermining the significance of political consensus, the UCPN (Maoist) is instead resorting to threaten the president to endorse the budget proposed by the present government unilaterally,” said Pandey, who is also politburo member of the CPN-UML.
The government had brought one-third budget for the current fiscal year through ordinance in July. The caretaker government, which dissolved the Constituent Assembly in last May without drafting a constitution, is constantly pushing to bring the full-fledged budget for the current fiscal year.
Finance Minister Barsha Man Pun had asked all the political parties to send a representative in the budget drafting process as per the instruction of Prime Minister Babu Ram Bhattarai. "There is no emergency to bring the budget now. We still have one month to forge consensus to bring the budget,” Pandey said.
Dr Prakash Chandra Lohani also suggested President Ram Baran yadav not to endorse the budget ordinance. "There is a risk of setting a wrong precedence while endorsing ordinance of budget at this time," Lohani, who is co-chairman of Rastriya Janasakti Party, said.
Finance Minister Pun requests Khanal to lobby for consensus
KATHMANDU (REPUBLICA) - Finance Minister Barsha Man Pun has sought help from Jhala Nath Khanal, chairman of CPN-UML to build an environment for political consensus to bring full-fledged budget for this fiscal year.
According to Pun´s press coordinator Manoj Garti Magar, Pun met Khanal at latter´s residence in Dallu on Sunday evening to request the former Prime Minister to lobby for political consensus for budget.
Khanal assured his cooperation to create an environment for announcing consensus budget. Khanal also suggested Pun to intensify parley with top leaders of other parties to secure support from them for the full-fledged budget.

ADB to focus on infrastructure, hydropower

The Asian Development Bank (ADB) has given indication that it will focus its investment on infrastructure development including hydropower generation in Nepal.
Such indication of shift in ADB´s investment priority came when Thierry de Longuemar, its vice-president for finance and administration, during his five-day visit to Nepal interacted with Finance Minister Barsha Man Pun, top officials of Ministry of Finance and Nepal Rastra Bank, among others.
Longuemar visited ADB-assisted Kali Gandaki ´A´ Hydroelectric project (144 MW) and discussed with officials the areas for prospective investment in transport infrastructure and power generation. Longuemar also discussed how the lack of infrastructure and power have impacted the Nepalese private sector.
"ADB operations in Nepal emphasize the need to urgently address infrastructure deficits, particularly of power, transport, and water," said ADB, issuing a press release on Saturday when Longuemar concluded his visit.
"Longuemar stressed on private sector development and attraction of private investment through development of Nepal´s capital and bond markets," the release further states.
During his visit, Longuemar also ventilated ADB´s interest to issue bond in local currency so that fund could be mobilized for lending to the private sector for the development of infrastructure and other priority projects.
"Longuemar, in his meeting with governor Dr Yuba Raj Khatiwada, proposed bond issue in local currency in order to help provide long-term financing for private infrastructure investment," the release says.
Highlighting the need for investment in the infrastructure sector, Longuemar said Nepal had potential to achieve stronger economic growth rate, given its natural resource endowments, human capital and strategic geographic location.
At the end of his visit, Longuemar said growth is a pre-requisite for establishing lasting peace and stability in the country and for that the country would require substantial increase in investments by both the public and private sectors.
The ADB has extended support to Nepal worth Rs US$ 3.59 billion in both loans and grants until September 2012. It is also preparing to invest Rs US$ 150,800 in Tanahun Hydropower Project jointly with Japan International Cooperation Agency (JICA).

PSDP in 9 core sectors to remove dev bottlenecks

The government is soon coming up with a Private Sector Development Policy (PSDP) that aims at intervening nine core areas ranging from labor and credit markets to infrastructure and capacity building so as to remove barriers that are holding back proper development of different markets, eventually leading to their failures.
"Officials from the Confederation of Nepali Industries (CNI) are engaged in formulation of primary draft of the PSDP," a senior official at the Ministry of Industry (MoI) told Republica. "However, the draft will be based on the concept note that the World Bank has developed for us."
The draft of the PSDP that is being developed under the leadership of MoI, with the direct participation of private sector, aims at overhauling the existing factor markets and increasing their efficiency.
A PSDP strategy for Nepal would specifically focus on correcting market failures, reads the concept note that was developed by Gabi Afram and Khaleda Atta of the World Bank.
The policy aims to intervene in nine core areas, namely, labor market, credit market, product market, knowledge market, infrastructure, institutions, capacity building, business regulation and measurement, and incentives and accountability that are considered essential for proper development of different markets that are led by the private sector.
The policy will intervene on labor regulation and especially labor relations in the labor market, reads the concept note, which states private sector accounts for 70 percent of gross domestic product (GDP) of the country. The policy will also look at impediments to the development of credit markets and identify measures that will encourage access to finance.
"The policy will also look at how government can encourage markets, particularly export market. This will cover deregulation, export promotion and establishing export infrastructure," says the concept note made available to Republica.
The note states that weak factor markets including land, labor and capital access as well as poor access to transport, infrastructure services, in particular, are proving to be major constraints for businesses.
“These constraints are leading to economic inefficiency by generating significant transaction costs for firms, hence causing the markets to fail in Nepal," states the note. "The ultimate aim is to correct market failures and ultimately give a boost to the economy and create more jobs."
The policy, among others, will also make attempts to facilitate technology transfer, raise access to land, address problems related to power supply and deal with transport bottlenecks.
"Specific measures to address needs of existing industrial estates will also be identified," reads the concept note.
Additionally, the policy will also intervene in the areas of capacity building through public-private dialogue (PPD), business regulation and accountability in the administration of the country.
The government´s endeavor to formulate a PSDP after more than two decades of adopting open market economy has long-term goals such as jobs creation, increasing disposable income, luring foreign and private investment, maintaining peace and stability, and ensuring sustainable livelihoods.

Govt to ease visa application process for foreign workers

The government is soon simplifying the process of obtaining work permit for foreign workers as complaints over delays in processing of visa applications continue to rise.
If things go according to plan, the new system dubbed ´integrated standard´, will be put into place in a few weeks time.
"Basically, different ministries have to work in coordination for that to happen," Bishnu Dhakal, under secretary at the Ministry of Industry (MoI), said. "The Industrial Promotion Division (IPD) at the ministry is taking the lead in making this happen."
The government´s latest move is expected to assist foreign workers joining Nepal-based multinational and joint venture companies, who are said to be facing problems acquiring work permits due to lack of one-window system.
As of now, the IPD, entrusted with the task of encouraging and facilitating domestic and foreign investors bringing in investment to the country, has started consultations with other concerned ministries in a bid to develop an ´integrated standard´ for visa process. "Once the system is in place foreign workers will be able to obtain and renew visa in short period of time," Dhakal said.
Currently, foreign workers have to get approval from the Labor Department and the Ministry of Home (MoH) to be eligible to work in Nepal. Although the MoI and the Department of Industry (DoI) coordinates with the MoH and the labor department to expedite the application process of workers, these foreigners still have to wait for at least two weeks to get a work permit. In some cases, foreign workers have even waited for months to obtain the permit.
"We are trying to shorten this period so that foreign workers do not have to face hassles while trying to acquire work visa," Dhakal said.
The latest attempt stems from the government´s endeavor to lure foreign direct investment (FDI) by improving all the possible areas. "There are instances when officials doubt the motive of applicants which create delays," Dhakal said. "But the innocents should not be punished for the acts of fruadsters.”
Despite the government´s multiple tasks, the FDI inflow has come down by 30 percent during the fiscal year 2011/12 compared to a year earlier and reached Rs 7.14 billion, as per the statistics compiled at the DoI.

Donors to help enhance pvt sector capacity

Amid slowing industrial activity in the country, donor agencies have expressed readiness to help enhance the capacity of Nepali private sector to increase contribution of industrial sector to Gross Domestic Product (GDP).
Japan International Cooperation Agency (JICA), the Asian Development Bank (ADB) and International Finance Corporation (IFC), among others, have separately initiated homework to chart out the modalities of support to strengthen the Nepali business community.
Donor agencies are interested in extending support for formulation of Private Sector Development Policy (PSDP), establishing private sector development forum and strengthening relations between the private sector and other stakeholders.
The government is working to bring out a draft of PSDP with support from IFC after almost two decades after the country embraced open market economy.
According to Anil Kumar Thakur, joint secretary at the Ministry of Industry (MoI), the government is closely working with representatives of the Confederation of Nepali Industries (CNI) and Federation of Nepalese Chambers of Commerce and Industry (FNCCI) to chalk out PSDP.
Keshav Acharya, former senior economic advisor for Ministry of Finance (MoF), said it was encouraging that the donors are interested in enhancing the capacity of Nepali private sector at a time when the industrial output is slowing.
Meanwhile, ADB, a regional development agency in the Asia-Pacific, has also started ground work for identifying the absorption capacity of the Nepali private sector.
Efforts aimed at enhancing the capacity of the country´s private sector are being taken at a time when the contribution of the manufacturing sector to the GDP has been decreasing constantly. According to statistics compiled at the MoF, the contribution of manufacturing sector to the GDP has just been 6.2 percent in the fiscal year 2011/12.
“The government should be able to take optimum benefit from donors´ efforts,” said an official at MoI.
JICA is working to establish a private sector development forum. Embassy of Japan in Kathmandu has initiated talks with FNCCI, the apex body of the private sector, aiming to identify possible ways of cooperation.
“Embassy of Japan has expressed interest to facilitate private sector by establishing a bridge between Nepali and Japanese private sector through JICA,” said the FNCCI official. He added that the private sectors of the two countries would have extensive discussions and communications once the proposed forum is established.
Moreover, the Japanese government has also announced that it would provide assistance to the Nepali private sector through its official development assistance (ODA).
At a recent meeting with senior representatives of the Nepali private sector, ambassador of Japan to Nepal Kunio Takahashi had indicated that Japan would initiate support especially to enhance private sector capacity through ODA.

Private sector to exert pressure for full budget

Saying that the lack of full budget has seriously hurt business activities and people´s development aspirations, the business community has decided to spearhead an ´aggressive campaign´ from Wednesday in a bid to exert pressure on the political parties to forge consensus for early announcement of the full-fledged budget.
“We will mobilize all sections of the society and would use all available ´tools´ to pressurize all the political parties, including those in the opposition, for the earliest announcement of full budget,” said Bhaskar Rajkarnikar, senior vice-president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
The FNCCI decided to launch the pressure campaign after representatives from different business sectors such as manufacturing, trading, housing, banking and contractors, among others, expressed concerns over deepening adverse impacts of the lack of full-fledged budget in their businesses.
The FNCCI had convened the roundtable of the business representatives on Tuesday. “The meeting concluded that we should exert a severe pressure against the political parties, urging them not to politicize the budget,” said Rajkarnikar.
He told Republica that the meeting endorsed launching of series of pressure programs in favor of full-fledged budget. Under these programs, FNCCI officials said they would hold roundtable meetings with all sections of the society and lobby with the political leaders to end differences on full-fledged budget.
“We will launch media campaign and mobilize all the chambers and commodity associations to raise awareness among the people why budget is important not just for us (business people) but also to a layman in rural hinterlands,” said Rajkarnikar.
Fundamentally, FNCCI said it was not in favor or against any political party. “But lack of fiscal policy and annual fund allocations has hurt private sector operations and regular businesses. Hence, we could not remain quiet,” Rajkarnikar added.
Issuing a press release, FNCCI also urged the political leaders not to do politics on budget, which is the lifeline of economy.
As present one-third budget is going to be used up soon, the FNCCI cautioned failure of the government to come up with full-fledged budget could push the country into a fiscal vacuum. “If this happened, the country will head toward becoming a failed state,” FNCCI said in the release.
“Political settlement might take time. Taking fiscal operations into hostage for political bargaining will be a foolish thing to do,” the FNCCI has assessed, and urged all the leaders to immediately pave the way for the announcement of full budget.

Govt mulls change of mgmt strategy at industrial estates

The government is mulling over forming a committee to raise the efficiency of state-owned industrial estates that house more than 600 factories and firms.
The step comes after the Federation of Industries in Nepal Industrial Estates (FINIE), the umbrella organization of firms operating in the industrial estates, formally submitted an application requesting the government to hand over 5,128 ropanis of land covered by the country´s 11 industrial estates to the private sector.
Since the Council of Minister´s decision of June 2010 prevents the government from selling its fixed assets to the private sector, it is now mulling over raising the efficiency of the Industrial Estate Management Limited (IEML), a state-owned body that regulates and manages the resources at the estates, so that problems faced by the private sector can be addressed.
"Internal discussions are taking place after we received a formal request from FINIE and a committee will be formed as soon as possible to study the situation," an official at the Ministry of Industry (MoI) told Republica on Tuesday.
Entrepreneurs who have built factories or set up firms in 11 industrial estates have long been urging the government to rethink its operations strategy at industrial estates so as to boost industrial output.
"Our request is that the government should either work efficiently to better-manage the industrial estates or handover the property to firms that are operating there," said Shailendra Lal Pradhan, president of FINIE, who is also a former executive member of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
The government is currently operating industrial estates in places such as Balaju, Patan, Hetauda, Dhanusha, Nepalgunj, Pokhara, Butwal, Bhaktapur, Biratnagar, Dhankuta and Saptari. These estates, which have attracted over Rs 13 billion of private investment and provide employment to 11,109 people, were primarily set up so as to make efficient use of available resources and extend better services and facilities to industries set up in the vicinity of one another.
But in reality this is not the case, according to Pradhan.
"The industrial estates do not have any load-shedding schedule let alone adequate supply of power to operate machines. So we don´t know when power comes and goes," Pradhan said. "There is also no security of the property."
Anil Kumar Thakur, joint secretary at the MoI, said that the government was serious about efficient management of the industrial estates.

Donor-funded project affected

Most of the donor funded projects including road expansion programs have been badly affected as the government has failed to allocate sufficient amount for the projects under the one-third budget.
The Ministry of Physical Planning Works and Transport Management (MOPPWTM), which implements most of the major projects, stated that it couldn´t start the road and bridge construction projects supported by the World Bank and the Asian Development Bank (ADB) due to absence of full budget, shows an official report.
The World Bank has agreed to extend support worth Rs US$ 60 million to construct bridges along the strategically significant roads that include highways and feeder roads. Similarly, ADB has pledged to provide an assistance of US$ 75 million for the construction and upgradation of strategic roads.
The report further stated that the donor-funded projects, which reported smooth implementation last year, have been affected after the ministry failed to clear the fees to be paid to consultants of the projects.
"Road upgradation and new road construction programs have been the most affected as we couldn´t move ahead due to unavailability of sufficient budget," said Tulsi Prsad Sitaula, secretary at MoPPWTM.
Sitaula further said that most of the projects had been delayed due to technical problems in the tender process.
"It´s hard to get contractors ready to undertake the projects," Sitaula said. "It takes two to three months to complete a tender process and another one month to get it approved. How can we implement the programs when the tender process takes almost four months?" added Sitaula.
Additionally, Sitaula has cautioned that development projects might be affected in the remaining two quarters of the current fiscal year. "The entire development will see a severe set back as implementation progress has remained dismal in the first quarter" he said .