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).

Industrial infrastructure program in limbo

When the government announced infrastructural support to cement factories utilizing local raw materials in 2008/09, the program had drawn praises from the private sector. Four years down the line, the priority program has completely lost steam. “

"This is sad. The program meant a lot to the private sector," said Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). 

Under the program, the government had promised to construct roads, drinking water facility and lay electricity lines to the factory sites. This, the government had claimed would encourage investors to make use of country´s huge limestone reserves, thereby saving billions of rupees spent on imports of clinker.

The private sector had welcomed the government´s announcement because the program had committed to relieve investors of the need for spending huge money in constructing basic infrastructures. 

However, the government over the last four years has constructed only one third of the total 32 km road it had promised to the four cement factories -- Ghorahi, Sonapur, Dang and Rolpa. Though the government had released Rs 175 million for road construction, only 48 percent of the amount has been spent so far. “

"The progress in laying electricity lines and setting up drinking water facili”y," Bishnu Prasad Dhakal, under secretary at the Ministry of Industry told Republica.

Promoters of the cement factories accuse MoI for the poor implementation of the program. MoI officials, on the other hand, passed the buck on other ministries. 

"It is true that MoI is the executing authority, but we rely on Ministry of Physical Planning and Works for the construction of roads, Ministry of Energy (MoE) for laying electricity lines and Ministry of Local Development (MoLD) for installing drinking water facility," said Yam Kumari Khatiwada, joint secretary at MoI.

Top MoI officials claimed they have always been exerting pressure on the ministries to implement the progra“. "Sadly, they have never given the program a priority," stated an MoI official.

However, top officials at MoPPWTM have their own explanations. "It´s not that this program is not in our priority," said Tulsi Prasad Sitaula, secretary at MoPPWT. "But how can we achieve results without any prior consultation and proper homework?"

Industrialists, meanwhile, expressed disappointment at the lack of progress in implementation of the program.

"If there is lack of coordination between the ministries, it is up to the government to sort them o”t," said a promoter of a cement factory.