Govt to finalize ToR for soft loan from EIB

The government is holding negotiations with the European Investment Bank (EIB) next week to finalize terms and conditions for soft loan of US$ 70 million for the construction of 140 megawatts Tanahun Hydropower Project.
“A team from EIB is scheduled to visit Nepal next week to finalize the terms and conditions for the soft loan,” joint secretary at the Ministry of Finance (MoF) Madhu Marasini, who also heads the International Economic Cooperation Coordination Division (IECCD), told Republica.
The government has already arranged a total of US$ 300 million soft loan from Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) for development of the project. “We will seek an additional US$ 70 million from EIB in the meeting scheduled for next week," Marasini said.
The government has already finalized terms and conditions for the soft loan with ADB and JICA. “The terms and conditions with EIB will be different from that of ADB and JICA,” said an official at the Ministry of Energy (MoE).
ADB has agreed to provide soft loan at 1.5 percent interest with 30 years of maturity period. Similarly, JICA has agreed to provide soft loan at 0.01 percent interest with 40 years of maturity period.
“The meeting with EIB team next week will dwell on finalizing interest rate and maturity period,” the official said. The second reservoir type hydropower project after Kulekhani will be developed by Nepal Electricity Authority (NEA) after the government arranges fund for the project.
Meanwhile, the government is also vying for a loan of US$ 30 million from Abu Dhabi Fund for Development (ADFD) for the development of the project. “ADFD has expressed interest in funding the Tanahun Hydropower Project. But any meeting with DFD has not been fixed so far,” said the official.
ADB, which is a lead funding partner, had provided US$ 25 million in grant assistance to prepare the detailed report (DPR) of the project. “The project design has been completed,” said project Chief Mahesh Prasad Acharya.
If everything goes as planned, the national pride project based in Bayas municipality of the Tanahu will start generating power by 2020. According to officials engaged in the negotiation process, ADB and JICA both also have taken Tanahun Hydro as a “prestige project”.

Khatiwada writes note of dissent on IPB decision

Nepal Rastra Bank Governor Dr Yuba Raj Khatiwada has expressed serious objection over the practice of bypassing Industrial Promotion Board (IPB) by Minister for Industry Anil Kumar Jha.
Dr Khatiwada has written note of dissent on the decision to license new liquor companies taken by 198th meeting of the IPB held about a month ago.
“I can´t agree with the decisions that have been taken by the IPB," Khatiwada, who is also the member of the board, has written at the bottom of the meeting minutes file. “There should be clarity on the provisions."
Khatiwada has further said that IPB can´t endorse everything that the ministry does. "It should be clear whether the IPB is to endorse everything that the ministry does or it has power to say no to each step that the ministry takes," Khatiwada has written in his note of dissent.
The government had lifted 12-year long ban on issuing licenses for liquor factories a couple of months ago. But after issuing licenses to some factories, MoI had stopped licensing processing, stating that it needs to review the policy.
Sources at the Ministry of Industry (MoI) and Department of Industry (DoI) have revealed that the Minister Jha is involved in some wrongdoings while issuing licenses to new factories.
Minister Jha couldn´t be contacted for comments despite repeated attempts of Republica.
According to officials close to the development, Minister Jha has violated the rules of rectifying decisions by the IPB meeting. “The IPB, which is supposed to endorse the decisions before they are implemented, has just started getting information about the ministry´s decisions,” a source said.
Another source said Minsiter Jha put a ban on licensing process after a handful of companies got the licenses.
The government, in October 2001, had decided to stop issuing new licenses to the new liquor factories in the country following pressure from the then CPN (Maoist). Ironically, the ban was lifted by the government headed by UCPN (Maoist) a couple of months ago.
According to Nepal Liquor Manufacturers´ Association (NELMA), the country imports liquors worth Rs 4 billion annually. Domestic companies produce liquors worth around Rs 11 billion a year.

PDA template only for export-oriented projects: NIB

The Office of Nepal Investment Board (ONIB) has disclosed that the project development agreement (PDA) template that is on the verge of finalization is only meant for export-oriented hydropower projects.
"The PDA template that is under discussion is not for projects that are for domestic consumption purposes," said Radhesh Pant, chief executive officer at ONIB. "We will soon develop a different template for that purpose."
Interacting with media persons at a program held on Friday, Pant said that ONIB was working towards tailoring PDAs with individual power developers for four mega hydropower projects that have a total installation capacity of 3,050 megawatt.
The projects on hand for PDA negotiations with developers include the 900 megawatts Arun III, 650 MW Tamakoshi III, 900 MW Upper Karnali and 600 MW Upper Marsyangdi.
ONIB has been holding regular discussions with the power developers who are engaged in the development of the above-mentioned four export-oriented mega projects.
GMR is engaged in the development of two projects, namely Upper Karnali and Upper Marsyangdi. Sulej Jal Vidyut Nigam is developing Arun III and SN Power has Tamakoshi III in its bag. Sutlej and GMR are Indian companies while SN Power is a Norwegian power developer.
ONIB, which came into existence more than a year ago to carry out the implementation of mega projects on a fast-track mode, doesn´t have any PDA template for the 750 MW West Seti Hydropower project. West Seti is the only project that is meant for domestic consumption.
"We will soon develop a PDA template for West Seti," Pant added. A Chinese company, Three Gorges, is engaged in the development of West Seti. Project evaluation for West Seti will be completed in the next few weeks, according to Pant.
Meanwhile, George Davies, director of hydro cluster at the Centre for Inclusive Growth (CIG), shed light on the detailed structure of the PDA. He skipped any explanation of how exactly the PDA template now under discussion protects the national interest of Nepal. "The PDA has provisions that guard the country´s interests," Davies had said in his presentation.
Davies made it clear that the risk was borne by the developer in most cases.
The interaction program, that was basically organized to make clear what the PDA is and how it protects the national interest, also touched base on other projects, including Chemical Fertilizer Plant, Nijghad Second International Airport and Solid Waste Management, among others.
"We want the best of best international developers to come to Nepal," Pant said, highlighting the importance of mature and detailed homework before actually signing a deal for project development.

9-point election govt proposal draws flak from private sector

The widely criticized nine-point draft proposal to form an election-government under the leadership of the sitting chief justice has also drawn flak from the business community.
"We have serious objections over the move by major political parties as the proposal does not clearly incorporate issues of economic development," said Suraj Vaidya, the president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
Major political parties have been holding a series of meetings to lay grounds for constituting an election government under the premiership of sitting chief justice Khil Raj Regmi.
Vaidya, who was addressing a press meet on Thursday in the capital, also voiced concerns over the indifference of political parties toward the worsening economic situation of the country.
Different business associations have echoed the voice of FNCCI, the apex organization of the Nepali private sector.
Nepal Chambers of Commerce, Federation of Contractors´ Association of Nepal (FCAN), Confederation of Nepalese Industries (CNI) and Nepal Bankers´ Association, among others have expressed their dissatisfaction over the fresh political development.
"The private sector is intimidated by forceful donation demands of the political parties and their sister organizations. Amid this disappointing situation, the fresh step taken by the political parties is irresponsible," Bhaskar Raj Rajkarnikar, the senior vice-president of the FNCCI, said.
Urging political parties to be serious about the country´s deteriorating economic situation, FCAN President Jaya Ram Lamichhane stressed the need for political parties to move ahead with preparations for an election that would lay grounds for economic development.
Vaidya also said that keeping the private sector intimidated might further devastate country´s condition.
Stressing the need for formulating a common minimum economic agenda for the country, Vaidya also said the political parties should join hands with the private sector to increase the pace of economic development.
"We have been requesting the political parties to agree on common minimum economic agendas and bring the country´s a budget on time no matter which party is in the government. But this is not happening and making us more worried about its possible negative impact in the economy in the coming fiscal year," said Vaidya.

Govt starts negotiation with EIB

The government on Wednesday formally started negotiations with the European Investment Bank (EIB) to finalize the terms and condition for US$ 70 million in loan from EIB to develop the 140 megawatts Tanahun Hydroelectric project.
“A two-member team from EIB has arrived in the capital for negotiations,” Chief of the Tanahun Hydropower Project Mahesh Prasad Acharya told Republica. This is the first time the government has sought loan from EIB.
The EIB team has offered two options -- floating and fixed interest rates for the loan, said Acharya, adding, “We have to decide which one to opt for.”
According to Acharya, the floating interest rate will fluctuate as per the global economy´s ups and downs whereas fixed interest rate will be stable once it is decided.
“However, the interest rate will be fixed when we actually accept loan from EIB,” he said.
EIB is the third funding partner to invest in the Tanahun Hydropower Project. The government has already finalized terms and condition with the Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) for loans worth US$ 170 million and US$ 150 million respectively.
“The meeting with EIB officials will continue for the next couple of days,” said Acharya, adding that the talks were moving ahead positively.
The government, after finalizing the terms and conditions with EIB for loan, will hold negotiations with the Abu Dhabi Fund for Development (ADFD) for loan worth US$ 30 million.
As of now, the government is expecting to get loan from EIB at an interest rate of less than 3 percent. “Issues such as actual interest rate and maturity period for loan are yet to be negotiated,” Acharya said.
JICA has agreed to provide soft loan at 0.01 percent interest with 40 years of maturity period. “Given the recent developments, the project would start on time,” said Acharya.
The national pride project located in Bayas municipality of Tanahu will start generating electricity by 2020 if the construction of the project begins in 2014. According to officials involved in the negotiations, ADB and JICA have also taken Tanahun Hydropower Project as a “prestige project”.

Govt devising plan to pay off 893 workers

The government is taking a fresh step to send ailing Janakpur Cigarette Factory (JCF) into liquidation by settling dues of 893 employees who have asked for a concrete pay off plan.
In this regard, the government is soon forming a committee comprising representatives from the government, employees and factory management to study financial situation of the struggling state-owned cigarette producer.
Though the government decided to liquidate JCF last year, it hasn´t materialized in the absence of a concrete pay off plan for workers.
“We are trying to address the demand for voluntary retirement scheme put forth by the employees by forming a committee which will stake stock of assets and liabilities of JCF along with outstanding dues that the factory owes to the workers,” Khum Raj Punjali, joint secretary at the Ministry of Finance (MoF), told Republica.
The Corporation and Coordination Division (CCD) of MoF, which is headed by Punjali, on Tuesday proposed to form a committee to do necessary homework for settling workers´ dues and other necessary works.
"The committee will study assets and liabilities of JCF and calculate fund required to pay off 893 workers,” Punjali added.
The government had announced to liquidate the factory through its Action Plan on Good governance, 2012.
According to Punjali, around Rs 2 billion would be required to pay off the workers. It would cover gratuity, medical and leave benefits.
The employees had originally approached the Ministry of Industry (MoI), seeking golden handshake offer. Later, they had forwarded their demand to the finance ministry.
“Close coordination between the two ministries would be necessary to complete the liquidation process,” said Punjali.
Established in 1965 with the support from the then Soviet Union, the factory had once dominated domestic market with popular brands like Yak, Gaida and Deurali. It, however, lost its market share after its monopoly in the market ended with the entry of privately-run Surya Tobacco Company.
The company reported an accumulated loss of Rs 170.80 million until 2010/11.
Meanwhile, workers, who have been knocking the doors of officials at both the ministries, expressed dissatisfaction over the government apathy toward their demands.
"We are no longer interested in working for JFC. That is why we have been pushing for golden handshake offer,” Arjun Chaulagain, a representative of JCF workers, told Republica.

3 projects get power generation licenses

The government has awarded power generation licenses to three hydropower projects with total generation capacity of 36.36 megawatts. The promoters of the projects have been asked to complete their financial closures for project development within a year.
According to the Department of Electricity Development (DoED), 30 MW Nyadi Hydropower Project, 4.36 MW Tungun Thosne Khola Hydropower Project and 2 MW Khani Khola Hydropower Project were granted the licenses last week."The developers will have to show their financial closures within a year from now," Gokarna Raj Pantha, senior divisional engineer at the DoED, told Republica.
According to Pantha, Nyadi Hydropower Pvt. Ltd -- a subsidiary of Butwal Power Company -- has received generation license to develop Nyadi Khola Hydropower Project. "The estimated construction cost of Nyadi Khola project is Rs 6 billion," Pantha informed.
The run-of-the-river project based in Bahundanda, Lamjung is projected to be completed within four years from the start of construction. "The developers have submitted the letters of intent from the banks as their financial sources," Pantha said.
The developer will have to construct 7-km transmission line of 132 kV capacity to connect the project with the national grid. "The power generated from the Nyadi Khola will have to be connected to the substation at Khudi," Pantha said. The project was first identified in 1993 when the government was working on the Small Hydropower Master Plan. Cowel International (P) Ltd -- a company supported by German Development Agency (GIZ) had conducted the first feasibility study of the project.
Likewise, Pashupati Energy Development Company Limited has acquired generation licenses for Tungun Thosne Khola and Khani Khola hydropower projects. "Pashupati Energy has agreed to develop both the projects in two years," Pantha said. The developer has already started construction of the projects that are based in Bhattedanda, Lalitpur.
The developer will have to lay a 4-km transmission line to connect the project with the national grid at Malta substation.
Meanwhile, the government has scrapped the survey license of 675 MW Upper Panpu Khola that was awarded to Diwas Bahadur Basnet in 2007. "The survey license was cancelled after the project´s environmental impact assessment report was not approved because the project is located inside the Annapurna Conservation Area in Mustang district."