NPBCL gets go-ahead for tunnel highway

The government on Tuesday granted permission to construct Kathmandu-Kulekhani-Hetauda Tunnel Highway to Nepal Purwadhar Bikas Company Limited (NPBCL).
"We are hopeful that the company will be successful to demonstrate the financial closure of the project within a year," Tulasi Prasad Sitaula, secretary at the Ministry of Physical Infrastructure and Transport (MoPIT), said.
The government has given go-ahead to the company on condition it achives financial closure within one year.
The project that connects Kathmandu and Hetauda by 58-kilometer is estimated to cost Rs 34.5 billion.
According to Lal Krishna KC, vice president of the company, the project is estimated to be completed in 44 months. "That means the project will come into operation by 2016," KC said.
The company, however, is yet to prepare convincing payback plan.

Industry ministry to study status of 10 more firms

After recommending ´sick industry´ status to four firms, the Ministry of Industry (MoI) is all set to conduct field study of another 10 firms that have applied for ´sick´ industry status.
“Our technical committee is preparing to dispatch a team to conduct field study of those 10 firms," a member of the technical committee under the ministry´s Industrial Promotion Division (IPD), told Republica.
The technical committee, which has been assigned to find out actual situation of the firms that have applied for sick industry status, sends a team of officials after completing their due diligence auditing.
The ministry has outsourced a team of chartered accountants to do due diligence auditing of the firms.
The 10 firms where the team will conduct field study are: Kharel Wooden & Metal Furnitures, Nava Durga Khadya Udhyog, Shree Antu Tea Industry, Laxmi Banaspati Ghee Udhyog, Bhrikuti Pulp and Paper, Gita Cold Store, Momento Apparels, Shirish Herbal, Shree Distillery and Dolphin Manner.
"The due diligence auditing report of these firms is in line with the financial statements that these forms had submitted while applying for sick industry status," the official said. "Now, the team will study the reasons behind financial failure of those firms.”
The ministry has already submitted a proposal to the cabinet to declare four firms -- Birat Leather, Birat Shoes, Nepal Borders and Basulinga Pvt Ltd - as sick and recommended them financial and non-financial facilities.
Yam Kumari Khatiwada, joint secretary at MoI who leads the technical committee, told Republica that a total of 37 firms had applied for ´sick industry´ status. These firms filed applications at the ministry after the government announced a program to revive sick industries in the country in 2011.

IBN seeks Rs 280m to hire consultants for infra projects

The Investment Board Nepal (IBN) has asked the government to set aside fund of Rs 280 million in the upcoming budget to hire around 28 consultants for fourteen infrastructure projects.
"We need at least two consultants for each project," an official at the accounting section of IBN told Republica. “The finance ministry and IBN, however, are yet to sit together for further discussion.”
The IBN, a high-level government entity that was formed more than one and half years, has been authorized to facilitate implementation of the 14 projects.
The projects that are in the bag of IBN include five mega hydropower projects. Similarly, other projects include project to upgrade Tribhuvan International Airport, Kathmandu Metro Railway, Kathmandu-Tarai Fast Track Road, Nijgadh Second International Airport, among others.
According to the official, the International Finance Corporation (IFC), a private sector lending arm of the World Bank, had developed the budget proposal of the IBN. "The IFC developed this proposal based on international practices of hiring consultants for large scale projects,” the official said.
This is the first time IBN is seeking budget from the government. So far, Office of the Prime Minister and Council of Ministers (OPMCM) has been providing budget to IBN.
The IBN is currently working on finalizing project development agreement (PDA) negotiation with four mega hydropower projects, namely, Arun III, Upper Marsyangdi, Upper Karnali and Tamakoshi.

A decade on, sick-industries revival program still not taking off

The government formed a committee to study the situation of sick industries in 1994 for the first time, with the aim of reviving them and increasing the manufacturing sector´s contribution to the country´s gross domestic product (GDP) and ultimately making the economy more vibrant.
Two things have happened since. One, the government has kept on forming different committees and study teams each year with instructions to find a way to revive these sick industries but not a single firm has had a new lease of life in the last 10 years.
Second, the contribution of the manufacturing sector to the GDP has constantly fallen to reach 6.2 percent in Fiscal Year 2011/12 -- the lowest in the last decade.
An enterprise can get a ‘sick-industries’ tag when it has either stopped operating or is operating at less then 20 percent of their production capacity for five years in a row due to external factors such as policy changes and natural calamities. Once that is done, it is qualified to get support and facilities from the government that will help its rehabilitation.
Looking at how the government has been forming committees and study teams gives an impression that it is trying hard to fix things and revive the country´s industrial sector. But, that is just an illusion, according to experts. The real problem lies somewhere else, they say.
"Vested interests of politicians and bureaucrats, in some cases, play a major role in creating friction between the mechanism to revive the sick industries," an official involved in the technical committee a -- formed to study the actual status of the sick industries and recommend ways of reviving them -- at the Ministry of Industry (MoI), said.
The government, in last 10 years, formed around a dozen of different committees in order to study and uplift the situation of sick-industries in the country. All of them recommended what should be done but none of them precisely categorized the criteria for sick-industries.
"The situation of sick industries is the same now as it was in 1994 -- when the first committee was formed to restore the situation of sick industries," Bishnu Dhakal, under-secretary at the MoI, said.
The Dr Babu Ram Bhattarai-led government formed an 8-member Sick-Industries Rehabilitation High-Level Task Force (SIR HLTF) under the leadership of Dipendra Bahadur Kshetry, vice-chairman of the National Planning Commission (NPC), back in 2011. The 20 pages-long report that was prepared by the SIR HLTF cleared the way for identifying the criteria to declare sick-industries in the country.
Based on the criteria set by the report, the MoI asked for application from the industries who would like to be declared as sick. 37 firms applied to the ministry to get the status of sick-industries. The MoI, which was entrusted to facilitate the development of the industrial growth in the country, formed a technical committee to study the actual situation of the firms that registered applications. It even hired a team of chartered accountants to do due diligence auditing of the firms in order to know the financial situation of the firms.
As the things have been moving forward, the ministry also forwarded a proposal to the council of ministers to declare four firms -- Birat Leather, Birat Shoes, Nepal Boarders Pvt Ltd and Basulingi Pvt Ltd -- as sick-industries.
The technical committee also made recommendations to the government about the financial and non-financial support that the firms should receive.
"The government is yet to declare those firms as sick," an official at the ministry said. "It´s still unclear whether the government would okay the recommendations that the committee made about the financial and non-financial support to the firms."
The program to revive sick-industries has gained slight momentum but there are other barriers that are hindering the smooth implementation of the program.
"There should be a clear understanding among the different government entities to take this program forward," Dhakal said.
Meanwhile, the constant changes of the officials involved in the process is another major hurdle in materializing the program. "The top level official was changed three times in the Industrial Promotion Division (IPD) of the ministry after the technical committee was formed," an official at the ministry said. "The transfer of the leader of the technical committee has also affected the timely implementation of the program."
The government´s move to revive the sick industries has been on limbo for years in one hand. On the other hand, problems such as acute power shortages, labor unrest and political instability have deviated investors from making fresh investment in the productive sector of the country.
"It would have made a difference in the country´s moribund industrial sector had the government implemented the sick-industries revival program effectively," Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said.
That is not all it is. Industrialists who have political influence also lobby for declaring their own industries sick even though they may not fall under the criteria.
"Politicians, mainly the minister at the MoI, put a lot of pressure to declare the firms sick whose owners are close to him in many cases," the official said. "That stops the officials from working properly and providing relief to the genuinely sick firms."
The constantly deteriorating manufacturing sector was expecting some exogenous intervention to become more productive after the country entered the peace process and the holding of Constituent Assembly (CA) elections in 2008 -- which ended in May 2012 without promulgating the constitution in the country. "But that hope was shattered as the industrial sector became more volatile since then," Murarka said.

Trade unions flay pact to ban strikes in industrial corridor

Three big labor unions in the country have strongly criticized the decision to declare Birgunj-Pathlaiya industrial corridor a strike-free zone.
While Nepali Congress-affiliated Nepal Trade Union Congress-Independent (NTUC-I) and General Federation of Nepalese Trade Unions (GEFONT), the labor wing of CPN-UML, have said the agreement was signed without following due procedure, All Nepal Revolutionary Trade Union Federation (ANRTUF) termed the agreement a ploy to weaken industrial workers. ANRTUF is the federation of workers supporting CPN-Maoist.
Birgunj Chamber of Commerce and Industry and Bara Chamber of Commerce and Industry along with seven trade unions affiliated to different political parties had signed a 19-point pact in the presence of government officials on Tuesday that, among others, banned all forms of strikes in the industrial corridor.
“The agreement was signed without following due procedure,” Bishnu Rimal, chairman of GEFONT, said. “Even though our leaders have signed it, we won´t accept it.” Rimal further added that their local leaders might have signed the agreement out of naivety.
Laxman Bahadur Basnet, president of the NTUC-I, echoed Rimal and said the presence home ministry officials in the signing ceremony suggests that something is wrong as labor issues are dealt by labor and employment ministry.
Officials of Birgunj Chamber of Commerce and Industry (BCCI), however, argued that all due procedures have been followed while signing the agreement. “The agreement was signed to protect the dying industrial sector. All stakeholders have realized that strikes and bandas are costing our economy dear,” Ashok Kumar Vaidya, president of the BCCI, told Republica over phone.
Moreover, ANRTUF has launched protest programs to show its dissent on the agreement. “We have decided to erect black flags at the entrance of all industries along the corridor on May 22 and 23 if the government didn´t raise minimum remuneration of workers within a week,” Ramdeep Acharya, coordinator of the ANRTUF, said. “If our demands aren´t addressed, we will close all factories on the corridor on May 24.”
According to Acharya, his trade union had submitted its 25-point demand to the government on March 24.
Meanwhile, All Nepal Trade Union Federation (ANTUF) -- labor wing of the UCPN (Maoist) -- has welcomed the agreement. "If the government addressed our demand for salary hike and social security for workers, we are ready to signed such agreements on other industrial areas as well,” Shalik Ram Jammakattel, chairman of the ANTUF, said. "The agreement signed on Tuesday signals that labor unions are serious about the industrial situation in the country."

MoE asks NEA to dig deeper into power supply irregularities

The Ministry of Energy (MoE) has forwarded the report of the high-level probe committee formed to study irregularities in five load distribution centers to Nepal Electricity Authority (NEA) for further investigation into the issue and identification of the perpetrators.
“The ministry forwarded the report to NEA on Monday as per a secretary-level decision,” an official at MoE told Republica.
The government had formed the probe team after it was revealed that NEA´s load distribution centers in Itahari, Duhabi, Biratnagar, Dhankuta and Siraha illegally supplied electricity to 14 firms in Itahari-Biratnagar industrial corridor even during load-shedding.
The team had found massive irregularities in the distribution centers and had recommended to the government to conduct detailed investigation into the issue and identify officials and industrialists involved in the wrongdoing, the official added.
The probe concluded that officials at the five distribution centers unlawfully supplied round the clock electricity to 14 firms along Itahari-Biratnagar industrial corridor. There are around more than 300 factories in the corridor.
The committee had submitted its report to the ministry last week after conducting a field study. According to a member of the committee, it had looked into electricity supply schedule of the five distribution centers. "We found that those distribution centers supplied electricity to the 14 firms going against the nationwide load-shedding schedule," the member said.
The government had formed the probe committee after the industrialists and locals complained about the wrongdoings of the five distribution centers at a meeting of the Nepal Business Forum (NBF) on March 25. They had also criticized Chief Secretary Lila Mani Poudel, who was also the chairman of NEA before the new government was formed, for overlooking the issue.
Poudel directed MoE to form the probe committee right after the meeting, the official added.
The firms that enjoyed round the clock power supply by influencing NEA officials at the distribution centers are Raghupati Jute Mill, Maruti Cements and Asian Thai Food, among others.
“Promoters of the 14 firms were found to have bribed officials at the distribution centers to ensure round the clock power supply at their factories,” the member of the probe team told Republica.
The probe committee led by Sundar Shyam Shrestha, deputy director general of the Department of Electricity development (DoED), had three officials from the ministry and a representative from the NEA as members.

'14 firms saved Rs 50m in energy bills by influencing NEA officials'

A government probe has concluded that 14 firms along the Itahari-Biratnagar industrial corridor saved energy bills worth at least Rs 50 million over the past three months ending mid-April by influencing officials of five distribution centers of Nepal Electricity Authority (NEA) to provide them round the clock electricity even during load-shedding.
The firms paid just Rs 6 for a unit of electricity. Power generated from generators would have cost them around Rs 25 per unit.
“As the irregularity is of large scale, the investigation team has recommended that the government probe further in order to identify the NEA officials who unlawfully supplied electricity to private firms,” a member of the investigation team told Republica on Sunday.
Ministry of Energy (MoE), which looks after NEA, had formed a five-member probe to look into the issue following widespread criticism.
According to sources, owners of the firms ensured round the clock electricity to their production facilities by paying kickbacks to officials of different distribution centers of NEA. Those firms had managed to get uninterrupted power supply from NEA´s distribution centers in Itahari, Duhabi, Biratnagar, Dhankuta and Siraha.
The team submitted its report to the ministry last week after conducting field study.
“The probe team looked into electricity supply scheduled of the five distribution centers. We found that those distribution centers supplied electricity to the 14 firms going against the nationwide load-shedding schedule,” the member added.
According to MoE officials, locals had complained about the issue last year as well. But their complaints were not entertained. “No one showed interest to look into the issue then,” an official at MoE said preferring not to be named.
The firms that enjoyed round the clock power supply by influencing NEA officials are Raghupati Jute Mill, Baba Jute Mill, Maruti Cements and Asian Thai Food, among others.
“Owners of 14 firms are found to have bribed officials at the distribution centers to ensure 24-hour power supply,” the probe committee member told Republica.
The member said the firms saved Rs 19 per unit of electricity consumed in the three-month period.
“Now, it is up to board of directors of the NEA to take actions against the perpetrators," the member said.
The investigation team led by Sundar Shyam Shrestha, deputy director general of the Department of Electricity Development (DoED), comprised three officials from the ministry and a representative from the NEA.