Nepal-India Petroleum Pipeline in News Again

The petroleum pipeline that has been talking time and again between Nepal and India—this was talked once again in the Inter-Governmental Committee meeting of two sides, which was held in the Delhi last week. This project had started almost one and half year back but couldn’t be materialized due to some irregularities in the Ministry of Commerce &Supply of Nepal then.The Indian Oil Corporation (IOC) had cancelled the Joint Venture proposal (which was in the verge of signing) by saying that the project wouldn’t work in the proper way.

This Project Won’t work in the Long-run 

The pipeline project might be good for the short run of Nepal’s petroleum market but in the long run this might be a problem. I am saying that because the petroleum market of Nepal should be liberalized for private sector--there must be the private sector’s involvement to enhance the quality of market and supply situation. The much talked private sector’s involvement is not happening due to hold of some bureaucratic hazards.  

IFIC Bank Will Have More Share in NB Bank

The International Finance Investment and Commerce Bank Bank Ltd (IFIC Bank) of Bangladesh has shown interest to invest more in the Nepal Bangladesh Bank in Nepal. The Central Bank of Bangladesh has principally provided the permission to IFIC Bank to invest more in the NB Bank in Nepal.

Survey Report of Nepal is Out

Ministry of Finance of Nepal Government has published the Country Survey Report, 2011 on Paris Declaration- 2005. This report shows some significant changes in the last three years from 2008-2011. The donor agencies in Nepal do not use the Country Procurement System (CPS) as much as they used to do in 2008. Only 37 percentage of their total annual budget used to be spent through the CPS in 2008 and now it has been increased by 19 % in the last three years and have reached to 56 percentage of their total annual budget.

AID AGENCY FLOUT GOVT RULE

Nepalese authorities say we are helpless

The aid industry in Nepal does not quite follow an easy route , and there are complex dynamics it associated with it. “In our case, it is like either we let them do whatever they want, or we decline the aid altogether”, a senior official in the Ministry of Finance told The Reporter.

What he implied was a disapproval of the way many aid agencies have conducted themselves in Nepal over a period of time. “ A few bilateral donors and their aid agencies apparently do not follow the Country Procurement System (CPS) that supervises  and keeps a tab on all procurement activities associated with the public sector.

Citing examples, he said  many donor agencies,  including the  United States International Development Agency (USAID), do not follow the CPS, i.e. the aid money it brings in here is spent without following norms set by the government, and these agencies have their way. Senior officials plead helpless on the issue.

“We don't have the right to ask any donor agency to procure under the norms of CPS", secretary at Abnindra Kumar Shrestha, Public Procurement Monitoring Office (PPMO) told The Reporter. “ Article 67 of the Public Procurement Act, 2006  gives  the freedom to donors not to comply with the CPS if the aid is not for budgetary support to the Government of Nepal.”  But it is found that  still a lot of aid intended for budgetary support flaunts CPS. Interestingly, the consultants hired with the help of World Bank had drafted the PPA, 2006.  Official version of the U S Embassy on the issue was not available although it had been approached.

“We are keen that aid agencies follow rules and demonstrate higher degree of transparency and accountability “, an official said , adding “this will also have positive impact in other sectors as this sector alone contributes to 26 per cent of our annual budget.”

“At times, they are very blunt to our mild objections. They simply ask us whether we want their support or not, and that is not the kind of decision that we can take at our level in the bureaucracy”, an official in the  Ministry of Finance said.

The latest Portfolio Performance Review of 2011/2012 has clearly stated that the CPS should be reformed to align it more with our needs and CPS system. But, it is far from being adhered to by the donors and their aid agencies. According to the guidelines, the donors should spend money by following our CPS and not by compelling the officials to accept their aid in its entirety with conditionality or forsake it.

Nepal Narrows Its Trade-Deficit with India

Nepal’s trade deficit with India has narrowed down by 1.6 percent in the first three months of FY 2011/12 compared to last years same period. Only very few products’ export, i.e. the export of zink, sheets, textiles, copper wire rod and cardamom have gone up according to the Government of Nepal’s revelation of a report last week. 

Indian Investment in Nepal’s Hydro Sector

The Indian investment in Nepal’s hydropower sector will definitely lead the country towards a better future. The Indian Ambassador to Nepal Jayant Prasad has said that there could be $ 15 billion worth of investment can be from India in the next five years. But he has given the stress to the ‘investment environment’. 

This statement from the Ambassador has come just around one month later of signing the Bilateral Investment Promotion & Protection Agreement between two countries. Pranav Mukharji, the former Ambassador to Nepal is in town when His Excellency Prasad is talking about the Indian investment in hydro sector of Nepal.

Local Bodies’ High Dependency in Nepal

The local bodies in Nepal have been highly dependent on foreign aid and government's budget. Sushil Ghimire, the secretary of Ministry of Local development has publicly admitted that the reason behind it is the lack of timely election in Nepal.The election in the local level is not happening since last 9 years--almost a decade. Officials and experts have claimed that this situation has been reflected into the dependency of local bodies. Previously, local bodies used to survive on their own by collecting the revenue in their levels.

This high dependency has led to the corruption and mismanagement of budget that goes to the local levels Nepal has been receiving the around 40 percent of total yearly budget as the foreign aid.