Maoist trade union threaten to shut down Surya Nepal from Monday

In a fresh case of worsening industrial relations in the country, Maoist-affiliated Nepal Multinational Companies´ Workers Union (NMCWU) at Surya Nepal has threatened to shut down the country´s largest tobacco manufacturing company from Monday, if the management did not fulfill its demands.

The union has submitted 11-point demand to the management. It announced the strike after majority of its members voted to go for the strike in case the management did not heed their demands.

“We have already informed our decision to the labor office and the company management,” said Devendra Sitaula, senior member of the workers´ union, who also took part in talks with the management.

He informed Republica that the workers were demanding the management to raise basic salary by Rs 2,500, double the life insurance cover to Rs 200,000 and pay Rs 1 million in gratuity at the time of retirement. The union has also demanded the management to deposit 2 percent of its annual profit in the workers welfare fund and provide permanent job to next of kin in case the workers died while working.

The union has also demanded with the management to allocate 50 percent of total vacant jobs to the offspring of workers, provide grant to the workers to construct houses and increase the retirement age to 58 from existing 55 years, among others.

Surya Nepal staff said that the workers and the management had sat for rounds of talks in the presence of representatives of local labor office. But the talks failed to settle the differences.

During the talks, the management had offered to pay them Rs 1,600 in addition to perks and benefits they were enjoying now. But union officials refused the offer.
“We want the management to address our demands in a package. We will not agree on a piecemeal deal,” said Sitaula.

Meanwhile, Surya Nepal has knocked on the doors of the Department of Labor as well as Federation of Nepalese Chambers of Commerce and Industry to settle the problem.

Man Bahadur BK, director general of the Department of Labor, said the department has taken up Surya Nepal´s request seriously. “We will forward the request to Labor Relations Improvement Committee and take immediate steps to avoid the looming shutdown,” he added.

Water transport for trade and commerce not feasible: Report

For years the government believed the country could make use of its rivers for water transportation. But a latest feasibility study conducted to assess such possibilities concluded that operating water transportation in three major rivers -- Koshi, Gandaki and Bheri was almost impossible due to their irratic flow pattern.

Two private consulting companies that presented preliminary report conducted under the terms of Ministry of Physical Planning and Works (MoPPW) said water transportation was not commercially viable in Nepal. However, the report notes that 11 out of 14 different sections of those rivers can be used for recreational purposes for tourism.

"River flow pattern that affect the operation of vessel vary greatly in those rivers. Though jet boats can be operated by constructing dams and other physical infrastructures, the cost involved in such development are so high, those make commercial operations of water transportation unviable," reads the report.

Officials who were sought to make comments on report said that this was a first step towards studying the potential of water transport in the country. "This report does not show any prospects of building water transport in these rivers. However, we are ready to do more study to see if there are still any chances of utilizing the rivers for transportation," said one of the senior officials of the ministry.

Ironically, the study team which was solely focused on finding the possibilities for water transportation couldn´t express the confidence in their own report. "Many aspects are yet to be studied though this is what we found," Padam Shahi, team leader of the study said, "Water transportation might be potential if we analyze it through the complementary perspectives but this is not comparing to other means of transportation."

The feasibility report which even failed to estimate the total cost of water transportation in three rivers has recommended making some short term plan to experiment the viability of the water transportation. Moreover, the study report proposed only two sections of the Bheri river for transport namely, Kamalpur to Bhtechaur and Ghatgaun to Taranga.

The report studied five sections of the Koshi, six sections of the Gandaki and three sections of the Bheri. "Some of the sections are already used for recreation and transport purpose," Shahi said, presenting the study report on Wednesday, "Even in those sections, locally manufactured boats are in use, this can´t be called as sound water transportation."

"This report has an indication that we can´t develop water transportation as substitutes to road transportation," senior official at the ministry said, "We had assigned companies to do the feasibility study in those rivers which were anticipated to be useful for the water transportation. After this report, I don´t think we would be able to develop water transportation in other rivers."

However, Dolalghat to Chatara and Chatara to Tribeni sections of Koshi River, Devghat to Ramdi and Mugling to Fishlin sections of Gandaki river are in use for recreational purpose already.

India to resume exports to Nepal against IC

After almost a month-long silence, India has finally acknowledged that its ambiguous notification issued while scrapping duty refund procedures (DRP) created confusions among Indian exporters, prompting them to seek payments in US dollar to make excise duty-free supply.

Indian Finance Ministry on Monday issued a fresh notification, clarifying to exporters that they can accept payments in Indian currency as well. It has notified that their supply made against Indian currency will still be regarded as exports, and exporters will not be charged excise duty on such exports.

“It is clarified that exports to Nepal will continue to be permissible irrespective of whether the payments are made in Indian currency or foreign convertible currency as long as they are in accordance with applicable Reserve Bank of India (RBI) guidelines,” reads the new notification that India´s Department of Revenue issued to its customs official.

Contrary to latest preciseness, India in its previous notification issued on January 13 had said that ´abolishment of DRP puts export to Nepal at par with exports to other countries except Bhutan´.

Following such notification, Indian exporters since the scrapping of DRP on March 1, had been demanding Nepali importers to make payments in US dollar and brought imports of excisable goods, which largely includes industrial raw material and vehicles, to a grinding halt for two weeks. Nepal Rastra Bank (NRB) allows payments in dollar for only 250 items.

Later, some Indian exporters started accepting payments in Indian currency but forced Nepali importers to pledge additional 10 percent payments as collateral to make sure the goods reached Nepal. This arrangement compelled the importers to pay more in excise duty at the customs.

Such confusion caused many Aerated drinks manufacturers like Barun Beverages, beer manufacturers and many other companies to incur additional cost. Industries like cement factories were on the verge of closure as they could not import raw materials and fuel were fast running out of stocks.

“We are hopeful the notification will make imports smooth and thankfully it came before we ran out of our stock of raw materials,” said Pashupati Murarka, vice president of federation of Nepal Chamber of Commerce and Industries (FNCCI).

The new notification, even considering the possible obstacles to the trade between two countries, has appealed the concerned traders to approach the Indian government for further clarification if they faced any difficulties in this connection.

Officials at the Indian Embassy, who were approached by the Nepali importers, said their finance ministry issued the new notification after Jayant Prasad, ambassador of India for Nepal, himself communicated with New Delhi.

Korean delegation studying investment prospects in Nepal

A delegation of Korean private sector has expressed interest to invest in Nepal´s hydropower and infrastructure projects.
The four-member delegation, which is in Kathmandu to study the prospects of investment in Nepal, met with the officials of Federation of Nepalese Chamber of Commerce and Industries (FNCCI).
“Yon Yong Suk, chief executive of Office of ILIJIN International Company Ltd, Korea and Bhaskar Raj Rajkarnikar, vice president of FNCCI lead the discussions between two parties,” reads a statement of FNCCI.
According to the release, Suk said the Korean investors are interested to invest in Nepal´s hydro sector. "I am hopeful that this discussion will pave the way forward for to us to invest in Nepal,” the release quoted Suk as saying in the meeting.
Sharing the vision of Investment Year 2012/13 among the Korean delegates, Rajkarnikar requested Korean investors to come to Nepal.
“The government is also formulating policies that are friendly for both domestic and international investors. This is why I request you to come here with investment,” Rajkarnikar told the Korean delegates.

Govt belatedly assigns West Seti to Investment Board

Following controversy surrounding the signing of a memorandum of understanding (MoU) with the Chinese power developer Three Gorges on the 750 MW West Seti Hydropower Project, the government on Monday asked the Investment Board to take up the project enabling the latter to take further decisions on its development.
Although officials did not explicitly explain how it could impact the deal that Minister of Energy Post Bahadur Bogati inked with Three Gorges, sources said the Prime Minister´s Office has entrusted the board to take all required decisions on the project. This means it can review and even revoke it if it deems appropriate.
Legally, the whole deal of West Seti should have been handled by the board since the very beginning, as its Act clearly entrusts the board to handle the large projects, including hydropower projects of over 500 MW. “Ignoring the board while signing the MoU was a mistake in itself,” a senior official at Prime Minister´s Office told Republica.
Now that the board has been assigned to take up and steer the project´s development, he said the board will have all the authority to decide on the project.
Following the government´s signal, the board on Monday began assessing every communication made in the past between the governments of Nepal and China, and also China Three Gorges Corporation. “We are also studying the MoU in order to figure out how to move forward,” said a source at the Board.
However, as the board was unaware of interest of the Chinese government, particularly how it would react if Nepal government wanted to make some changes or scrap the MoU. “We don´t want to hurt China´s sentiment for we are still eyeing the soft loans from the Chinese Exim Bank for developing the project. MoU has complicated matters for us,” said the source.
During the bilateral communications, Investment Board is also planning to request China to resume negotiations on a soft loan of US$ 1.6 billion -- the identified project cost of West Seti for which Ministry of Finance was negotiating till recently.
“We are still discussing what will be the best model for West Seti development. Nonetheless, we are making request for resumption of talks for soft loans because we want to keep all the options open,” said the source.
"Our whole efforts at present aim at two things; one is to make the project happen, and the other is to maximize the benefits for country," he told Republica, adding how the board will steer the project will become clear only after it talks with Chinese officials, mainly those based in Kathmandu.
Meanwhile, the board on Monday wrote to the sub-committee formed by the parliament´s Committee on Natural Resources and Means to probe West Seti MoU that the board was ready to take up the project with high priority if it is brought under the board´s jurisdiction after requisite amendment and revision.

Indian Investment in Nepal

No matter what goes wrong, Indian investors will come to Nepal. One reason for business men is definitely to make profit. But that is not the only one. Indian business men who have complete support of government wants to explore the volume of business in Nepal in order to know the dynamism of Nepal's private sector. Interestingly, an economic national daily from India has a report about Indian incs in Nepal. However, the report is well compilation of information and sentiment of Indian investors but substantial information about their areas of interest to make investment and volume of money that will flow into Nepal in the upcoming days. 

Raw materials, fuel crises hit cement factories

Supreme Cement that has been producing 400 tons of cement and 200 tons of clinker every day is on the verge closure. It is not because of power shortage or labor problems, but because the company will soon run out of raw material and fuel as Indian exporters have declined to supply them in Indian currency after the scrapping of duty refund procedure (DRP) on March 1.

The company had been using firebricks imported from Dalmia Refractories and petroleum coal from Reliance in India. But both the Indian companies are now demanding Supreme Cement to pay for its purchases in US dollar if it wants to maintain supply.

"It is already 24 days since we have operated with reserve stocks and that will run out soon. Once that happens we will be forced to shut down the factory,” said Pashupati Murarka, promoter of the company and vice president of Federation of Nepalese Chamber of Commerce and Industries (FNCCI).

Supreme is not the only company that is facing this problem. All cement factories are fast running out of raw materials, particularly firebricks and petroleum coal. "Unfortunate for us, we can not pay the supplier in US dollars as Nepal Rastra Bank (NRB) has opened payment in dollar for only 250 items and items we import are not included in that list,” said Murarka.

Given the situation, all cement factories could shut down in the near future, he said.

Then there are new problems. Nepali firms that recieved supplies against IC payment too have been compelled to pay more as Indian exporters have forced them to pledge 10 percent collateral on the total value of the consignments.

Their condition is that they will refund the collateral once the importing party furnish them customs document proving the supplies crossed the border. They are refunding the money too. “But the problem is our customs officials do not accept the collateral is refundable amount and are charging excise duty on that amount too,” said Murarka.

Aerated drinks manufacturers like Barun Beverages, beer manufacturers and many other companies are currently facing this problem.

“The nature and extent of problem is different. But lack of India and Indian exporters´ support in the wake of termination of DRP has affected all the Nepali firms importing excisable items,” said another official of FNCCI.

Govt deaf to private sector´s plea
Despite such problems that fundamentally goes against bilateral deals agreed by the two governments and the central banks, the private sector is unable to find people in Ministry of Commerce and Supplies to support their cause.

"We are constantly asking government officials what could be the reason behind this problem? Sadly, they have nothing to say to us,” said Murarka.

That is not all. Following government´s silence, the business community even approached the Embassy of India in Nepal, seeking explanations behind rejection of Indian exporters to supply goods against IC. But even that has not been of any help.

“Officials in both MoCS and Embassy say the governments have changed nothing in the procedures and practice, hence, there should be no problem. But our reality is something else,” said Murarka.

On being queried why the government has not taken over the industries´ complaint, officials like Commerce Secretary Lal Mani Joshi said they were not aware of reasons behind the problem. Just like a week ago, he reiterated that he had approached the Indian counterpart seeking explanations but have not heard anything so far. Surprisingly, Joshi even said there were no problems any more.

The problem on import of excisable items surfaced after Indian exporters demanded Nepali traders to make payment in USD following the scrapping of DRP arrangement on March 1. That brought import of such items to a grinding halt for about two week.

Though some exporters have started supplying goods against IC, entrepreneurs said their demand for collateral had created new problem.

"Exporters from Indian states including Gujrat and Maharastra are still asking us to make payment in dollar,” said Murarka. Those supplying against IC too have inflated the cost for them.