Thursday, September 22, 2016

Complete Chameliya within 10 months, energy minister tells CGGC

Energy Minister Janardan Sharma today directed the contractor of the Chameliya Hydropower Project to complete the project in 10 months.
In a meeting with Nepal Electricity Authority (NEA) and contractor of the Chameliya Hydropower Project, China Gezhouba Group of Power Company (CGGC), the minister asked the contractor to expedite the project which is already 10 months behind the schedule.
The project started construction in 2007. But its work has been halted for the past two years due to dispute regarding shrinkage in tunnel.
The contractor, NEA and the consultant today signed an 8-point agreement to reschedule the project. According to the agreement, the contractor has agreed to start the construction from next week.
The delay had made the 30-megawatt (MW) project situated at Balach in Shikhar VDC-4 of Darchula district uncertain. Upon completion, the project will generate 180 million units of electricity annually. People of the far-western region are expected to be benefitted from the project.
The project, which is expected to give impetus to the economic activities in the far-western development region, is estimated to cost Rs 15.6 billion. Its estimated cost was Rs 8.5 billion in the initial phase.
The delay has not only escalated the project cost but also deprived the people of far-western region of the dividends of development.
The project was initially targeted to be completed by March 2016, according to the revised schedule. The target was to complete the project by 2011 when the project went on floor in 2007.

Wednesday, September 21, 2016

Petroleum pipeline project gathers momentum

The much-talked about petroleum pipeline project has gathered momentum after a brief halt due to last year's economic blockade.
Construction of the pipeline project is expected to begin from December, according to the Nepal Oil Corporation (NOC).
The Raxual-Amalekhgunj Petrol Pipeline project has gathered momentum as its detailed project report has been finalized by Indian Oil Corporation (IOC) and NOC joint team in New Delhi. A team led by NOC executive director Gopal Khadka is in New Delhi to finalise the detailed survey report.
Indian prime minister Narendra Modi had promised to expedite the project during his visit to Kathmandu in August last year. However, the project had become uncertain because of the economic blockade imposed by India following promulgation of the constitution a year ago.
"The uncertainty has finally ended as NOC and IOC have already completed the detailed survey study of the project,” an NOC official said from New Delhi. "Construction woks will complete within a year."
The length of the pipeline, however, has decreased after the detailed survey. Earlier, the length of the pipeline was estimated at 41 km. However, the recent study showed that the pipeline will be 37.6 km long.
The joint study has also estimated the project to cost at Rs 4.40 billion. India will invest Rs 3.20 billion, while Nepal will chip in Rs 1.20 billion, according to the study.
“The construction will start soon,” a deputy director said, adding that IOC engineers have completed the study, making the project viable. He said that the IOC has asked the Nepali side to help clear physical structures and trees along the proposed sites.
Around 13,000 trees have to be cleared along the proposed pipeline, according to the survey. Similarly, some electric poles and transmission lines also need to be relocated.
The NOC team will also request the IOC to increase the capacity of the pipeline as the demand for petroleum products in Nepal is increasing by 14 percent annually in recent years. Some 1500 tankers have been ferrying petroleum products from India to Nepal at present. Once the pipeline is ready, the transport cost is expected to come down making the petroleum products cheaper. Similarly, it is also expected to ensure regular supply of petroleum products.
According to officials, the pipeline can pump 3,000 kiloliters of petroleum products at a time.
Meanwhile, NOC and IOC will also review the petroleum products agreement signed in 2012. The agreement has to be reviewed every five years.

Tuesday, September 20, 2016

Himalaya Airlines to fly Colombo from October 1

Himalaya Airlines, a Nepal-China joint venture airline, is starting scheduled flight to Colombo from October 1.
The airline will fly its Airbus A320-214 – configured with eight Business Class and 150 Economy Class seats – on the new route, according to vice president-administration of Himalaya Airlines Vijay Shrestha.
Himalaya Airlines will fly to the Sri Lankan capital city three times a week on Tuesdays, Thursdays and Saturdays. It will depart from Tribhuwan International Airport (TIA), Kathmandu at 1130 hours and will arrive in Bandaranaike International Airport, Colombo at 1515 hours, according to Shrestha. "The flight leaves Colombo at 1615 hrs and arrives Kathmandu at 2015 hours on the same day,” he added.
“After an overwhelming response received from our two non-scheduled flights to Colombo, we found this route to be very potential," he said, adding, that the airlines has observed passenger traffic data between the two countries over the last several years before arriving at the decision to commence scheduled flights.
He also said that the airlines was pleased to be able to resume services to and from Colombo as it is an important market for tourism promotion of both countries. "Flying to this destination will definitely promote tourism between two nations as well as generate new business opportunities," Shrestha added.
The airline has appointed Classic Travel as its General Sales Agents (GSA). The company will be responsible for the airline's sales and marketing, market development, reservations and ticketing services representing, according to the statement.
Himalaya Airlines is offering one-way fare at Rs 29,191 for and roundtrip fare at Rs 50,041.
The fare is inclusive of all government taxes.
The airline started commercial flights on May 31, starting a direct flight to Doha, Qatar. It has plans to connect Kathmandu with New Delhi, Yangon, Dammam, Beijing, Lhasa, Chengdu, Bangkok, Hong Kong and Dubai.
Tibet Airlines owns 48.99 percent of stakes in the airline, while the remaining 51.01 per cent are held by a consortium of Nepali investors.

Monday, September 19, 2016

One Year After Constitution Promulgation: Whither economic revolution

The country is celebrating first anniversary of the promulgation of the new constitution. One year on, the constitution that was expected to end political transition spanning almost seven decades and bring stability has still been revolving around the politics, pushing the economic agenda on the back burner.
The new constitution was expected to pave the way for prosperous Nepal ending political transition, according to Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Pashupati Muraraka. "But the country is still hovering around the political agenda," Murarka said.
"The path to prosperity passes through rule of law and economic freedom," he said, adding that the business fraternity had a bitter experience over the past year due to old laws and the lack of law that encourages private sector investment. "Most of the laws related to private sector and investment are redundant and hence are in need of amendment."
The legal fraternity also believes that several laws related to the economic sector are in need of amendment. Advocate Jagdish Dahal says that the current laws need amendment so that they can help create investment-friendly environment. "Some of the laws discourage private sector investment," he added.
Confederation of Nepalese Industries (CNI) president Haribhakta Sharma echoed Murarka.
"Rule of law and the confidence in people that the law is equal for everyone help create investment-friendly environment and promote fair practice and competitiveness in the private sector," Sharma said, adding that the culture of 'some animals are more equal than others' creates an unjust environment and prohibits fair competition. "On top of that, it is already late to bring the economic agenda to the forefront."
The time calls for bringing the economic agenda to the forefront as promised by our political leaders, Sharma said. "The leaders should now fulfill their commitment of economic revolution. But even after the promulgation of constitution, stability has remained elusive which has become a major concern for investors."
However, the leaders are still seen busy in political wrangling. Though the constitution has ensured equal opportunity, the governments formed in the past year have promoted crony capitalism and those who are near and dear to political parties and leaders have got favouritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.
It is but irony that the country witnessed the lowest economic growth of 0.77 per cent in the year when the constitution was promulgated though due to devastating earthquake and economic blockade. The earthquake and economic blockade has been projected to increase the number of poor people in the country, making Nepal one of the poorest counties in South Asia.
"The political leadership now has to understand that they cannot get respect in the world for being the leader of one of the poorest countries of the world," an economist said. "The leaders should correct themselves and concentrate on economic development to make Nepal a prosperous country so that they also get due respect," he suggested.

Saturday, September 17, 2016

Chaudhary calls for more philanthropic contributions

Chairman of Chaudhary Group Binod Chaudhary has stressed the need for significantly increasing private sector spending on philanthropic projects.
"We need to recognise the importance of our societies' sustainability," Chaudhary said, addressing the Milken Institute Asia Summit in Singapore yesterday. "We, the private sector, should seriously reflect upon our contribution to the society that is so important to us."
Rather than thinking of profit as the prime objective, the private sector should focus on doing sustainable and socially responsible business, Chaudhary told top business leaders attending the summit.
Chaudhary's remarks came on the backdrop of Chaudhary Foundation's ongoing CG Shelter and CG School projects in the earthquake-affected districts of Nepal. He was recognised with the 'Asian Man of the Year' award by 'We Care for Humanity', a US-based humanitarian organisation, at the UN Building, New York, in August in recognition of his contribution to rehabilitate the earthquake survivors.
Chaudhary also called upon the world business leaders to support Nepal's post-quake rebuilding efforts. "Nepal is making effort for rebuilding," he said, adding that the business sector can definitely contribute toward this end.
Stating that the earthquake came as an unfortunate disaster for the people of Nepal, Chaudhary said that the country could nevertheless take the rebuilding effort as an opportunity for economic growth. "We are doing our best for rebuilding, but have been unable, so far, to take it forward as a catapult for economic development. We have this opportunity in hand, and we need to take it," he added.
Chairman and chief executive officer of Singapore-based KS Energy Kris Wiluan, founder and chairman Emeritus of India-based Sobha Group PNC Menon, and founder of Room to Read John Wood were the co-panelists with Chaudhary. Chief executive officer of JP Morgan Private Bank Andrew L Cohen moderated the event. Top leadership of private and non-government sector from across the world attended the prestigious annual summit.
The Milken Institute is a non-profit, non-partisan think tank working to increase global prosperity by advancing collaborative solutions that widen access to capital, create jobs and improve health. It conducts data-driven research, action-oriented meetings and policy dialogues toward that end.

Friday, September 16, 2016

Nepal-India agree new loans, to push ongoing hydro projects

Nepal and India today signed an agreement for a line of credit (LoC) of $750 million for post-earthquake reconstruction in Nepal.
"We have today signed the agreement for a line of credit of $750 million for post-earthquake reconstruction of Nepal," Indian Prime Minister Modi said in a speech at Hyderabad House, in New Delhi, according to the Press Information Bureau at the office of the Indian prime minister. "I am confident that it would bring relief to millions of people affected by last year's devastating earthquake in Nepal," he added.
India has also agreed to extend additional LoC for new projects such as Phase-2 of  the Tarai Roads, power transmission lines, substations and a polytechnic in Kaski, Modi said, adding that India's initiatives for open skies, cross-border power trade, transit routes and cross-border connectivity would directly benefit Nepal and help strengthen economic partnership. "Nepal and India are also closely working on a range of areas of economic engagement including energy and water resources sectors," he said.
"Prime Minister Prachanda and I agreed to push for speedy and successful implementation of the ongoing hydro-power projects, and development and operationalisation of transmission lines," he said, adding that it would be a source of much needed energy, and revenue generation for Nepal.
Modi also said that he and the visiting Nepali prime minister have agreed to showcase the shared Buddhist heritage and focus on the development of Ayurveda and other traditional systems of medicine, apart from agreeing to focus on close monitoring and time-bound completion of all development projects. "I and the Nepali prime minister are confident that our decisions today would provide strength to the economic engagement and take it to new heights."
The $750-million credit line is over and above the $1 billion – $250 million as grants and $750 million as a soft loan – which India announced following the devastating earthquake in Nepal last year that claimed over 8,000 lives.
Likewise, Nepal and India also signed a memorandum of agreement (MoU) for project management consultancy services for upgrading and improving the road infrastructure in Nepal's Tarai area.
National Highways and Infrastructure Development Corporation Ltd (NHIDCL) – an Indian government company under the Ministry of Road Transport and Highways that is mandated to build a network of roads in tough terrain, including the north eastern Indian states – is going to provide consultancy to the Nepal government for construction of 10 postal roads in the Tarai region bordering India, at a cost of Indian IRs 5 billion.
Likewise, Nepal and India also signed another agreement on a first amendatory dollar credit line for post-earthquake reconstruction projects in Nepal, according to the PIB.
However, Nepal has failed to prepare projects to absorb the earlier line of credit (LoC) of $1 billion announced by Modi in 2014. Nepal has only been able to absorb only $550 million out of the total.
Of the total of LoC announced in 2014, a total of 14 road projects including small ones and local ones have been identified that could consume $330 million, while $200 million has been allocated for two irrigation projects.

ADB projects 4.8 per cent economic growth, 8.5 per cent inflation

Asian Development Bank (ADB) has projected the economy to grow by 4.8 per cent – due to continued normalisation of trade and supplies, steady remittance inflows, faster pace of post-earthquake reconstruction, modest fiscal stimulus and more normal monsoon – in the current fiscal year. The government has targeted to achieve 6.5 per cent economic growth.
Likewise, the inflation, according to the ADB, will remain at 8.5 per cent, due to better agricultural harvest on the back of normal monsoon, subdued inflation in India, low international fuel and commodity prices, and normalisation of production and supplies since February 2016, which will likely lower general prices of goods and services in the current fiscal year despite the demand-side pressures emanating from the earthquake-related fiscal stimulus.
However, the government – in its budget – and central bank – in the Monetary Policy – has targeted to contain the inflation under 7.5 per cent.
Releasing the Macroeconomic Outlook for 2016-17 today, the multilateral development partner said that the ongoing developments and a cautiously optimistic outlook on reconstruction and political situation is expected to push the GDP growth to 4.8 per cent.
The ADB forecast is, however, lower than the government's target of 6.5 per cent announced in the budget for the current fiscal years. ADB has tried to accommodate the downside risks while calculating the economic forecast.
Agriculture, industry and services outputs are expected to contribute 0.7, 1.0 and 3.0 percentage points, said the ADB country director Kenichi Yokohama, releasing the Outlook.
A downside risk to the forecast is the more than expected damage caused by natural disasters, especially flooding and landslides, to agricultural output; slow rehabilitation and reconstruction works; slow pace of budget execution; and depressed demand in services sector arising from the deceleration of remittance inflows. But the better monsoon and expected pace of reconstruction works – in the current fiscal year – has helped create moderately optimistic scenario, the report reads.
"However, it hinges on the scale of recovery of agricultural output given the normal monsoon, the scope and pace of post-earthquake reconstruction and rehabilitation, budget execution, and remittance inflows,” principal economist at the ADB Sharad Bhandari said, adding that the monsoon rains were above normal and on time unlike in the past few years.
Approximately, 80 per cent of total rainfall occurs between June and September. The Ministry of Agricultural Development has estimated that paddy transplantation has been higher compared to previous years. Paddy transplantation averaged about 95 per cent of 1.4 million hectares of rice field by the first week of August, much higher than 75 per cent in the fiscal year 2014-15.
However, widespread flooding in the Tarai region and the mid-hills, and landslides caused some damage to crops during the last week of July and the first week of August, he added. "The outlook for industrial and services output is contingent upon the evolving political situation, reconstruction work, pace of budget execution, recovery of tourism sector and remittance inflows," said Bhandari.
The scope and pace of reconstruction projects will affect demand for quarrying, manufacturing and construction activities, which largely dictates the trajectory of industrial output.
Timely, effective and judicious budget execution, which includes both accelerated spending and reform measures, will be at the core of industrial and services sector recovery. Similarly, a slowdown in the growth of overseas migrants is bound to affect remittance inflows, which subsequently would affect the major components in the services sector, he said, adding that increasing the quantum and quality capital spending is crucial to building the necessary infrastructure to graduate from Least Development Country (LDC) status to a developing status by 2022, and the long-term goal of becoming a middle income country by 2030.

PPA implementation still challenging
KATHMANDU: Though amended Public Procurement Act (2016) has some desirable features, there remains a gamut of challenges in the procurement process that has delayed the development projects, the Asian Development Bank said today.
Additional penalties – forfeiture of bid security – may not be sufficient to engage good contractors, read a special chapter of the Macroeconomic Outlook for 2016-17 issued by the ADB. "Improved quality of selection is also necessary," it reads, adding, "Additional performance guarantees may not be sufficient to deal with low bids, apart from stringent technical evaluation is necessary."
Likewise, the increase in threshold to Rs 20 million from Rs 6 million for works contracts/tender without requiring bidders' qualification may foster malpractice in the construction industry, it states identifying the challenges. "Thresholds applied to international bidders may violate World Trade Organisation (WTO) rules as well as procedures of multilateral development banks," the report added.
The multilateral donor, however, has praised the amendment for placing clearer authority on chief of the procuring entity for timely and quality procurement and execution of contract; for explicitly recognising e-bidding now and six additional direct procurement methods added, greater delegation of authority to facilitate decisions on cost variations, PPMO's regulatory functions strengthened, greater clarity on different procurement processes for methods such as design and build, turnkey/EPC, public-private partnerships, among others.