Friday, September 30, 2016

Nepal's competitiveness eroding

Though Nepal has improved its competitiveness by a notch, it has lost its rank as the third most competitive economy in South Asia, according to Global Competitiveness Report 2016-17 published by World Economic Forum (WEF).
Nepal scored 3.87 points and ranked 98th among 138 economies in the world, reveals the Global Competitiveness Index (GCI). The country was at the 100th position among 140 countries last year.
In South Asia, India leads the chart with global ranking of 39, followed by Sri Lanka (71) and Bhutan (97), whereas Nepal slipped to fourth most competitive economy from last year's third most competitive economy. The GCI has ranked Bangladesh and Pakistan at 106th and 122nd position, respectively.
However, the country boasts the best macroeconomic environment in South Asia, and after significant recent improvement, the second highest level of health and primary education, according to the report.
But Nepal is the worst performer in terms of infrastructure. "The quality of infrastructure in Nepal has stalled," the report added.
Nepal is still under the factor-driven economies or Stage 1, which has 35 countries.
There are three sub-indices in the competitiveness report; Basic Requirements, Efficiency Enhancers, and Innovation and Sophistication factors. Nepal is ranked 98th in both Basic Requirements and Efficiency Enhancers sub-indices, while it is at the 127th position in Innovation and Sophistication sub-index.
Likewise, there are 12 pillars under the three sub-indices. Under Basic Requirements sub-index, Nepal ranks 100th with a score of 3.50 in Institutions, 130th in Infrastructure with a score of 2.16, 27th in macroeconomic environment with a score of 5.54, and 82nd in Health and Primary Education pillar scoring 5.56.
Similarly, under Efficiency Enhancer sub-index, Nepal ranks 113th with a score of 3.26 in Higher Education and Trainings, 116th with 3.90 score in Goods Market Efficiency, 103rd with 3.86 score in Labour Market Efficiency, 73rd with 3.91 score in Financial Market Development, 126th with 2.56 score in Technological Readiness, and 91st with 3.24 score in Market Size pillars, according to the report.
"Among 138 economies, Nepal ranks 124th with 3.25 score in Business Sophistication and 126th with 2.63 score in Innovation pillar under the Innovation and Sophistication sub-index," it added.
In the Global Competitiveness Report 2015-2016, Nepal was ranked 100th, with a score of 3.9, among 140 economies in the world. Likewise, with a score of 3.8, Nepal was ranked 102nd in the Global Competitiveness Report 2014-2015, among 144 economies.
The report also highlighted government instability, inadequate supply of infrastructure, corruption, inefficient government bureaucracy and policy instability as the most problematic factors in doing business in Nepal.
According to the report, Switzerland is the most competitive economy, followed by Singapore and United States.

Thursday, September 29, 2016

Government launches NTIS 2016 trimming exportable items' list

With an ambitious target to double the export of NTIS products to around 4 per cent of the gross domestic product (GDP) by 2020, the government has today launched the revised Nepal Trade Integration Strategy (NTIS), putting 12 sectors in priority.
It has trimmed the list of goods and services having high export potentials to 12 from 19 in the NTIS 2010 on the basis of comparative and competitive advantages.
According to the revised NTIS or NTIS-2016, the list now has nine products and three services. The new list has prioritised medicinal and aromatic plants, black cardamom, ginger and tea under agriculture produces, and leather products, footwear products, readymade garment, pashmina and hand-knotted carpet under industry category.
Likewise, remittance generating services, IT, BPO and IT Engineering, and tourism are the service products in the NTIS-2016.
Launching the NTIS-2016 today, commerce minister Romi Gaucahn Thakali said that the government was trying to reduce the cost of production of agriculture and industrial products.
However, traders and exporters have complained that the government initiative was simply insufficient to give a boost to exports. Chronic energy crisis and labuor problem are some of the constraints to export growth, they added.
The Ministry of Commerce had revised the NTIS-2010 as per the suggestions of the exporters after export of key products declined continuously despite getting high priority.
NTIS is one of the ambitious programmes that the government launched to promote products and services having high export potentials since last six years. However, export of most of the 19 NTIS products has been disappointing in recent years.
According to the Trade and Export Promotion Centre (TEPC), export of NTIS products increased by a mere 2.08 per cent to Rs 27.41 billion in the last fiscal year. Export of NTIS products is around two per cent of the GDP at present.
Meanwhile, the strategy has set immediate targets that need to be achieved by 2017 and medium-term targets by 2020.
It will also clarify which authority will look after specific products, the ministry officials said, adding that the revised NTIS envisions creating an enabling environment for trade by strengthening the supply capacity as well as institutional capacity development of trade-related institutions. "Capacity enhancement of trade-related institutions could be highly supportive in reducing cost of trade through initiation of various measures."
Commenting that the NTIS 2016 is ‘realistic’, National Planning Commission (NPC) member Dr Swarnim Wagle, on the occasion, said that the country’s export has been slowing due to supply-side incompetencies, deficiencies on the regulatory front, and less than optimum cooperation from the government since the beginning of the new century. Citing examples of some ‘high value to weight ratio’ products like Kobold watches, Sherpa Adventure gear, organic tea, software and creative apps and ophthalmic lenses developed by Tilganga Institute, he said that some Nepali products have been doning amazingly well in the international market by efficiently branding their products
Nepal as a young populous country should not skip manufacturing and rather focus on reviving the manufacturing sector, especially along the Tarai belt, Wagle said, highlighting the possibility of creating mass employment by linking up the Nepali industries with Indian production networks as well as regional and global value chain.
Stressing on the need of complementary reforms, he said that reform and industrial enterprise development, foreign direct investment, labour reforms, logistic industry development, our ambition in tourism all need to be taken simultaneously. "Horizontal reforms or high quality improvements in entire sectors at the same time could be almost impossible for a country like Nepal, which is when anchor investment could be the next best option and Nepal is also focusing on the second alternative, like the special economic zones, targeted investment approaches."
Enhanced Integrated Framework (EIF) – the aid for trade mechanism of World Trade Organisation (WTO) and various other development partners for productive capacity enhancement of least developed countries – has been providing support for NTIS implementation.

Tuesday, September 27, 2016

Growth in developing Asia steady: ADB

Developing Asia is expected to grow steadily despite external pressures and should meet earlier forecasts for 2016 and 2017, aided by resilience in the region's two largest economies, the People's Republic of China and India, according to a new study of Asian Development Bank (ADB).
In an update of its flagship annual economic publication, Asian Development Outlook (ADO) 2016, ADB kept its 2016 and 2017 gross domestic product (GDP) growth forecasts unchanged from its March estimates of 5.7 per cent for each year.
"Strong growth in the PRC and India is helping the region maintain its growth momentum,”, deputy chief economist of the ADB Juzhong Zhuang said. "Still, policymakers need to watch for downside risks including potential capital reversals that could be triggered by monetary policy changes in advanced economies, especially the US."
A delayed recovery continues to hamper major industrial economies – like the US, the euro area, and Japan – and the ADO Update has trimmed the earlier 2016 growth forecast to 1.4 per cent, rising slightly to 1.8 per cent in 2017, according to a statement issued by the Manila-based multilateral donor.
Fiscal and monetary stimulus measures supported stronger-than-expected growth in the PRC. The ADO Update also raised the PRC's growth forecasts by 0.1 percentage points in 2016 and 2017, to 6.6 per cent and 6.4 per cent respectively, which is helping to offset sluggishness elsewhere in East Asia, the statement added.
The sub-region is now expected to grow by 5.8 per cent in 2016, and 5.6 per cent in 2017.
"South Asia, driven by the Indian economy, will retain its rapid pace of growth with GDP seen expanding 6.9 per cent in 2016, and 7.3 per cent the following year, unchanged from the March forecasts. India's growth forecast for fiscal year 2016 is kept at 7.4 per cent, supported by strong private consumption, while the milestone tax reform passed this year and progress in restructuring bank balance sheets should help revive investment and propel growth of 7.8 per cent in 2017," it adds.
The ADO Update also notes that risks to the region's outlook remain tilted to the downside, with the external environment still fragile and the possibility of a US Federal Reserve Rate hike leaving open the potential for disruptive capital flows that could complicate macroeconomic policy management in the region.

Asia could benefit from low-carbon emission
Developing Asia stands to gain far more than it will need to pay to shift to a low-carbon growth, the Asian Development Bank (ADB) report reads.
Keeping global temperature increases below 2 degrees Celsius, as agreed at the 2015 Paris climate summit, will require developing Asia to spend an additional net $300 billion per year on clean-energy infrastructure alone through 2050.
The finding is set forth in a special theme chapter, "Meeting the Low-Carbon Growth Challenge" in an update to its flagship annual economic publication, Asian Development Outlook 2016.
"This is a substantial sum, but the economic returns from adopting low-carbon policies needed to mitigate the increasingly devastating impacts of climate change, far outweigh the costs," said deputy chief economist of the ADB Juzhong Zhuang.

Sunday, September 25, 2016

After Upper Marshyangdi 'A', Sinohydro eyes Upper Kaligandagi

After successfully completing 50-MW Upper Marshyangdi 'A' Hydropower Project, SinoHydro Resources Ltd has set its sights on 65-MW Upper Kali Gandaki Hydropower Project.
Talks for power purchase agreement (PPA) of the Upper Kali Gandaki project, which will be based in Myagdi district, is underway. Environment Impact Assessment (EIA) study of the project has already been completed, according to higher official of the SinoHydro.
The generating license of the project is held by Global Trade Link. It is learnt that SinoHydro will form a joint venture with Global Trade Link to develop the project.
“We are planning to build more hydropower projects in Nepal as the country is rich in water resources,” chairman of the Sino Hydro Resources Ltd – a Chinese government undertaking – Sheng Yuming said.
Sharing his experience in hydropower development, Yuming sad four factors – time, safety, quality and cost – are very important for hydropower projects.
However, the Upper Marshyangdi 'A', which was delayed by 10 months due to last years' earthquake and the economic blockade – has witnessed cost escalation of 8 per cent from the initial estimation of Rs 16 billion. The project went on floor on 2012.
Criticised for delaying the projects like Kulekhani I, the Chinese government undertaking has completed the project with the private sector almost on time.
Comparing the investment scenario in the countries like Pakistan and Lao PDR where SinoHydro has invested in power generation, Yuming said that Nepal is comparatively a safer destination for investment.
Power generated by Upper Marshyangdi 'A' is being connected to national grid on Monday.
SinoHydro Resources owns 90 per cent stakes in SinoHydro-Sagarmatha Power Company, the developer of Upper Marshyangdi 'A'.
Energy minister Janardan Sharma and ambassador of the People's Republic of China to Nepal, Wu Chuntai, are jointly inaugurating the power plant on Monday. The 25-MW will be added to the national grid on Monday and remaining 25-MW will be added in a couple of days, according to the SinoHydro-Sagarmatha Power Company.
Upper Marshyangdi 'A' will be the largest project, in terms of installed capacity, to start generation after the Madhya Marsyangdi (70 MW) which started generation in 2008.
A 20- km transmission line built as per the contingency plan by the developer itself connects the power generated by Upper Marshyangdi 'A' to the substation of Madhya Marsyangdi in Beshisahar of Lamjung.
Upper Marshyangdi 'A' is the first hydropower project built with Chinese foreign direct investment (FDI) and financed by China Exim Bank.

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.

Thursday, September 15, 2016

Nepal drops two notches in economic freedom

Nepal has been ranked 108 out of 159 countries and territories included in the Economic Freedom of the World: 2016 Annual Report, released today by Samriddhi Foundation in conjunction with Canada's Fraser Institute. Last year, Nepal was at the 106th position with a score of 6.56.
With an overall score of 6.54 – in a scale of 1 to 10 where a higher value indicates a higher level of economic freedom – Nepal ranked 108th out of 159 jurisdictions in this year's index. With this, Nepal has dropped two places down in the global ranking.
Nepal's score dropped to 7.89 from 8.72 under Size of Government component, whereas its score climbed to 4.79 from 4.33 under Legal System and Property Rights. But Nepal has the worst score and ranking in Legal System and Property Rights.
Likewise, Nepal's score in Access to Sound Money climbed to 6.43 from 6.42. Nepal also improved its score to 6.72 from 6.47 under Freedom to Trade Internationally.
Under Regulation of Credit, Labor and Business Component also, Nepal's score climbed to 6.87 from 6.85. However, overall score dropped to 6.54 this year from last year's 6.56, according to the report.
"Economic freedom leads to prosperity and a higher quality of life, while the lowest-ranked countries are usually burdened by oppressive regimes that limit the freedom and opportunity of their citizens,” said Fred McMahon, Dr Michael A Walker Research chair in Economic Freedom with the Fraser Institute.
Economic freedom - also second generation human rights - ensures countries' prosperity.
According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives.
For example, countries in the top quartile of economic freedom had an average per-capita GDP of $41,228 in 2014, compared to $5,471 for bottom quartile nations. Moreover, the average income in 2014 of the poorest 10 per cent in the most economically free countries ($11,283) dwarfed the overall average income in the least free countries ($5,471).
And life expectancy is 80.4 years in the top quartile countries compared to 64 years in the bottom quartile.
Globally, Hong Kong (9.03) again tops the index, continuing its streak of number one ranking, followed by Singapore (8.71), New Zealand (8.35), Switzerland (8.25), Canada (7.98), Georgia (7.98), Ireland (7.98), Mauritius (7.98), and United Arab Emirates (7.98). Australia and the United Kingdom tied for 10th with a score of 7.93, according to the report.
The 10 lowest-ranked countries in this year's report are Iran, Algeria, Chad, Guinea, Angola, Central African Republic, Argentina, Republic of Congo, Libya and Venezuela.
Some despotic countries such as North Korea and Cuba couldn't be ranked due to lack of data, the report states. The report further reads that Germany (7.55), Japan (7.42), France (7.30), Russia (6.66), India (6.50), China (6.45) and Brazil (6.27) are some of the countries that have improved their ranking.
The Fraser Institute produces the annual Economic Freedom of the World Report in cooperation with the Economic Freedom Network -- a group of independent research and educational institutes in nearly 100 nations and territories.
The Economic Freedom of the World Report is world's premier measurement of economic freedom, measuring and ranking countries in five areas: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labor and business.
This year's publication ranks 159 countries and territories.

Tuesday, September 13, 2016

NAC aircraft’s tire flattens at TIA

A tire of an aircraft of Nepal Airlines Corporation (NAC) from New Delhi got flattened while landing at Tribhuvan International Airport (TIA) today afternoon.
TIA sources that one rear tire of the Airbus A320 burst while it was heading to parking bay after landing. "The aircraft is stranded after the tire got flattened, we are unable to take it to the parking bay,” said an official at TIA.
The Air Traffic Control Tower quickly alerted the pilot that wheel no. 2 was detached towards the runway while he was conducting a touchdown roll. The 158-seater Airbus Lumbini was fully occupited, sources said. But all the passengers onboard the plane are safe and have been shifted to the airport terminal. The burst also caused some damage on the runway.
The country’s only international airport has been closed and all flights in and out of TIA were halted for an hour after the aircraft got stuck at runway. According to TIA Spokesperson Prem Nath Thakur, all inbound and outboud flights were halted from 12:45 pm to 1:48pm.
The flight 206 onboard had 150 passengers including foreign minister Prakash Sharan Mahat, who was flying into Kathmandu from New Delhi.
Mahat was returning home after completing his two-day official visit to New Delhi to set the stage for visit of Prime Minister Puspa Kamal Dahal 'Prachanda', which is slated to begin from September 15.
Meanwhile, NAC has also cancelled all Airbus-sector flights including New Delhi, Dubai, Hong Kong, Bangkok and Mumbai until further notice, according to NAC’s spokesperson Ram Hari Sharma. The national flag carrier is trying to reschedule few flights as it has now only one Boeing-757 for international operations.

Monday, September 12, 2016

PM to personally monitor national pride projects

Prime Minister Pushpa Kamal Dahal 'Prachnada' has announced that he will personally take stock of all the national pride projects.
Addressing the 37th meeting of National Development Action Committee (NDAC) today, the premier, who also chairs the National Planning Commission (NPC), said that he would personally monitor the national pride projects.
Stating that the past fiscal years have seen low budget spending – especially the development budget that is expected to create employment and contribute to capital formation – Dahal directed the ministers and the secretaries to create an environment to ensure that development projects are completed in time as per the schedule. "If the projects are not moving forward as per the schedule, apply carrot and stick policy," he told ministers and secretaries.
Annual average spending over the past decade stands at around 70 per cent also due to weak governance, age-old administration, political transition and inefficient bureaucracy.
In the last fiscal year 2015-16, the government was able to spend only around half of the development budget.
In the last fiscal year, the government was able to spend 56.30 per cent despite huge reconstruction work expected due to the devastating earthquake of 2015. According to the Financial Comptroller General's Office, the government had spent 71.47 per cent or Rs 585.65 billion, of the total budget of Rs 819 billion in the last fiscal year. Among them, the status of the national pride projects was pathetic.
Asking the ministers and the secretaries to take action against those who are responsible for delay in projects, the PM directed them to identify those, who spend 11 months of the year without doing anything, and spend haphazardly on the 12th month, and punish them accordingly.
Last moment spending has been a repeated trend in Nepal. It not only encourages misuse of resources, but also leads to corruption.
Apart from improving the current governance system and restructuring administrative mechanism, the political leadership must regularly prod the bureaucracy to expedite development projects, if the development projects need to be completed on time.
On one hand the government is unable to spend the development budget and on the other, most of the spending has been on unproductive sector that can neither generate employment nor help capital formation. The delay has only helped in cost escalation of development projects, pulling the economic growth down. In the last fiscal year, Central Bureau of Statistics (CBS) had projected the economy to grow by only 0.77 per cent.
Until policy reforms, depoliticisation of the bureaucracy, enhancing of institutional capacity and restructuring of administration can be achieved, the government – especially PM Dahal – should take a lead role in expediting development projects under his personal initiative, say experts also.
Either Nepal has to expedite development projects on a war footing now or remain poor, under developed and paralysed. In the current fiscal year too, the government has been able to spend only 3.86 per cent of the total budget by the end of the second month.
Delayed development projects have not only been holding the country back, but also adding to economic costs for the people. The weakness of the planning commission and also the various ministries in effectively monitoring development work is going to cost not only the economy but also social progress, as scarce and precious resources are misused in the last months every year thereby encouraging financial indiscipline and recklessness.
The delay in development projects is also due to negligence in monitoring and evaluation, and this has to be looked into seriously, PM Dahal said, asking the bureaucracy and ministers to make sure that the capital budget meet the 80 per cent spending target in the current fiscal year.
Dahal also asked the secretaries and ministers to be present in the meeting with complete homework on how to expedite development projects.
Currently, the Office of the Prime Minister and Council of Ministers looks after mega projects whereas the Finance Ministry looks after projects with outlays of above Rs 150 million. The ministries concerned are also responsible for monitoring development projects apart from the National Planning Commission. Likewise, the parliamentary committees – especially the Development Committee and Public Accounts Committee – also take stock of the development projects. However, many blame the parliamentary committees for obstructing development projects rather than facilitating them.
Almost all the development projects are either running behind schedule, thereby escalating costs, or have shown little progress due to not only political instability but also lack of regular monitoring by the respective departments, ministries, National Planning Commission, and the Office of the Prime Minister and Council of Ministers.
The premier instructed the chiefs of development projects to terminate their contracts if the main contractor is not working in the field.

Sunday, September 11, 2016

After Finance Ministry green signal, NAC to buy two widebody jets

If everything goes as planned, national flag carrier Nepal Airlines Corporation (NAC) will have a new Airbus in its fleet by next September. "We are planning to bring one wide body aircraft by September 2017 while a second one will arrive by April 2018," said Nepal Airlines Corporation (NAC) managing director Sugat Ratna Kansakar.
The national flag carrier is planning to call a tender for two wide body aircraft by December and sign the aircraft purchase agreement by March 2017, he said, adding that the plan appeared possible after finance minister Krishna Bahadur Mahara today promised the NAC team led by tourism minister Jeevan Bahadur Shahi that he would table the proposal in the cabinet soon.
"Finance Minister Mahara has promised to take the proposal to the cabinet to secure the government's guarantee," he added.
NAC had long been seeking government guarantee to purchase two wide body aircraft and expand in the international market. Currently, the national flag carrier flies to eight international destinations including three Indian cities, and it plans to expand to Guangzhou, China soon. The new wide body aircraft will help NAC start non-stop flights to London, Kansakar added.
We will be borrowing Rs 25 billion from the Citizens Investment Trust (CIT) and the Employees Provident Fund (EPF) after the government's guarantee, Kansakar said. "Details of the borrowing plan are being worked out."
NAC has already borrowed Rs 10 billion from EPF for the purchase of two Airbus aircraft last year. The details for fresh borrowing will be worked out by the board and the nitty-gritty of the procurement finalised, he added.
The national flag carrier is planning to phase out its ageing Boeing 757s and run an all-Airbus fleet. The induction of two new jets will bring the number of Airbus aircraft with NAC to four. The Airbus 330 can accommodate up to 280 passengers and serve long-haul destinations like the UK, Japan and Australia.
NAC currently has five different types of aircraft – Boeing, Airbus, Twin Otter, MA60 and Y12e – in its fleet and this has made it difficult to manage different sets of pilots, engineers and spare parts.
The current fiscal year budget has also promised funds for the national carrier to buy the widebodies. NAC's market share on the international routes stood at 7.88 per cent in 2015, up from 5.87 per cent in 2014. Two new Airbus aircraft is expected to double the market share.
The Plan
To fly non-stop on Kathmandu-London-Kathmandu route
First widebody likely ro arrive by September 2017
Second one by April 2018

Friday, September 9, 2016

Parliament ratifies Kyoto convention, customs procedures will be simplified

The parliament today ratified International Convention on the Simplification and Harmonisation of Customs procedures or popularly known as revised Kyoto Convention.
The ratification means Nepal has become party to the convention that is one of the instruments of the World Customs Organisation (WCO). It is expected to help simplify the customs procedures for trade facilitation.
“Nepal, as a member country of World Customs Organisation, will be able to upgrade its customs procedures to the international standard thereby facilitating legitimate international trade while effecting customs controls, including the protection of customs revenue and society, after ratification of the international convention,” said deputy prime minister and finance minister Krishna Bahadur Mahara, addressing the parliamentarians.
The WCO – an intergovernmental organisation headquartered in Brussels – has created various instruments to achieve its goals like enhancing the efficiency and effectiveness of member customs administrations, thereby assisting them to contribute successfully to national development goals, particularly revenue collection, national security, trade facilitation, community protection, and collection of trade statistics.
The convention is also an international agreement that provides a set of comprehensive customs procedures to facilitate legitimate international trade while effecting customs controls, including the protection of customs revenue and society, according to the WCO.
"It deals with key principles of simplified and harmonised customs procedures like predictability, transparency, due process, maximum use of information technology, and modern customs techniques, including risk management, pre-arrival information and post-clearance audit," it added.
The revised Kyoto Convention comprises of several key governing principles, including transparency and predictability of customs controls, standardisation and simplification of the goods declaration and supporting documents, simplified procedures for authorised persons, maximum use of information technology, minimum necessary customs control to ensure compliance with regulations, use of risk management and audit based controls, coordinated interventions with other border agencies and a partnership with the trade.
"The ratification of the convention will help block revenue leakage by bringing transparency, reducing cost of international trade and help frame predictable and transparent legal provisions for trade," Mahara said, adding that Nepal and the Maldives are the only two countries in South Asia that are in the process of ratifying the convention that has 105 countries as its party. "It also promotes trade facilitation and effective controls through its legal provisions that detail the application of simple yet efficient procedures and also contains new and obligatory rules for its application."
As part of becoming the party to the convention, Nepal has already incorporated 97 indicators, out of 122, in the law. “We will make necessary amendments to include remaining 25 indicators in the law,” Mahara said, adding that the government has already prepared the drafts of the laws for amendment.
He also informed that the current Customs Acts needs to be amended as it needs to include various procedures, including customs declaration, authorisation of papers, sample collection at customs, physical test, provisions of lab, revenue payment system and bidding at the customs. He also said that such simplification of customs procedures will help facilitate the international trade.
The revised Kyoto Convention was adopted in 1999 and entered into force in February 2006. The contracting parties – or countries – that have ratified the convention cover at least 80 per cent of the value of globally traded goods.

Thursday, September 8, 2016

Government has no plan to bring supplementary budget

Dispelling rumours that the government is planning to bring a supplementary budget, deputy prime minister and finance minister Krishna Bahadur Mahara today said that the government has no such plan.
Addressing a meeting of the parliamentary Finance Committee, he said that the government has not done any homework for bringing a supplementary budget and such budget cannot be brought without political consensus.
Mahara, however, said that he is trying to forge political consensus for bringing three-budget related finance bills that were thwarted by his party – Communist Party of Nepal (Maoist Centre) and the Nepali Congress – earlier this year.
In July, the parliament had rejected three finance bills – the Finance Bill 2016, the Bill to Mobilise Internal Loans, and the Loan and Guarantee Bill (21st amendment) – although the budget itself was passed, creating moral pressure on the then K P Sharma Oli government to resign.
"Since the bills cannot be tabled in the same session of the House, we have to take the opposition into cofidence to pass them as the government has to suspend some parliamentary provisions to allow tabling of the bills," he added.
Although the government can make spending following the passage of the budget earlier this year, the thwarting of the three finance bills has made it difficult for the government to mobilise revenues.
Finance Secretary Shanta Raj Subedi, speaking at the committee, said that the Finance Ministry is currently mobilising the revenue through Periodic Tax Recovery Act, 1955, since the finance bills were thwarted by parliament. "The Periodic Tax Recovery Act, 1955, allows the government to mobilise revenue for six months," he said, adding that the government will be in difficulty, if the finance bills are not passed from the House by November 30.
The Periodic Tax Recovery Act 1955 automatically came into effect after then finance minister Bishnu Prasad Poudel presented the budget for the fiscal year 2016-17 on June 28. However, some economists argue that the government cannot mobilise revenue (collect taxes) through the Periodic Tax Recovery Act, 1955 after rejection of the finance bills by the parliament.
The parliament had scheduled approval of the corollary bills on July 13 as it had already approved the Appropriations Bill, paving the way for the government to spend from the beginning of the new fiscal year. But the then Oli government was reduced to minority as one of the key coalition partners, CPN (Maoist Centre), withdrew its support on July 13 making the fate of the finance bills uncertain.
The Finance Ministry has started feeling pressure due to the lack of finance bills, Subedi added without elaborating.
Likewise, revenue secretary Rajan Khanal, on the occasion, said that there is no space for the incumbent government to either increase or decrease the tax, its a pathetic situation that the ministry has to mobilise revenue through Periodic Tax Recovery Act 1955, despite the House session has not been ended.
The earstwhile government led by Oli had brought an expansionary budget of Rs 1.048 trillion budget that is expected to fuel inflation.

Wednesday, September 7, 2016

Global trade finance gap reaches $1.6 trillion, SMEs hardest hit: ADB

The inability of financial institutions to provide $1.6 trillion in support to buyers and sellers of goods across countries resulted in forgone growth and job creation in 2015, according to an Asian Development Bank (ADB) Brief released today.
Developing Asia’s share of the global trade finance gap was $692 billion, including India and the People’s Republic of China.?
In its new study, '2016 Trade Finance Gaps, Growth, and Jobs Survey,' ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 337 banks in 114 countries and 791 firms in 96 countries. The annual survey is now in its fourth year.
"The growth of the trade finance gap in 2015 continues to be a drag on trade, and small- and medium-sized enterprises (SMEs) are the most affected,” said head of ADB’s Trade Finance Programme Steven Beck. "The survey shows that both globally and nationally, regulators and policymakers should increase support for trade finance through smarter banking regulations, more transparent and comprehensive credit ratings systems, and capacity building for local banks," he said, adding that ADB’s Trade Finance Programme stands ready to assist member countries and our client banks in all of these areas.
According to the brief, trade finance gaps persist in part due to the cost and complexity of compliance with banking regulations, with 90 per cent of surveyed banks citing anti-money laundering and know-your-client requirements as impediments to their ability to expand trade finance, especially for small businesses. Basel III banking regulations, which set liquidity requirements for bank finance, are also cited by 77 per cent of respondents as a major barrier to finance new trade.
The report notes small- and medium-sized enterprises (SMEs) face the greatest obstacles in accessing affordable trade financing.
Globally, 57 per cent of trade finance requests by SMEs are rejected, against just 10 per cent for multinational companies. High rejection rates lead many firms to turn to inefficient informal financing.
Financial technology (Fintech) can help bridge the financing gap for businesses left out of trade finance, according to the brief. But awareness of digital finance by small businesses remains low, with 70 per cent of responding companies indicating that they are unfamiliar with these tools. Among firms that were familiar with digital finance, peer-to-peer lending had the strongest uptake rates in developing countries.
Since 2009, ADB’s Trade Finance Programme has supported more than 8,200 SMEs across the region, with about 11,800 transactions valued at over $23.6 billion, in sectors ranging from commodities and capital goods, to medical supplies and consumer goods.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in Asia. It is owned by 67 members, 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.

Tuesday, September 6, 2016

PDA with Upper Trishuli soon: Energy Minister Sharma

The government is preparing to sign Project Development Agreement (PDA) with the promoters of the 216 MW Upper Trishuli-1 hydroelectricity project, according to energy minister Janardan Sharma.
Speaking at a forum 'Foreign Direct Investment in Hydropower' jointly organised by International Finance Corporation (IFC), Independent Power Producers’ Association of Nepal (IPPAN) and Nepal Water and Energy Development Company (NWEDC), in the capital today, Sharma said that the PDA for Upper Trishuli-1 will be signed soon.
According to a Energy Ministry, PDA negotiations between the ministry and NWEDC have reached final stages and that the agreement will be signed soon.
NWEDC is a joint venture company with stakes of three Korean companies – Korea South East Power Company (KOSEP), Daelim Industrial Corporation and Kyeryong Construction Industrial Corporation – the IFC and Bikesh Pradhanang, a Nepali investor. The run-of-river type project will generate 216MW electricity through three turbines of 72MW capacity each.
The hydropower project is expected to generate 1456.4 Gigawatt hours of net electricity per year, of which 1149.7 Gigawatt hours would be generated in the wet season and 306.7 Gigawatt hours would be generated in the dry season. The project site is near Dhunche, the headquarters of Rasuwa district.
It is high time for Nepal to attract FDI to exploit its rich water resources, Sharma said, adding that Nepal has both natural and human resources. "What we do not have is enough investment. Therefore, the importance for FDI is very high for Nepal."
Stating that Nepal has already signed a Power Trade Agreement (PTA) with India, a huge market for Nepal’s hydroelectricity, minister Sharma said this agreement is going to encourage FDI in Nepal’s hydropower sector.
Sharma went on to say that it takes years for hydropower promoters to get license and sign Power Purchase Agreement (PPA) and Power Development Agreement (PDA). "This does not encourage the foreign investors,” he added.
Similarly, director general of the Department of Industry Maheshwor Neupane, on the occasion, said that the government has a policy of prioritising the hydro sector for FDI. "FDI in hydropower sector has been increasing, though slowly," he added.
Stating that the Korean government has built fundamental industries and developed Korea’s economy through foreign loans and foreign direct investment, Korean ambassador to Nepal Choe Yong Jin said, “Nepal has one of the largest potentials in generating hydropower. "But such a great potential can only be materialised into reality through investment only," he said, "And this investment is possible through discussions with all the stakeholders and decisiveness and strong will of the leaders."
Envoy Jin expressed hope that the Upper Trishuli-1 Project, which is being developed by the international consortium NWEDC in collaboration with Korea South-East Power (KOSEP) and IFC, will make significant contribution to increasing total hydropower generation of Nepal.
Likewise, on the occasion, chief executive of KOSEP Heo Yup shared Korea’s FDI-funded development story. "Realising that borrowing foreign funds and inviting FDI were essential for infrastructure development, Korean government took various measures to protect foreign capital and, as a result, it attracted large amounts of foreign capital," he said, adding, "As a result, Korea was able to build a base for a sharp economic growth that surprised the whole world."
After 30 years of receiving FDI, he said, Korea became one of the top 10 exporting countries in the world, with its export volume of $2,000 billion. "Now, it is Korea who makes FDI in other countries."
Speaking at the programme, president of Independent Power Producers’ Association Nepal (IPPAN) Khadga Bahadur Bisht said that the policy makers of Nepal should seriously dwell on the FDI. "We have been seeking FDI since 1981. But there have been only a few hydro projects funded through FDI," he said, adding that Nepal hasn’t done well in terms of attracting FDI. "Nepal’s policy makers have to give priority to FDI."
A panel discussion was also held in the second session of the programme. The panel discussion chaired and moderated by former member of National Planning Commission (NPC) Dr Swarnim Wagle included energy secretary Suman Prasad Sharma, IPPAN president Khadga Bahadur Bisht, project manager of PPIB of Pakistan Iqbal Munawar, principal investment officer of IFC Kamal Dorabawila, USAID's energy policy and strategy advisor Michael Boyd as the panelist.

Monday, September 5, 2016

ADB appoints Ingrid van Wees as new vice president

The Asian Development Bank (ADB) has appointed Ingrid van Wees as vice president for Finance and Risk Management.
van Wees will be responsible for the overall management of the operations of the Office of Risk Management, the Controller’s Department, and the Treasury Department. She succeeds Thierry de Longuemar, according to a press note issued by the ADB today. van Wees is a senior official in the German Investment and Development Corporation (DEG) where her current portfolio covers debt, equity, and fund investments in Europe, the Middle East, and Asia, reads the note. "She also has treasury experience in developmental investment banking."
Before she moved to DEG in 2004, van Wees held management positions in corporate finance and business development with private corporations.
She holds a Masters degree in Business Administration from INSEAD and Mechanical Engineering from Delft University of Technology in the Netherlands.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members, 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including co-financing of $10.7 billion.

Friday, September 2, 2016

Minimising societal risk key for hydropower development

The societal risks of alienating local people in areas where hydropower projects are constructed are nearly as important to consider as climate risk, according to a new study. The study – conducted by International Centre for Integrated Mountain Development (ICIMOD) and FutureWater – is based on the study of glaciers across the Hindu Kush Himalayan region, which was presented during Stockholm World Water Week.
According to the study that is conducted to understand the impacts of climate change in the mountains and the possible downstream consequences, these hydropower projects are mostly in mountain areas, and local people often perceive that the benefits accrue to people in the plains, who get electricity, while people in the mountains bear the environmental and social costs.
“Hydropower companies need to provide direct and tangible benefits to local communities to manage this risk,” reads a media release issued today by ICIMOD.
According to theme leader for water and air at ICIMOD Aditi Mukherji, successful benefit sharing mechanisms in Nepal and India has been discussed to come to a conclusion that good and responsible governance at the local level is needed to ensure that local communities derive commensurate benefits from hydropower projects.
The Hindu Kush Himalayan region has nearly 500 GW hydropower potential but only a fraction of it has been developed. As countries in the region gear up for increased hydropower production to alleviate energy poverty, they find themselves grappling with increasing climatic and social risks.
The seminar convened by ICIMOD, Stockholm International Water Institute (SIWI), FutureWater, and Statkraft at Stockholm World Water Week yesterday discussed these risks and the way forward, the release further reads.
"There is a need to manage risks so that the mountains and the plains derive sustainable benefits from the region’s rich hydropower potential,” the release has quoted director general of ICIMOD David Molden as saying. He also stressed on the importance of the Hindu Kush Himalayan region as a global asset.
The hydropower sector is facing major challenges as a result of climate change-induced glacier melt. Glaciers across the region are retreating, leading to changes in future hydrological regimes. At the same time, the risk of glacial lake outburst floods and landslides is increasing, putting both existing and planned hydropower plants at risk.
“Changes in hydrological regimes means that there will be more water in the near future as glaciers melt, but it will decline after 2100,” said Arthur Lutz from FutureWater, a water management research organisation, according to the release.
Martin Honsberg from the hydropower company Statkraft, added that the only feasible way to manage this risk is to be better informed about the impacts of climate change on glaciers and river regimes, which can be done by setting up long-term monitoring systems.
At World Water Week this year, ICIMOD convened various seminars and hosted a booth to draw attention to a range of water-related issues and their impact on the ecosystems and people of the Hindu Kush Himalayan region, the release adds.

Thursday, September 1, 2016

Cooking gas price slashed by Rs 50 per cylinder

Nepal Oil Corporation (NOC) has reduced the price of cooking gas by Rs 50 per cylinder effective from today midnight. The meeting of NOC management today afternoon took the decision to reduce the price of the Liquefied Petroleum Gas (LPG) – popularly known as cooking gas – price by Rs 50 per cylinder, according to the spokesperson of the NOC Bhanubhakta Khanal.
A cylinder of cooking gas will cost Rs 1,325 in the domestic market – after the downward adjustment of the price – from earlier Rs 1,375.
Even after reducing price, the NOC is making a profit of Rs 61.70 per cylinder, as the state oil monopoly has been earning a profit of Rs 111.70 per cylinder, while selling at Rs 1,375 a cylinder earlier. In addition to profit, NOC collects Rs 69.33 on every cylinder as infrastructure development tariff to build its infrastructure, which means that even after revising the price, NOC will still generate profit worth Rs 131.03 on sales of a cylinder.
Likewise, NOC makes a profit of Rs 10.65 per liter of petrol, 5.38 per liter diesel and 16.88 per liter kerosene but the state fuel monopoly has not revised the prices of petrol, diesel and kerosene though the price list of its sole supplier Indian Oil Corporation (IOC) – of September 1 – has increased the price of other petroleum products.
"Since the major festivals are around the corner, we have decided not to increase the price of other petroleum products,” Khanal said, adding that the NOC has reduced the price of cooking gas as per the direction of Supplies Ministry to give relief to consumers ahead of festive season, he added.
The NOC receives new price list as per the international market rates – every fortnight – on the first and 16th day of every Gregorian calendar from its supplier IOC.
Based on the supplier's price list, which is based on the international market rates, the state oil monopoly has introduced automatic pricing mechanism to make adjustments – upward or downward according to price movement – to the prices of petroleum products on September 29, 2014, though the NOC has been reluctant in regularly following the mechanism, and implement it effectively.
In what is seen as a consumer-friendly decision on Sunday, the Supplies Ministry had announced the sale of essentials including cooking gas, lentils, rice, ghee, oil, sugar, paneer and goat at subsidised rates throughout the coming festive season.
The government has announced a festive season discount of Rs 5 per kg for 15 varieties of rice sold by Nepal Food Corporation (NFC), Rs 5 per kg for a kg of sugar and Rs 2 per kg for salt sold by Salt Trading Corporation (STC), and a Rs 10 per kg festive subsidy for ghee sold by the Dairy Development Corporation (DDC).

Cabinet appoints Shrestha as NPC vice chair

The government has appointed executive director of central bank Dr Min Bahadur Shrestha as the vice chair of National Planning Commission (NPC).
Shrestha – an executive director of Public Debt Management Department at the central bank – had also served as the Research Department head of the central bank, Nepal Rastra Bank (NRB).
Having received a PhD from the University of Wollongong, Australia, Shrestha has published half a dozen books on finance, monetary economics, financial liberalisation and economic development.
Similarly, the government has appointed Shreeram Poudel as adviser at Finance Ministry. Poudel is also a board member of the central bank. He had also served as adviser of the Finance Ministry earlier during the term of Baburam Bhattarai-led government.