Monday, December 22, 2014

IFC, GMR Group partner for power projects to unlock hydro potential and promote growth

International Finance Corporation (IFC) – a member of the World Bank Group – has partnered with India’s GMR Group to develop the 900 MW Upper Karnali hydropower plant, and two transmission line projects in Nepal.
The projects will meet energy demands and create jobs in Nepal and the South Asia region.
The transmission projects will evacuate power from the Upper Karnali and 600 MW Upper Marsyangdi Hydropower projects in Nepal. IFC InfraVentures – a global infrastructure project development fund – is a co-developer of these projects. IFC will make investments for project development and help achieve financial closure for these projects, which have a total investment outlay of $1.7 billion. The Upper Karnali plant will create over 3,000 jobs and help reduce greenhouse gas emissions of nearly two million tonnes of carbon dioxide equivalent annually.
According to the joint development agreement, 12 per cent of the power generated from the Upper Karnali project will be provided free of cost to Nepal.
"This is the very first project for which the Project Development Agreement (PDA) was executed by the Investment Board,” said chief executive officer of Investment Board of Nepal Radhesh Pant. "IFC's expertise in the international financial markets brings complementarity and synergy to GMR's strengths in regional infrastructure," he said, adding that IFC's involvement will help the project achieve timely financial closure, construction, and operational milestones.
"IFC’s financing and global expertise in the hydro sector will help the projects become a game changer for Nepal’s hydropower sector and will attract international investors,” said group chairman of GMR Group G M Rao. "The development of these projects complements the initiatives taken by India and Nepal to establish high-capacity cross-border transmission links to facilitate power trading between the two countries," he added.
Nepal has significant hydropower potential but less than one per cent of it is developed. Only an estimated 46 per cent of the population has access to electricity. Over the last decade, demand for power in Nepal has grown at nine  per cent annually, while supply has not kept pace.
“Hydropower is a powerful engine for economic growth in Nepal,” said IFC director for Asia Pacific Vivek Pathak. "These projects will boost a common energy market in South Asia, create sustainable employment, improve quality of life, and provide reliable and clean energy for local industry," he added.
Nepal is a priority country for IFC.
Since 2008, IFC has been working closely with Nepal's private sector through investments and advisory services. IFC has been working in developing infrastructure, tourism, financial markets, transportation, and trade finance in the country. In recent years, IFC has also been assisting the government to make doing business easier.

Friday, December 12, 2014

After India, US and China compete to help Nepal

US and China are competing to help Nepal, after the southern neighbour India.
The US – under Millennium Challenge Corporation – is going to fund between $100 million and $600 million per project, whereas the northern neighbouris going to fund RMB 800 million, according to the Finance Ministry.
With the restoration of stability and improved economic prospects, the development partners are increasing their assistance to Nepal. In August, Southern neighbour India had also pledged $1 billion soft loan for Nepal.
The MCC selection is is also a message of Nepal’s shift from a conflict-ridden country to a stable one with a parliament and agencies for good governances that are active, and an image-booster in the global arena. The MCC assistance will not only directly channeled to the national budget, it will also help whitewash Nepal's image in the international community that its ready to development.
The US has decided to make Nepal eligible for its large-scale Compact Programme for investment, finance minister Dr Ram Sharan Mahat said, adding that the move has come due to improvement in various economic indicators and the country's progress in institutionalising democratic process.
The board of the Millennium Challenge Corporation (MCC) – in its press note issued by the US Embassy in Kathmandu – stated that Nepal’s consistent strong performance on the MCC’s eligibility scorecards as well as its progress in institutionalising democratic progress.
The MCC Board meeting, held in Washington DC yesterday, selected Nepal for the US government’s multi-year agreements to fund specific programmes targeted at reducing poverty and stimulating economic growth.
Following the board’s selection of Nepal for the Compact Programme, MCC’s chief executive Dana J Hyde called Prime Minister Sushil Koirala and informed him about the board’s decision. Compact Programmes are multi-year agreements between the Millennium Challenge Corporation (MCC) and a given country to fund specific programmes targeted at reducing poverty and stimulating economic growth.
"The government of Nepal has made great progress in establishing democratic institutions that are responsive to its citizens," Hyde was quoted in the US Embassy’s statement. "The decision provides an opportunity for US to deepen its bilateral relationship with Nepal and help improve the lives of Nepali people."
Premier Koirala, on the occasion, thanked Hyde for Nepal’s selection for the programme. He also thanked the US government for the assistance and its continuous support for the socio-economic development of Nepal.
Likewise, MCC vice-president Tom Kelly called finance minister Dr Ram Sharan Mahat on phone and informed the MCC decision to help Nepal.
Dr Mahat thanking the MCC informed him of the country's willingness to utilise the investment in the infrastructure, especially in hydropower and road transportation.
The Millennium Challenge Corporation (MCC) had selected Nepal for its threshold funding in December 2011 also but Nepal was yet to receive any grant under the funding, in the form of small-scale grants.
Earlier, a joint team of Nepal and the US had prepared a Growth Constraints Analysis report, along with a diagnosis of the constraints, for the MCC.
Joint Secretary at Finance Ministry Madhu Marasini said that Nepal has been directly chosen for the large-scale funding between $100 million and $600 million per project. “A team from US will visit Kathmandu in January and they, alongwith Nepali officials, will select projects in energy and road infrastructure, which are major growth constraints,” added Marasini, who is also chief of the International Economic Cooperation Coordination Division under Finance Ministry.
Along with Nepal, the MCC board has also selected Mongolia and the Philippines as eligible for new Compact Programme recipient countries, in addition to the previous 25 countries.
MCC is an innovative and independent US foreign assistance agency that is helping lead the fight against global poverty. It forms partnerships with some of the world’s poorest countries, but only those committed to good governance, economic freedom and investments in their citizens.
There are two primary types of MCC grants: Compacts and Threshold Programmes. Compacts are multi-year agreements between the Millennium Challenge Corporation and a country to fund specific programmes targeted at reducing poverty and stimulating economic growth. Threshold Programmes are smaller-scale grants awarded to countries that may not qualify for compact funding but are firmly committed to improving policy performance.
Likewise, China has also pledged to increase grant assistance for Nepal by over 400 per cent in the next fiscal year 2015-16. "China is providing a grant of around RMB 800 million (approximately Rs 12.93 billion) in the fiscal year 2015-16," said finance secretary Suman Prasad Sharma, who is visiting China next week to sign the agreement. "China has committed an assistance of RMB 150 million for the current fiscal year 2014-15."
A team led by Sharma is leaving for China on Monday to take part in Inter-governmental Economic and Technical Committee meeting. The meeting that is being held after seven years, is scheduled for Wednesday and Thursday, will discuss issues related to trade, investment and foreign assistance.
The country has received  Rs 84.34 billion foreign aid commitment – Rs 10.96 billion more than what the country received in the last fiscal year – in the first quarter of the current fiscal year.
Nepal has, however, received foreign cash loans of Rs 1.99 billion and foreign cash grant of Rs 3.34 billion in the first three-month between mid-July and mid-October, in terms of actual flow, the central bank data revealed.

Wednesday, December 3, 2014

Nepal third most corrupt country in South Asia: Transparency International

Nepal has slipped down from last year's rank – to become third most corrupt country in the South Asia – in the Corruption Perception Index (CPI) 2014 published by Transparency International, today.
Nepal has been ranked 126th this year with 29 score out of 100 among 175 countries, according to the Transparency International. The country was ranked 116th position in 2013 with a score of 31 among the 177 countries.
Bhutan – ranked 30th – maintained its clean image and succeeded in remaining on top among South Asian countries with 65 points. Last year, Bhutan – with 63 points – was ranked 31st among 177 countries.
Likewise, Bhutan has emerged as the least corrupt nation in South Asia securing 65 score behind India (rank 85) and Sri Lanka (rank 85) scoring 38 each. Afghanistan improved its score – by 4 points – this year, but it has remained on bottom among the South Asian countries.
The 20th edition of the Corruption Perception Index ranked Bangladesh at 145th and Pakistan at 126th position.
The  Corruption Perception Index scores countries on a scale of zero to 100, with zero indicating high levels of corruption and 100, very clean.
More than two thirds of the 175 countries in the 2014 Corruption Perception Index have scored below 50, according to the Transparancy International that has placed Denmark on top of the chart with a score of 92, whereas North Korea and Somalia share last place, scoring just eight.
"The 2014 Corruption Perceptions Index shows that economic growth is undermined and efforts to stop corruption fade when leaders and high level officials abuse power to appropriate public funds for personal gain,” said chair of Transparency International José Ugaz, in his statement.
The fight against corruption has been a big challenge to developing countries, including Nepal, over the years, said chair of Transparency International Nepal Chapter Bharat Bahadur Thapa, releasing the Transparency International report in the capital today.
"We urge the government and other stakeholders to take initiatives to control corruption," he said, adding that the country has failed to control corruption since it was listed in the Corruption Perceptions Index some 11 years ago. "The report covers not only the corruption in public sector but also in the private sectors."
He also regretted that stakeholders including the government never took the Transparecny report seriously.
The Nepal report is based on the separate surveys conducted by five international organisations, Bertelsmann Foundation, World Bank, World Economic Forum, Global Justice Project and Global Insight.
Bertelsmann Foundation conducted the survey on action against those abusing authority, World Bank conducted survey on status of accountability and corruption status, World Economic Forum carried out survey on paying bribes to get professional and public services, whereas Global Justice Project surveyed on the abuse of authority by the government, judiciary and lawmakers for fulfilling vested interests. Likewise, the Global Insight had come out with survey on the impact of corruption in business sector.

South Asian countries – Rank
Bhutan – 30
India, Sri Lanka – 85
Nepal, Pakistan – 126
Bangladesh – 145
Afghanistan – 172