WB provides Rs 5.94 billion additional loan for road sector development

The World Bank has agreed to provide $55 million (approximately Rs 5.94 billion) additional loan assistance to the government for the implementation of Road Sector Development Project (RSDP), which has been under implementation since 2008.
Joint Secretary and chief of International Economic Cooperation Coordination Division under Finance Ministry Baikuntha Aryal and country manager of World Bank Nepal Takuya Kamata signed the Financing Agreement today in the Finance Ministry on behalf of the Government of Nepal and the World Bank respectively.
The project has three components; the Road and Bridge Development, the Institutional Strengthening and Project Implementation Support and the Resilience Enhancement.
During the project period, 21 different activities will be carried out. The final outcomes of the project include all-season road access, reduced travel time and improved access to economic centre and social services in 31 beneficiary districts, according to a press release issued by the Finance Ministry.
It is stated that the project will upgrade about 700-km of existing dry-season roads and carry out periodic maintenance of about 2,550-km selected strategic roads. The construction of 33 bridges on selected roads of the Strategic Roads Network and the replacement of three earthquake-affected bridges with permanent structures are also the major activities of the project.
The project also consists of technical audit of the civil works and the maintenance of 355 bridges affected by the devastating earthquake last year. The Ministry of Physical Infrastructure and Transport will be the executing agency and the Department of Roads will be responsible for implementation of the project.
The government has expressed its sincere appreciation to the World Bank for this assistance and for continued support in the socio-economic development of Nepal.

NOC jacks up petroleum prices

Nepal Oil Corporation (NOC) jacked up the price of petrol, diesel and kerosene tday ociting rise of price of the crude oil in the international market.
The NOC board meeting decided to increase Rs 4.50 per liter on petrol, diesel and kerosene with effect from late evening Sunday, said NOC spokesperson Bhanubhakta Khanal. "NOC has however not increased price of cooking gas and aviation fuel."
After the increment, the price of petrol per liter is now Rs 101.50, and diesel and kerosene is Rs 77.50, he said, adding that the state oil monopoly has hiked the price after the Indian Oil Corporation (IOC) – the only supplier of petroleum products to the NOC – has increased its rate. "The NOC has been forced to hike price also in view of the trade along the Nepal-India bordering areas. The increased rate will also bring down price gap of petroleum products in the southern border areas."
Petrol and diesel prices are cheaper in Nepal compared to India. "The price gap has helped the fuel to outflow," Khanal added.
However, it is the duty and responsibility of the customs and Armed Police Force (APF) – deployed along Nepal-India border – to control the diesel and petrol smuggling due to price gap.

Sagoon plans to raise $20 million through mini IPO

Sagoon Inc –a US-based social commerce startup founded by a Nepali – is soon launching a Mini Public Offering (mini IPO) under the regulations enacted by the Obama administration's landmark JOBS Act to establish itself as a public company.
Through the mini IPO, the company plans to raise $20 million from the general public globally and use that money to launch mobile apps, introduce Social Smart Card and increase the user base, according to the founder of Sagoon Govinda Giri.
An investor can invest as little as $299 which is around Rs 30,000. The shares will be allocated to the investors based on their availability and first come first basis. Those, who are interested can purchase as many shares as they want. Each unit of a share costs $23, the company informed.
Sagoon is waiting to get qualified by the US Securities and Exchange Commission (SEC) to start accepting online investment globally from the general public. If everything goes as plan, the mini IPO will be floated in mid-January 2017. The social media startup plans to sell 8,69,565 shares worth $20 million, Giri informed.
Apart from being the first Nepali-founded company to come out with the public offering, Sagoon is also the first social media venture in the world that offers an investment opportunity to the public in its early stages. The opportunity was not available during the early stages of other social media like Facebook and Twitter.
The US JOBS Act – which was signed into law in 2012 – is regarded as one of US President Barack Obama's most ambitious legislations that, for the first time in the history, allows the general public to invest in a very early stage companies.
Earlier, only rich people, who either had an income of more than $200,000 a year or have the net worth in excess of $1 million, and bankers were allowed to invest. And the public had to wait for the companies to float full IPO.
Under the new law, the US and Canadian companies that have their primary offices located in the US can raise up to $50 million annually. It is a great opportunity for young startups to go public in their early stages.
However, SEC regulation is a quite lengthy and expensive process; it takes around 4 months to prepare the filling documents, involves legal and accounting fees of over $100,000, requires 2 years audited financials and follows many regulations. After filling, SEC again takes a couple of months to review and approve. After getting qualified, a startup is required to file the financial discloser publicly twice a year. In this regard, the new law is similar to traditional IPO offering except the limit of raising funds is up to $50 million annually.  
“This is a great opportunity to bring people from my own community, fans and supporters who believe in our dream and love to build innovative products and take a risk to invest in our dream," Giri said, adding that he wants them first to receive potential financial returns.

Nepal getting new software to track old Indian notes

The central bank is getting new software to facilitate the exchange of banned Indian currency (IC) Rs 500 and Rs 1000 notes in the country.
The software will also make it impossible for non-Nepalis to exchange demonitised Indian notes, central bank deputy governor Chintamani Shiwakoti said speaking to mediapersons in Biratnagar today.
"We have already sent a proposal to the Reserve Bank of India (RBI) on the system that will be in place to exchange demonistised notes,” he said adding that an individual will only get to exchange Rs 25,000 worth of Indian currency (IC). "If we find that anyone has exchanged more than Rs 25,000, we will seize the excess amount."
In accord to the new template, a Nepali citizen wanting to exchange money has to fill up a form, submit a copy of Nepali citizen and other personal details, which will be uploaded in the software. The software will bar any user coming to exchange money for the second time and has exceeded the limit.
Nepal Rastra Bank – the central bank – will provide a form for anyone, who wishes to exchange IC and on the form the person needs to provide his/her citizenship number and phone number, according to Shiwakoti.
The central bank is now waiting for RBI nod to use this software. As soon as the central bank gets the permission, it will distribute the software across its branches in Nepal.
IC worth over Rs 3.36 billion Nepali currency is believed to be in Nepal, according to the unofficial figure. Likewise, around Rs 2.52 billion of worth of IC in Rs 500 and 1,000 denominations is believed to be in the banking sector and around Rs 810 million with travel agencies and other businesses.
The Indian government – in its bid to fight against black money – is less concerned about the implications of demonitisation on the neighbouring countries, according to central bank officials. "This is a secondary issue for them as their focus is on mitigating the problems brought about by the announcement," the official added.
The demonetisation of Indian notes has affected the banking system of Nepal. The cemntral bank has permitted very small amount of the IC 100 rupee notes to people, who want to visit India.
The central bank has also been witnessing long queues since the demonetisation of notes in India.
Prime Minister Pushpa Kamal Dahal and his Indian counterpart Narendra Modi have also discussed the issue over the phone. Likewise, finance minister Krishna Bahadur Mahara and his Indian counterpart Arun Jaitley also held talks on the issue over phone. India has assured it will provide exchange facility but it has not provided any details.
Meanwhile, the Reserve Bank of India (RBI) has told the central bank that it will not be providing India notes till April of next year. Nepal buys Indian Currency (IC) paying dollar as the country imports most of the merchandise from India in Indian Currency. Apart from, the payment of imports bill, Nepalis going to India for education, pilgrimage, trading or for treatment, also need IC in regular basis. But they are facing hard times due to Indian government's move to ban IRs 500 and IRs 1,000 banknotes.
On November 8, Indian Prime Minister Modi, in an unscheduled live televised address at 20:15, declared that use of all IRs 500 and IRs 1,000 banknotes of the Mahatma Gandhi Series would be invalid from midnight of the same day and announced the issuance of new Rs 500 and Rs 2,000 bank notes of the Mahatma Gandhi New Series in exchange for the old banknotes.
Though, the Indian government claimed that demonetisation was an effort to stop counterfeiting of the current banknotes allegedly used for funding terrorism, as well as a crack down on black money in the country, it has hit the general public in the rural areas more. The move was also described by the Indian government as an effort to reduce corruption, the use of drugs, and smuggling.
The Indian government’s deadline to exchange the demonitised notes elapses on December 30. Chances are that the Indian government would allow Nepalis to deposit their notes in their bank accounts in Nepal after bearers present their documents to prove the source of the currency. But the window period will be short.

Nepal to graduate from LDC by 2025: UN

Nepal is among the 16 countries that will graduate to the developing country status from the current Least Developed Country (LDC) category by 2025, according to a report by the UN agency.
The United Nations Conference on Trade and Development (UNCTAD) report states that Nepal is projected to graduate only in two criterion – human asset index (HAI) and economic vulnerability index (EVI) – of the three criterion. "If this is the case, this will be the first time that the income criterion has not been met at the time of graduation," says the report.
A LDC must have gross national income (GNI) per capita of $1,242 for graduation. Nepal needs to double from its current GNI that stands at $752,
"Nepal also has to boost economic growth to spur the income, one of the three criterion to graduate, though meeting the two criterion is enough to graduate," the Least Developed Countries Report 2016 'The Path to Graduation and Beyond: Making the most of the Process' noted.
The report also said that most of the countries, whose graduation is expected by 2024, have included graduation as an explicit goal in their development plans and programmes.
"Five of these countries – Nepal, Bangladesh, Bhutan, Laos and Myanmar – have set explicit timetables," it said. "Also of the 16 countries projected to graduate by 2025, only four – Afghanistan, Bhutan, the Lao People's Democratic Republic and Nepal, all in Asia – are landlocked."
According to senior economist at the UNDP Nepal Basudeb Guha-Khasnobis, the situation in Nepal has been improving in recent months. "If things move as according to the plan, Nepal could also meet the income criteria by 2022,” he added.
Nepal became eligible to graduate from LDC category as it met two criteria – HAI and EVI -- in 2015. Once a country is eligible, it is evaluated every three years to check the sustainability of the graduation. Guha is of the view that Nepal will sustain coming two triennal reviews by the Committee for Development Policy (CDP) slated for 2018 and 2021.
The National Planning Commission (NPC) had, in its 13th Plan, included a target of graduation by 2022, bringing forward from 2030 in the 12th Plan. The commission's approach paper on graduation by 2022 includes 'strategic directions and action' for each of the three criteria as well as for monitoring and evaluation.
A country is graduated from the LDC category not only on the basis of meeting three criteria – GNI per capita, HAI and EVI once, it also has to sustain thresholds for at least two criteria or reach double the GNI per capita threshold – income-only graduation – in two consecutive triennial reviews.
Graduation process is only the first milestone in a marathon of development, not the winning post of a race to escape the LDC category, Guha said, adding that it marks the end of a political and administrative process, not the completion of an economic or developmental process.
Guha said that economically how a country graduates is more important than when.
But some economists are of the view that the graduation will cut foreign development resources and preferential treatment that a country gets as LDC as it would reduce development finance, which becomes less concessional, and also access to climate finance may be reduced. Likewise, after graduation a country will also lose potential preferential market access that is estimated at $4.2 billion per year across LDCs as a whole.
However, Guha claims that the effect of losing preferential market access depends on coverage and structure of LDC – specific preferential schemes, product composition of exports, and distribution across markets and also fallback tariffs after graduation.
But a graduating country benefits from a grace period – normally three years – before graduation effectively takes place. This period, during which the country remains an LDC, is designed to enable the graduating state and its development and trading partners to agree on a 'smooth-transition' strategy, so that the planned loss of LDC status does not disrupt the socioeconomic progress of the country. A smooth-transition measure generally implies extending to the graduated country, for a number of years after graduation, a concession the country had been entitled to by virtue of LDC status.
However, Guha suggested Nepal to form national policy agenda to address macroeconomic policy frameworks combining stability with investment dynamism and employment generation, scaling up public investment – including projects that strategically address bottlenecks in the productive sector – increased fiscal space: improved tax systems, diversification of revenue sources and addressing illicit financial flows, improved access to credit and financial services, notably for farmers and SMEs, coupled with accelerated transformation of rural economies: upgrading agriculture, promoting non-farm activities for effective and sustainable graduation.
The UN has currently designated 48 countries as LDCs. The list of LDCs is reviewed every three years by the CDP – a group of independent experts reporting to the United Nations Economic and Social Council (ECOSOC). The CDP, in its report to ECOSOC, may recommend countries for addition to, or graduation from, the list of LDCs.
The UN report also notes that while the 48 LDCs comprise around 880 million people – accounting for 12 per cent of world population – they face such serious structural barriers to growth that they account for less than 2 per cent of world GDP and around 1 per cent of world trade.

ADB approves $120 million for school sector development programme

The Asian Development Bank (ADB) has approved a loan of $120 million, equivalent to Rs 13.11 billion, for the implementation of School Sector Development Plan (SSDP).
Moreover, the ADB would provide technical assistance worth Rs 54.5 million for the capacity development technical assistance project in the school sector.
Finance secretary Shantaraj Subedi and ADB Nepal Mission’s country director Kenichi Yokoyama signed the loan agreement today and exchanged at the Finance Ministry.
The SSDP is a continuation of the previous School Sector Reform Programme (SSRP), which was more focused on the quantity while SSDP focuses on the quality which supports the comprehensive interventions in improving quality in basic education and expands the coverage of quality secondary education.
The programme ensures the new school construction meeting all disaster risk resilience standards.
Further building on SSRP experiences, this programme will be implemented in a more harmonised and coordinated way through Joint Financing Arrangement with other development partners as well. The SSDP shall be implemented by the Department of Education.
The government has expressed its appreciation to the ADB for the assistance and its continued support in the socio-economic development of Nepal.

ADB approves $186.8 million to upgrade road

The Asian Development Bank (ADB) has approved a $186.80 million loan for starting a project to improve domestic and regional transport connectivity including strategic road networks.
The new loan has been sanctioned to upgrade 160 kilometers (km) of Nepal's strategic road network (East-West Highway). The project will upgrade the sections of 115-km Narayanghat-Butwal road and the Bhairahawa-Taulihawa (45 km) feeder road.
The total cost of the project is $256.50 million, with the government contributing $69.70 million. The estimated completion date is early 2022.
"The project will help in improving transport connectivity within and outside the country," senior transport specialist at the ADB's South Asia Regional Department Lee Ming Tai said.
The transport connectivity will decreases transport costs, increases people's access to jobs and social services, boosts trades with neighbouring countries, and assists the development of competitive industries in Nepal including high-value agriculture, agro-processing and maintenance, the ADB said in a statement.
Roads carry about 90 percent of the overall passenger and goods traffic in Nepal. But the landlocked country also has the lowest road density in South Asia with only 14 km of road per 100 sq km and 0.90 km per 1,000 people.
This poor connectivity increases transport costs, limits people’s access to jobs and social services, impedes trade with neighbouring countries, and undermines the development of competitive industries in Nepal, including high-value agriculture, agro-processing and manufacturing.
According to Tai, these road improvements will increase access of 673,000 people in Tarai area to schools, hospitals, jobs as well as local and international markets.
The road improvements will also incorporate flood control and drainage designs in anticipation of more frequent and intense rainfalls in the area as a result of climate change. The project will contribute to the ADB’s commitment to increase climate finance by approximately $66.5 million. The project roads are located in Nepal’s tropical climate zone which experiences heavy rainfall from June to September.
Road safety is a key element of the project as road traffic accidents in the country continue to rise due to an increase in vehicle numbers and poor road conditions.
Considering the continue rise of road accidents in the country, the new road section will have service lanes to cut-off slow moving local traffic from fast moving through traffic, prosaic-friendly features like walkways on both sides of the roads in settlement areas, prosaic crossing and road accidents emergency response system at critical locations.
The project will include a five-year performance-based maintenance clause in the contracts with the view of tapping the private sector for maintenance contracts in the future. In this regard, the ADB is providing separate technical assistance to the Department of Roads, the project’s implementing agency, to modernise road asset management and support the implementation of performance-based maintenance contracts.
The 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, the 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 totalled $27.2 billion, including co-financing of $10.7 billion.