Nepal Airlines postpones flight service to Osaka

Nepal Airlines Corporation (NAC) has postponed its flight to Japan due to shortage of passengers till August. With the postponement of the flight, the restart of Nepal-Japan direct flight – after almost a decade – has been delayed for one more month.
Joint spokesperson for NAC Navaraj Koirala confirmed the postponement of the Kathmandu-Osaka flight for a month due to a lukewarm response to pre-booking. “Some of the passengers, who have bought the NAC ticket, will be referred to another airline,” he said, adding that the schedule of the Kathmandu-Osaka flight will remain unchanged. “NAC will operate Osaka flights three days a week, Tuesdays, Thursdays and Saturdays.”
The financially bankrupt NAC has fixed Rs 45,000 for one-way and Rs 77,000 for a round trip to Osaka. It takes around six-and-a-half hours to reach Osaka from Kathmandu. Operation of commercial flights to Osaka is expected to help NAC overcome its financial woes as it is expected to help generate revenue for NAC and contribute to the growth of Japanese tourists visiting Nepal.
The national flag carrier had opened ticket booking on the Kathmandu-Osaka route after receiving permission from Japan Civil Aviation Bureau (JCAB) to operate flights from Tribhuvan International Airport (TIA) to Osaka International Airport. The national flag carrier that used to fly twice a week on Kathmandu-Osaka route in between 1994 and 2007 had halted service due to lack of aircraft and human resources.

Civil Saving and Credit Cooperatives faces bank run

Civil Saving and Credit Cooperatives is facing a liquidity crunch after mass withdrawals by depositors. The Pokhara-based cooperatives today appealed other cooperatives to bail it out as it has faced bankruptcy due to mass withdrawal. The bank run in the cooperatives started after the media reports of its imminent collapse, the cooperatives said, organising a press meet, today.
Civil Saving and Credit Cooperative – operated by the Civil Group led by Ichchha Raj Tamang – today accepted that its cash flow had dried up. “We are not fully bankrupt but we are facing a liquidity problem due to mass withdrawal after multiple media reports,” said chairman of the Civil Group, who is also the founder of Civil Cooperative, Tamang.
Though Tamang – in the press meet – claimed that the cooperative has not violated government laws, the Civil Saving and Credit Cooperatives has lent huge amount to its operators, which is against the Cooperative Act 1992. The Act bars cooperatives from issuing more than 20 per cent of its loans to an individual borrower. Tamang, however, claimed that the cooperatives has started reforms by diversifying the business. “Civil Saving and Credit Cooperatives is now investing in hydropower, information technology and the hospitality business,” he said, refuting the charges that the cooperative had conducted financial dealings with Civil Bank, a commercial bank operated by the group.
The cooperative – which has also investment of Rs 140 million by the National Cooperative Bank – had overexposed itself in the real estate, hotel and hydropower sectors, which dried up its liquidity.
The Civil Group has investments in 21 different types of businesses. But the cooperative has exposed its investment in a single sector in Civil Homes – a housing company that is currently working on its ninth project in Godavari – that has sold more than 1,000 units of standalone houses and apartments. “The cooperatives has invested around 90 per cent of its deposits totalling to Rs 7.5 billion in the realty business operated by the group,” informed the sources in the cooperatives that according to them, the cooperatives has faced the liquidity problem also due to lack of good governance practice.
The cooperative department under the Kathmandu Metropolitan City has urged Civil Saving and Credit Cooperative to implement corrective measures in time or the department will be forced to take action against it. The department has also asked the cooperative to create a three-year plan to revise its portfolio management and launch other measures to avoid going into liquidation.
Recently, some of the cooperatives have been facing liquidity crunch – something like it happened a decade ago – and the government has declared some 11 cooperatives including Societal Saving and Credit Cooperative a ‘troubled institution’ due to unsound lending practices, exposure to the volatile real estate market and embezzlement by their promoters.
There have been some 130 crisis-ridden cooperatives misappropriating at around Rs 11 billion of people’s savings, according to report prepared by a commission headed by Gauri Bahadur Karki some five years ago. “Most of the crisis-ridden cooperatives, including Oriental Cooperative that alone embezzled around Rs 5.5 billion, landed in trouble because of their board members’ involvement in misappropriation, and huge exposure in the realty sector,” the report reads.

Petroleum pipeline nears completion

Construction of Motihari-Amlekhgunj fuel pipeline nears completion as 99 per cent of the pipe-laying process has been completed.
According to Nepal Oil Corporation (NOC), around 99 per cent of the installation of petroleum pipeline on the Motihari-Amlekhgunj has been completed. “The pipe laying process of 36.6-kilometre on Nepal side has been completed,” the fuel monopoly said, adding that Indian Oil Corporation (IOC) – which is the project developer – has already completed laying pipes along 32.7-km within the Indian territory. “Petroleum products from India will be imported to Nepal via the 78-km pipeline under the project, which is the first cross-border project in the entire South Asia.”
Though, the project is estimated to come into operation from mid-April, the launch date has been rescheduled for mid-July. A total of 25 Nepali technicians are currently in India to receive an eight-day training that IOC is providing to handle the project. “After the training of technicians concludes, the pipeline’s ownership will be handed over to Nepal.”
The project – with a total cost of over INR 2 billio – is expected to reduce the annual cost of importing petroleum products from India to Nepal by road by Rs 2 billion. NOC plans to further expand the petroleum pipeline up to Lothar in Chitwan, the fuel monopoly added.

Rs 50 million minimum threshold for FDI invites criticism

On one hand the government aims at increasing more foreign direct investment (FDI) and on the other, it has increased minimum threshold for FDI surprising the foreign investors.
The government has – two weeks ago – decided to revise the minimum threshold upward for FDI to Rs 50 million from Rs 5 million. With the increment of minimum threshold for FDI, the foreign investors could shy away from Nepal as the minimum threshold for FDI in other South Asian countries is much lesser than in Nepal. The private sector, has however, asked the government to increase minimum threshold to Rs 100 million.
Increasing the minimum threshold, the government has claimed that it aims at attracting large amounts of foreign capital to bridge the resource gap, and also safeguards small domestic industries.
The private sector, however, claimed that upward revision of minimum threshold to at least Rs 100 million will help support large-scale projects and also facilitate the import of modern technology. “A lower threshold, on the other hand, could affect local small industries,” it claimed, adding that a lower threshold means foreign investors will crowd in only in small businesses including restaurants, coffee shops and hotels but not in mega projects.
The foreign investors have been, however, surprised by Nepal’s move to increase the minimum threshold by 10 times. “It will discourage the foreign investment,” chief of the one of Nepal’s long term bilateral development partner said, adding that they have been expecting the Nepal government to make the foreign investment more easier especially after the Nepal Investment Summit 2019 – in March – where the government promised moon. “The Nepal government has failed to walk the talk as promised in the summit also because it has increased the negative list in the Foreign Investment and Transfer of Technology Act (FITTA) claiming to protect a number of domestic products.”
 The government is drafting a regulation for the FITTA (Amendment 2019) aiming at protecting a number of domestic products by prohibiting FDI in certain sectors including travel, mass communication, and farm products.
Likewise the draft of the regulation – which is in the final stages and be forwarded to the Cabinet for approval immediately – is also not going to attract the FDI, he said, adding that prior to Nepal Investment Summit in March, Nepal government had promised to bring the Acts and regulations to encourage the FDI. “Though private sector has been advocating for a higher threshold, some in the private sector still believe that the threshold should be minimal.”
The restrictive threshold will discourage the investors as they might find investing in other South Asian countries is much easier than in Nepal, according to chairman and CEO of Business Oxygen – Nepal’s first private equity fund – Siddhant Raj Pandey.
Calling the government’s decision ‘irrational’, Pandey said that the government should have – rather than focusing on the size of capital – prioritised on the import of innovative technology and efficient management.
The domestic private sector has been lately asking the government to be more restrictive rather than being competitive. Instead the private sector should have asked the government to make the business comparatively competitive by policy intervention in key issues including market operation, labour shortages in manufacturing and agriculture, small basket of goods with high comparative advantage, poor infrastructure, and bureaucratic hassles. “The private sector should also improve its efficiency and transparency in business operation,” Pandey added.

95.5 per cent of Nepalis have an electricity connection : Energy Progress Report

Electricity had reached some 95.5 per cent of Nepali populace as of 2017, according to the Energy Progress Report. “Only 1.3 million out of 29 million Nepalis remain to be connected to an electricity supply,” it reads, adding that in 2010, only 65 per cent of Nepali populace had an electricity connection. “Nepal is expected to achieve 100 per cent access to electricity within a few years, well ahead of the target year of 2030 set by Sustainable Development Goal 7 (SDG7).
Nepal’s access to electricity increased at an annual rate of 4.3 per cent, which is much higher than the global average of 0.8 per cent, according to the Energy Progress Report released last week by the five Sustainable Development Goal (SDG) stakeholders including International Energy Agency (IEA), International Renewable Energy Agency (IREA), United Nations Statistics Division (UNSD), World Bank (WB) and World Health Organisation (WHO).
The report further reads that the global electrification rate rose by 6 per cent to 89 per cent in 2017 from 83 per cent in 2010, falling short of the target rate required to reach universal access by 2030.
Over the review period, some 99 per cent of Nepal’s urban population enjoyed access to electricity and 95 per cent of rural people are currently connected with a mix of grid and off-grid systems. Universal access to clean cooking solutions will help to prevent some 3.8 million premature deaths each year, primarily among women and children, from exposure to household air pollution, the report adds.
Nepal ranks top among the set of access-deficit countries – including Afghanistan, Bangladesh, Fiji, Mongolia  -- which provide their populations with access to electricity from off-grid sources. “Around 11 per cent of Nepali population is reliant on mini-biogas, mini-hydropower plants, and solar mini-grids for energy consumption,” it reads.
Likewise, Nepal ranks third among the top 20 countries with the highest share of solar lighting progress with 15 per cent of the population obtaining power through solar grids. According the report, Nepal’s rural electrification schemes and increasing use of small solar panels for lighting in remote areas has contributed to the increased access to electricity. “The campaign to rid rural households of firewood and provide clean energy through mainly solar and small scale hydel plants by 2022 has been effectively meeting its annual targets,” said Ram Prasad Dhital, former executive director of the Alternative Energy Promotion Centre,” it adds.
However, energy minister Barsha Man Pun recently reiterated the government’s plan to provide access to energy to 100 percent of the population in the next five years. “In five years, we intend to provide access to 100 per cent of the population through a mix of grid, According to Nepal Electricity Authority (NEA), only eight districts – Bajura, Humla, Jumla, Kalikot, Mugu, Dolpa, Rukum (East) and Solukhumbu – remain to be connected to the national grid. Bajura, Rukum (East) and Solukhumbu will be connected to the national grid by the end of this fiscal year.
The Energy Progress Report also claimed that between 2018 and 2030, the annual average investment will need to reach approximately $55 billion to expand energy access, about $700 billion to increase renewable energy, and $600 billion to improve energy efficiency.

Listed hotels post handsome profits

The listed hotels – though they are only three in number – have posted record profits in the third quarter on increased arrivals and occupancy, though the average daily expenditure of tourists has been on decline.
Among the three listed hotels on the Nepal Stock Exchange (Nepse), which have published their unaudited financial reports for the third quarter ending mid-April, Soaltee Hotel and Taragaon Regency Hotels posted profits, whereas Oriental Hotels witnessed decline in profit.
Soaltee Hotel – according to its unaudited third-quarter report – posted Rs 231 million net profit, some 52.35 per cent increase compared to the same period last fiscal year. During the same period last fiscal year, Soaltee Hotel had posted net profit of Rs 151.64 million.
Soaltee Hotel earned revenues totaling Rs 1.31 billion, up by 16.61 per cent year-on-year while its total expenses amounted to Rs 1.02 billion, up by 8.77 per cent only, according to the report of the hotel  that claimed that it had been marketing aggressively to increase its occupancy in the fourth quarter in the key source markets including India.
Likewise, profit of another share market listed hotel – Taragaon Regency Hotels – has jumped by 29.47 per cent before bonus and tax in the third-quarter, compared to the same period in the last fiscal year. According to the unaudited financial statement published by the hotel – mandatory under regulatory order – it has posted a net profit of Rs 356.57 million in the third quarter of the current fiscal year, whereas Taragaon Regency Hotels had posted a net profit of Rs 275.40 million in the third quarter of the last fiscal year.
Taragaon Regency Hotels’ revenues – according to the third quarter report – increased by 14.28 per cent year-on-year to Rs 1.04 billion, whereas revenues totalled Rs 915.7 million. Likewise, Taragaon Regency Hotels’ paid-up capital stood at Rs 1.88 billion including Rs 777 million in reserves, the report reads, adding that its revenue swelled due to a rise in tourist arrivals and effective marketing strategy. “It may face competition in the coming days with the proliferation of five-star hotels in Nepal prompted by an improving political and business environment.”
However, Oriental Hotels, which operates the five-star Radisson Hotel in Kathmandu, reported a net profit rise of 6.32 per cent in the third quarter of the current fiscal year, according to the hotel’s unaudited report of the third quarter. “Oriental Hotels posted a net profit of Rs 207.45 million after tax, up from Rs 195.11 million in the same period in the last fiscal year,” the report reads, adding that its revenue collection stood at Rs 876 million. “Oriental Hotels’ profit growth slowed in the third quarter due to an increase in expenses as it had renovated 40 of its rooms.”
The fourth hotel – Yak N Yeti – that was earlier listed at the Nepse is no more in the share market since last half decade.
Nepal has lately witnessed a large number of hotels due to increasing number of tourists, though the tourist spending has not been increasing. “It will be challenging, if tourist arrivals do not match the increasing number of hotels lately,” Oriental Hotels writes in its report.
Tourist arrivals crossed the one-million mark for the first time in 2018, with 1.17 million foreign visitors travelling into the country, but their spending has plummeted to a seven-year low to $44, according to Hotel Association Nepal (HAN). “The average spending was $54 per day in 2017, whereas in 2003 – during the Maoist insurgency – the per day tourist spending hit a record $79.1.”
Last year, Nepal received 1.17 million tourists and earned a record Rs 70 billion in foreign exchange,” according to the statistics of HAN. “The previous year, the country had welcomed 940,218 foreign visitors and earned Rs 65.8 billion.”
But the increase in tourist arrivals does not match earnings also due to low spending of the tourists. “A arge number of hotels have been selling their rooms at cheaper rates, and as a result, earnings had not increased despite arrivals crossing the one-million mark,” according to HAN.

Nepal Telecom Authority to set up IT centres in 124 remote villages

The Nepal Telecommunications Authority is setting up IT service centres at 124 remote villages to provide integrated government services, in line with the government’s ambitious Digital Nepal Framework-2018 that envisions a ‘digital society’ with 90 per cent of the population having access to broadband services by 2020.
The Information Service Centre Formation and Management Work plan – prepared by the authority –plans to install four computers, printing machines and networking equipment and expand broadband facilities from those centres to wards, health centres and community schools.
The information centre project has been launched to combat digital exclusion in 124 rural municipalities, which has no access to telecommunications facilities as of date.
According to acting chairman of the Nepal Telecommunications Authority Purushottam Khanal, the regulator is starting a tender process for procurement of equipment within a month. The authority has estimated that it will take around Rs 90.52 million to procure equipment to establish those centres. “The authority plans to mobilise funds collected by levying telecom operators service charges amounting to 2 per cent of their gross income to execute the project,” he added. “Almost half of the shortlisted local levels are located in the western provinces of Karnali (26) and Sudurpashchim (28), in line with the by-laws which state that the authority must give special priority to rural communities without access to internet and with measurable presence of marginalised and economically backward denizens.