Nepal-India IGC meeting on January 9-10; experts, pvt sector suggest gamut of issues for revision

The Nepal-India Inter-Governmental Committee (IGC) on Trade, Transit and Cooperation meeting is set to be held in Kathmandu in January.

The IGC, apex bilateral mechanism for promotion of trade and investments between Nepal and India, is scheduled for January 9-10, confirmed the Ministry of Industry, Commerce, and Supplies. Earlier, the IGC meeting was scheduled for November but the meeting was postponed.

The meeting will review progress made on several agendas in the sphere of trade and commerce, Commerce Secretary Govinda Bahadur Karki said, adding that the IGC is a regular meeting and Nepal has no specific agendas for this meeting.

However, experts have been suggesting a gamut of issues including review of the duty-free access provided to Indian primary agricultural products to revision rules concerning the Certificate of Origin (CoO).

They have also proposed to revise the current arrangement of allowing reciprocal access for agricultural products, horticulture, flowers, forest products, rice, pulses, flour, wheat husk, livestock, poultry, fish, honey, dairy products, and eggs, as Nepali agricultural goods struggle to compete under the current duty-free access provided to Indian products.

The private sector has also suggested the ministry to take up the issue of export hassles on large cardamom, tea, ginger, and anti-dumping duty on jute products, quarantine and food testing lab, parking fee on Integrated Check Post (ICP).

However, the experts have also recommended Nepal to negotiate a reduction in the required value addition for zero-duty access to India. At present, a 30 percent value addition is required for exports to India, but Nepal should advocate to lower it to 20 percent, according to the experts.

India is not only the Nepal's largest trading partner but also a gateway to third country trade. Thus, Nepal should also lobby to revise its transit treaty to secure access to additional Indian seaports, Dhamra Port in Odisha and Mundra Port in Gujarat, experts suggested.

Nepal has requested that Dhamra Port be designated as a gateway for its transit needs and has urged swift action on Mundra Port stating that Dhamra Port can accommodate larger ships and importing goods through this port would significantly reduce import costs for Nepali traders.

Nepal is using Kolkata Port and Visakhapatnam Port currently. However, Kolkata Port accommodates small vessels only.

But the experts have been complaining that the issues have been piling up because Nepal's presentations during discussions with India had been ineffective and lacked thorough preparation before IGC meeting.
(Published at NepalKhabar: https://en.nepalkhabar.com/news/detail/12181/)

Nepal, ADB sign loan and grant agreements amounting to Rs 105.59 billion

The government and the Asian Development Bank (ADB) today signed loan and grant agreements amounting to $777.6 million (equivalent to Rs 105.59 billion), at the Finance Ministry, for the implementation of three projects and a programme.

The Financing agreement for the implementation of Kathmandu Valley Water Supply Improvement Project (phase 2), South Asia Subregional Economic Cooperation (SASEC) Electricity Transmission and Distribution Strengthening Project and Green, Resilient and Inclusive Development (GRID) Programme were signed, according to a press note issued by the Finance Ministry.

Finance secretary Dr Ram Prasad Ghimire and Country Director of the Nepal Resident Mission ADB, Arnaud Cauchois signed the agreement on the behalf of the government and ADB, respectively.

The project—Kathmandu Valley Water Supply Improvement Project (phase 2) aims to secure safe and reliable water supply services for people in the Kathmandu Valley, the press note reads, adding that tt includes the relocation and construction of the Melamchi intake, construction of long tunnel and the expansion of the Sundarijal Water Treatment Plant.

The project cost of Kathmandu Valley Water Supply Improvement Project (Phase 2) will be $240 million (equivalent to Rs 32.59 billion). The ADB will support $15 million (equivalent to Rs 2.03 billion) grant and $170 million (equivalent to Rs 23,08 billion) concessional loan, Japan Fund for Prosperous and Resilient Asia and Pacific (JFPR) will support $3 million (equivalent to Rs 407.46 million) grant and the government contributes $52 million (equivalent to Rs 7.06 billion) for it, it adds.

Similarly, the project—SASEC Electricity Transmission and Distribution Strengthening Project focuses on meeting Nepal's growing energy demands while supporting green electricity exports. It will be $537 million (equivalent to Rs 72.93 billion). ADB will support $30 million (equivalent to Rs 4.07 billion) grant and $311 million (equivalent to Rs 42.24 billion) concessional loan, EU will support $22.6 million (equivalent to Rs 3.06 billion) grant, Norway will support $31 million (equivalent to Rs 4.21 billion) grant, Strategic Climate Fund will support $10 million (equivalent to Rs 1.35 billion) and the government contributes $132.4 million (equivalent to Rs 17.98 billion) for the execution of this project.

The construction of 290 kilometers of transmission lines, five new substations, and the upgrading of two existing ones are key components of this project, the press note adds.

Likewise, the GRID programme aims to assist in implementing the Green, Resilient and Inclusive Development approach by addressing policy, regulatory and institutional barriers to unlock sustainable investment opportunities across various sectors. The programme's objective is to ensure that development activities are environmentally sustainable, resilient and inclusive.

The ADB will support $100 million (equivalent to Rs 13.58 billion) for GRID Programme as a budget support.

The Irrigation Modernization Enhancement Project (IMEP) focuses on modernising surface water irrigation systems of Nepal and piloting hill lift irrigation. It will directly benefit families of project area enhancing agricultural productivity and climate resilience.

After signing the agreement, finance secretary Ghimire expressed his heartfelt appreciation to ADB for its consistent support and partnership. He emphasised that these initiatives would not only improve irrigation system, water security and agriculture but also strengthen climate resilience in Nepal's most affected communities and contribute to achieving sustainable development goals.

Country Director of ABD Arnaud Cauchois, on the occasion, emphasised the key features of these projects, including their financing structures and significance for Nepal's economy.

He reiterated ADB's strong commitment to supporting Nepal's development priorities, particularly in climate adaptation, agricultural productivity and water resources management and support to achieve SDGs.

World Bank approves $100 million to support policy framework for GRID and Growth

The World Bank’s Board of Executive Directors today approved a $100 million development policy operation (DPO) to help Nepal strengthen its ongoing efforts to implement green, resilient, and inclusive development (GRID). This is the second in a programmatic series of three DPOs which aims to improve the enabling environment for Nepal's sustainability pathway, according to the World Bank.

“This programmatic DPO series is a catalyst for Nepal to build greater resilience and sustainability, and drive and protect the basis for long-term growth for all Nepalis,” World Bank Regional Country Director for Maldives, Nepal, and Sri Lanka David Sislen said, adding that this operation supports Nepal’s policy programme in a variety of sectors including green fiscal instruments, water security, irrigation, land use and management, sustainable forest management, and climate and disaster information systems.

Since 2021, the government has laid out an ambitious programme of action in the area of environmental sustainability, resilience, and inclusive development. This approach recognises the need for a development model to address the intertwined challenges of joblessness, pandemics, expanding economic opportunities for vulnerable groups, and climate and other environmental risks that impact Nepal’s people, prosperity, and environment.

The World Bank DPO series anchors Nepal’s ongoing shift to a more sustainable development path. Nepal’s policies supported by the DPO series arose from stakeholder dialogues and Nepal’s own development priority programmes and plans. These policies aim to improve air quality, expand hydro-meteorological services to better disaster risk reduction, improve water security by boosting year-round irrigation and safe water supply, strengthen community forest management, and enhance land use planning.

“Nepal continues to put in place a strong policy programme that recognises that resilience is best achieved when sustainability and inclusion are also pursued in an integrated way,” World Bank Programme Leader for Maldives, Nepal, and Sri Lanka and Task Team Leader for the operation Stephen Danyo, said adding that it is at the heart of Nepal’s approach to sustainability, resilience, and inclusion.

Nepal’s policy programme is set to help the country attract and expand investment in several sectors important for jobs, livelihoods, health, and resilience for millions of citizens.  As one part of the solution to the challenges mentioned above, the DPO series supports Nepal to generate durable development impacts.

Nepal, ADB sign grant agreement of Rs 21.23 billion for two projects

The government and Asian Development Bank (ADB) today signed a concessional loan and grant agreement of $157 million (approximately Rs 21.23 billion), at the Finance Ministry, for the implementation of the Mechanised Irrigation Innovation Project (MIIP) and the Climate Resilient Landscapes and Livelihoods Project (CRLLP).

The grant agreement amounting to $15 million and loan agreement amounting to $110 million for the implementation of MIIP was signed by finance secretary Dr Ram Prasad Ghimire and Country Director of the Nepal Resident Mission ADB Arnaud Cauchois, on the behalf of the government and ADB, respectively, according to the Finance Ministry.

According to the agreement, the MIIP will introduce advanced irrigation technologies, including a prepaid card system allowing framers to access water based on their field's need. "The project will be enforced in the Rautahat and Sarlahi districts of Madhes Province, benefitting over 121,000 farmers."

The primary objectives of the project are to improve agricultural productivity, ensure year-round irrigation and contribute to food security. Additionally, this project will adopt Design, Build and Operate (DBO) modality and establish an irrigation management company for the long-term sustainability of groundwater irrigation system in the region.

Similarly, the grant amounting to $22 million and loan agreement amounting to $10 million for the implementation of CRLLP was also signed by joint-secretary at the Finance Ministry Dhani Ram Sharma and Country Director of Nepal Resident Mission, ADB Arnaud Cauchois, on the occasion.

The CRLLP stresses enhancement of climate resilient rural communities in the Karnali and Sudurpaschim provinces, which are highly vulnerable to the impacts of climate change, a press note issued by the Finance Ministry reads. "The project is aimed at addressing water insecurity, promoting nature-based livelihoods and empowering local communities through the sustainable management of water resources." The project further stresses empowerment of communities to adapt to climate challenges by fostering sustainable water management, agroforestry, silviculture and forest management.

The project will also play a crucial role in improving water security by addressing the region's vulnerability to climate-induced challenges, it claims.

After the signing of the agreement, finance secretary Ghimire expressed his gratitude to ADB for its continued support and partnership. He emphasised that these projects would not only enhance irrigation infrastructure but also spur climate resilience among some of Nepal's most vulnerable communities.

Similarly, Country Director of ADB Cauchois, on the occasion, underlined the key features of these projects, the financing modalities and their importance to Nepal's economy, reaffirming ADB's commitment to supporting Nepal's development goals—particularly in the areas of climate adaptation, agricultural productivity and water security.

Himalaya Airlines to operate Pokhara-Lhasa flights

Pokhara Regional International Airport (PRIA) is going to see first regular international flight, almost two years after coming into operations. A Nepal-China joint airline company Himalaya Airlines is starting its regular international flights between Pokhara and Lhasa of China. The Civil Aviation Authority of Nepal (CAAN) confirmed the flights. "The Pokara-Lhasa flight is expected to start from the first week of January, 2025," the aviation sector regulator confirmed.

Himalaya Airlines has already submitted its schedule for the Pokhara-Lhasa route, informed CAAN joint spokesperson Gyanendra Bhul. "After almost two years, Pokhara Regional International Airport is expected to witness international flights," he said, adding that regular flights on the route could significantly boost the inflow of Chinese tourists to Pokhara.

Himalaya Airlines is planning to start flights on Pokhara-Lhasa route using a 144-seat Airbus A-319. "The flights will begin as soon as the Civil Aviation Administration of China grants permission,” Bhul said, adding that Nepal side has completed all necessary preparations.

According to the schedule, the airline will operate a Kathmandu-Lhasa-Pokhara flight on Mondays, spending the night in Pokhara before flying Pokhara-Lhasa-Kathmandu on Tuesdays. 

Himalaya Airlines is currently flying on Kathmandu-Lhasa route. But due to lack of passengers the flights -- earlier three times a week (Mondays, Wednesdays, and Fridays) -- have been reduced and irregular. But the airlines has prepared a new schedule and hopefully continue the regular flights.

Himalaya Airlines has also received approval for Kathmandu-Lhasa-Kathmandu flights on Wednesdays and Fridays.

Government and World Bank launch $128 million project to improve provincial and local road network

The Government of Nepal and the World Bank jointly launched the $128 million (equivalent to Rs 17.15 billion) Provincial and Local Roads Improvement Programme-Phase 1, today. 

The project aims to enhance the connectivity, efficiency, resilience, and safety of Nepal’s provincial and local road network while also strengthening the government's ability to manage the road network, according to a press note issued by the World Bank. "The programme will be implemented by the Ministry of Urban Development in coordination with the provincial and local levels." 

The project was launched by Deputy Prime Minister and Minister for Urban Development Prakash Man Singh in the presence of provincial ministers of physical infrastructure and development from Sudurpashchim, Karnali, and Madhesh provinces.

“This project promotes the spirit of federalism embodied in the constitution bringing together the three tiers of government to work for the benefit of Nepalis," Shrestha said, adding that the focus of the project on environment-friendly and climate-resilient construction techniques and five-year maintenance component is key to supporting sustainable infrastructure development. 

The first phase of the project will upgrade and improve 180km of selected provincial roads and bridges, undertake maintenance of 400km and 700km of existing provincial roads and bridges respectively, and construct 100km of all-weather roads and bridges to provide connectivity to prioritized municipalities and local levels.

"This project will help improve Nepal's road infrastructure with a focus on resilience, and safety," said  World Bank Regional Country Director for Maldives, Nepal, and Sri Lanka David Sislen. “By working closely with the Government of Nepal, we are committed to ensuring better access to essential services and economic opportunities for millions of Nepalis.”

The first of the three-phase project will be implemented in Sudurpashchim, Karnali, and Madhesh provinces and 13 municipalities which will be scaled up in future phases. About one million people are expected to benefit from improved access to all-weather, resilient, and safe provincial and local roads and bridges.

At the launch event, a tri-partite memorandum of understanding was signed between the federal, provincial, and local governments of Sudurpashchim, Karnali, and Madhesh provinces for the implementation of the project.

The project will incorporate several best practices, such as five-year performance-based maintenance combined with construction contracts, routine maintenance conducted by self-help groups, complementary community-led infrastructure projects, pilot testing alternative connectivity methods and rural transport services, development of approach roads, and implementation of an online programme monitoring and management system.

Provinces press prime minister over unmet demands for key powers

The chief ministers of seven provinces jointly called on the federal government to implement the 17-point charter of demands they presented last year.

Expressing their concerns at the meeting of the National Development Problem Solving Committee led by Prime Minister KP Sharma Oli today, they asked to fulfill the demands which are a must for the provinces’ effective functioning.

Last July, a delegation of seven chief ministers had presented their 17-point demands including deployment of civil servants, promulgation of laws, and revenue sharing.

“We jointly called for implementing the 17-point demand, most of which remain unimplemented,” Madhesh Province chief minister Satish Kumar Singh said, adding that their key and longstanding demands include adjustment of Nepal Police in provincial police force and promulgation of the Federal Civil Service Act as in the absence of the necessary law the smooth functioning of the provinces have been regularly under question. "Although maintaining law and order falls under the exclusive authority of the provinces, successive federal governments have delayed the adjustment of the police, and promulgation of subsequent laws.

The provinces also demanded transferring ownership of land and buildings being used by provincial entities to the respective provinces, and deployment and transfer of the officials in coordination with the provinces. Provinces have been complaining that frequent unconsented transfers of principal secretaries, secretaries and other staff adversely affect their performance.

The chief ministers have been demanding an arrangement to send secretaries by the federal government to the provincial ministries and by chief administrative officers to the local units, with the provinces retaining the ultimate authority to assign them duties. 

Currently, the federal government deploys them directly, which has created problems in the he provincial level.

Since the provinces have been facing unprecedented burdens from natural disasters, the chief ministers demanded urgent support and response from the federal government.

Likewise, delay in promulgation of the remaining federal laws to delegate the exclusive and concurrent authorities to the provinces, as well as amendments to existing laws to ease land acquisition for development projects and establish industrial areas have also hindered the progress of provincial governments.

The chief ministers also asked to amend the Local Government Operations Act to ease revenue sharing from river-based resources between local and provincial governments, and revise the Forest Act to allow them to use national forests. 

The Madhesh government has even filed a writ petition in the Supreme Court demanding authority over forest management, but the case has been pending since long.

The chief ministers have also demanded to repeal of the Urban Area Public Transport (Management) Authority Act-2022 to enable provinces to collect revenues from traffic rules violation.

The chief ministers, during today's meeting, also expressed frustration over delays in obtaining clearance from the forest ministry, which according to them is hindering development efforts of the provincial governments. In response, PM Oli said he too was concerned about the delays in development works due to lack of permit in the use of forest covered areas.

Oli was of the view that concerned agencies with forest should facilitate development efforts while also working to protect forests and environment. Instead they are creating barriers in development efforts, he added.

Oli, on the occasion, also called for running an effective, competent and transparent administration, which can priorities addressing the public grievances.