Saturday, March 30, 2019

NRNA, domestic investors save the government

Non Resident Nepalis Association (NRNA) and domestic private sector saved the government as the mega projects illuded the investment summit that has showcased 77 projects for the foreign investors.
The government today signed some 15 memorandums of understanding (MoUs) – most of which is with the domestic private sector and NRNA – of the 17 applications, at the conclusion of the two-day Nepal Investment Summit 2019 in Kathmandu.
The summit witnessed investment agreements on 15 projects between investors themselves and also between the government and investors, according to the Investment Board of Nepal (IBN) that has extended the deadline to submit their applications for the showcased projects till April 20 due to low turnout.
Of the 15 projects that were signed, Chaudhary Group (CG) – owned by Forbes-listed only Nepali billionair Binod Chaudhary – alone signed 4 joint venture agreement with Indian investors, whereas some of the projects earlier said to bring in foreign direct investment (FDI) also signed agreement for financing with the local banks – giving a new definition to the FDI, though the experts claimed it to be a government 'face saver' for the government. A FDI project signing financing agreement with domestic banks is going to not only change the definition of FDI but also create liquidity crunch and hit macroeconomic stability in the country, though the amount seems not huge.
The projects include a joint venture agreement on development of a multi-model logistic park between CG and Sharaf Group, JV agreement to develop the 600-megawatt utility-scale solar photovoltaic project between CG and Skypower, JV agreement between CG and Turkcell for 5G mobile network service, solar photovoltaic energy between Chief Ministers’ Office of Province 2 and CG Infrastructure, according to the board. 
The summit also witnessed agreement on development of the 164MW Kaligandaki Gorge Hydropower Project between Yunnan Xinhua Water Conservancy and Hydropower Investment, Hydro Solutions Group and Shanghai Investigation, Design and Research Institute.
The event also witnessed commitment letter for financing the 900MW Arun-III Hydropower Project – though the Indian developer was supposed to bring in the FDI to develop hydel project – between Nabil Bank, Everest Bank, State Bank of India and SJVN Arun-III Power Development Company. The Indian SBI Bank has made a commitment to provide Rs 65.6 billion while Everest Bank Ltd (Rs 8.13 billion) and Nabil Bank Ltd (Rs 4.88 billion) will also contribute to the project estimated to cost  Rs 112.28 billion.
Muthoot Finance of India also officially announced its investment of Rs 399 million in United Finance, though Muthoot had already agreed to inject money in C-class financial institution in Nepal. United Finance is also a part of Chaudhary Group (CG).
The summit also witnessed an agreement for development of Himalaya Boutique Village Resort in Banepa, setting up a Rs 10 billion fund by Non-Resident Nepali Association (NRNA) and construction of a grain warehouse and infrastructure development cooperation. NRNA and Ministry of Industry signed the agreement. NRNA presiden Bhaban Bhatta informed that an agreement is signed with the government to set up a basket fund worth Rs 10 billion to support the government’s agenda of economic prosperity.
Likewise, Investment Board Nepal (IBN), International Finance Corporation (IFC) and Special Economic Zone (SEZ) Authority for development of Simara SEZ as per public-private-partnership (PPP) modality. Also notable were the announcement of financial investment confirmation of $650 million for the 216-MW Upper Trishuli Hydropower Company by a Korean company.
The IBN has also claimed that it will set up a robust follow-up mechanism on agreements that had been signed and those that would be signed in the next few weeks.
But the investors seemed not convinced with the two-third majority 'communist' government due to their schooling and unpredictable behavior.
The second Nepal Investment Summit held in 2017 saw the commitment of around Rs 14 trillion and its implementation progress is nearly 25 per cent. The country had organised the summit for the first time in 2048 BS following the restoration of democracy. The investors attending the summit had pledged investment of approximately $100 million, but only around 25 per cent was realised, government data show.
This time the investment could go up in the extended deadline.
Addressing the concluding ceremony, former prime minister and co-chair of Nepal Communist Party (NCP) Pushpa Kamal Dahal said it was the right time for investors to inject investment in Nepal as the country’s sole priority was economic prosperity and development.
Finance Minister Dr Yubaraj Khatiwada said the investment summit had successfully promoted Nepal as a favourable destination for doing business and expressed his commitment to support investors through all means.
A total of 735 delegates from 40 countries representing 300 companies, in addition to 600 domestic participants from over 100 companies, took part in the summit, according to the board.

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