Preliminary study of Tokha-Rasuwagadi road started

A Chinese technical team has started a preliminary study of the tunnel section of proposed Tokha-Rasuwagadi road.
The Department of Roads (DoR) confirmed that the preliminary assessment of the Tokha-Chhahare-Gurjubhanjyang tunnel section has been started. “The team will gradually begin the study of other sections of the road project too,” director general of the department Keshav Kumar Sharma informed, adding that the team s active in the field. “The team is expected to complete the preliminary study within a few months.”
The government has planned to construct 4.17-kilometre-long tunnel to connect Tokha with Gurjubhanjyang and a 24-kilometre-long tunnel to connect Betrawati with Rasuwagadi. But the Nepali Army is also working on opening the track of the Betrawati-Rasuwagadi section citing that building a road instead of digging a tunnel would be more cost-effective.
According to a memorandum of understanding (MoU) – signed during the visit of Chinese President Xi Jinping on October 13 – Nepal and China had agreed to develop a 50-km road linking Kathmandu and Rasuwagadi. During Xi’s visit, Department of Roads and China International Development Cooperation Agency had signed the agreement.
According to the agreement, China will bear majority of the cost of building the road and tunnel, including the cost of study. The team, which is working in Nepal now, will submit its report and authorities from Kathmandu and Beijing will then start the work on the detailed project report (DPR) and detailed engineering study.
Though, the government is expecting that the Chinese government will finance the strategic project that the Chinese construction companies have expressed interest to build under the build, own, operate and transfer (BOOT) model, the funding modality of the project will be discussed after the DPR is finalised.
When the project is completed, it is expected to reduce the distance and travel time between Kathmandu and Rasuwagadi, and also shortens Kathmandu’s distance with the northern border Kerung.
The Kathmandu-Rasuwagadi road is around 125-km long, and passes through Galchhi of Dhading but the distance will be reduced to 50-km once the new route is completed.

Government shortlists developer for Nijgadh airport project

The government today shortlisted developers for the construction of three mega projects including Nijgadh International Airport, Lower Arun Hydropower Project and Kathmandu Outer Ring Road Project.
A meeting of the Investment Board Nepal (IBN) chaied by Prime Minister KP Sharma Oli today shortlisted the Swiss company Zurich Airport International AG to develop Nijgadh International Airport Project and decided to seek extensive proposal from it to construct the second international airport in Bara, according to a press note issued by the board.
“Though some seven firms submitted their proposals for for the construction of second international airport, only Zurich Airport International AG is qualified for the project as its LoI matched the eligibility criteria set by the board,” chief executive officer of the board Maha Prasad Adhikari confirmed. “The remaining six companies failed to meet the criteria.”
The other firms including Matrix Enterprises of Nepal, China Airport Construction Group and China State Construction Engineering Company from China, GMR of India, Qatar Airways and Vinci Group of France were disqualified due to lack of eligibility criteria.
Construction modality of the airport project had remained a major conflict between the government, political parties and the private sector. While calling for EoI for the development of the project, the government had sought proposals from interested firms to build the airport project either under the build, own, operate and transfer (BOOT) or public private partnership (PPP) modality.
The estimated cost of the airport project stands at Rs 400 billion ($3.45 billion), according to the board. “The airport will be built in three phases; the first phase will cost $1.21 billion, the second phase $1.12 billion, and the third phase $1.12 billion.
The government had decided to develop Nijgadh International Airport, one of the most ambitious projects, in 1995. But the timeline for the new airport was pushed back on multiple occasions due to financing and legal issues over its environmental impact. The Environmental Impact Assessment (EIA) report approved by the government shows that more than 2.4 million small and large trees will have to be cut down to build the long-awaited modern international airport in Nijgadh that will have a 4,000-metre runway.
The meeting also went through the proposal to construct Lower Arun Hydroelectric Project. According to the board, three firms – SJVN Ltd of India, a joint venture between Nepal’s HIDCL and Power Construction Corporation of China Ltd, and a joint venture between Nepal’s Green Resources Pvt Ltd and Electric Power Development Company (J Power) of Japan – submitted proposal to develop 679-megawatt Lower Arun Hydropower Project that is estimated to cost Rs 670 billion. “All the three proposals on Lower Arun meet the board’s eligibility criteria so ‘the board is preparing to ask them for detailed proposals,” Adhikari said, adding that the board will evaluate their proposals and pick a firm for the development of the public-private partnership project.
The Lower Arun Hydropower Project has been in limbo since 2016, when the government revoked the licence of a Brazilian company, Brass Power. The government had issued the licence to the Brazilian company in 2012. The Brazilian company had even planned to export more than 50 per cent of the energy generated to India but Brass Power did not show interest in developing the project after there was no progress in the power purchase agreement (PPA) with India.
After revoking the licence, the government had kept the project in its basket and was looking for a builder.
Likewise, the board has also received four proposals for the construction of the Kathmandu Outer Ring Road Project, but three proposals did not meet the eligibility criteria. “A Chinese construction company, China Communication Construction Co, has been shortlisted for the development of the Kathmandu Outer Ring Road Project,” the board informed, adding that the 72-kilometer Outer Ring Road will be constructed at a cost of Rs 212.3 billion. “If the detailed proposal, which has yet to be received from the shortlisted Chinese firm, is found satisfactory, then the project will be awarded.”
As per the initial study report in 2008, the cost of construction of the project was expected to hover around Rs 70 billion.
However, since the price of land has skyrocketed in the intervening years, the project construction cost is expected to shoot up. The project was initially proposed 14 years ago in the budget for the fiscal year 2005-06. The initial cost estimate for the project stood at Rs 6 billion.
The much talked Outer Ring Road will be 50 meters wide with eight lanes, cycle tracks, green belts and pavements on both sides along with flyovers at major intersections, according to the board.
“The companies that have been shortlisted for all these projects will submit their detailed proposals and the board will evaluate them,” Adhikari said adding that the contracts will be awarded to those that fulfill all the requirements.
According to the World Bank, Nepal needs to spend 10 per cent to 15 per cent of the gross domestic product (GDP) annually on infrastructure for the next 10 years. To boost investments, the government earlier this year in March had organised Nepal Investment Summit 2019, which saw investment proposals worth about $17.5 billion from both domestic and foreign investors. All the three projects were showcased during the Investment Summit 2019 in March.

Asian Infrastructure Investment Bank approves first loan to Nepal

The Asian Infrastructure Investment Bank (AIIB)'s Board of Directors has approved a loan of up to $90 million for a hydropower project in Nepal.
Approving its first loan to Nepal since it was established in 2014, the China-backed institution said Nepal will receive $90 million for the construction of the 216 MW Upper Trishuli 1 hydropower plant in Rasuwa. The 216-megawatt run-of-river hydropower plant will be developed on the Trishuli river under a 35-year build-own-operate-transfer (BOOT) model.
“The AIIB’s investment will provide much-needed, long-term financing for a vital infrastructure project,” said the bank’s director general Dong-ik Lee. “We are confident that our investment will demonstrate the viability of Nepal’s sustainable energy sector to other potential private-sector investors.”
The Upper Trishuli-1 Hydropower Project will increase the country's power generation by almost 20 per cent, helping to reduce acute power shortages in Nepal, according to a statement from the multilateral development bank.
The Asian Infrastructure Investment Bank plans to disburse the pledged amount for the $647.4 million hydel plant from October 2019. The project – to be constructed by a joint venture of Daelim and Kyeryong, and operation and maintenance by Korea South-East Power – is financed with a mix of debt and equity funding. The total debt stands at $453.2 million and is entirely financed by foreign capital with funds from sponsors including International Finance Corporation (IFC), Asian Development Bank (ADB) and others.
According to IFC – a stakeholder and lender to the developer – the plant has a capacity to provide 40 per cent of Nepal’s expected annual output during the dry seasons including the peak winter demand months.
“We recognise that power supply shortages in Nepal have caused significant delays in the restoration of infrastructure and services impacted by the 2015 earthquake,” AIIB vice-president and chief investment officer DJ Pandian said, adding, “By investing in hydropower and encouraging further private sector investment in the country, we will help drive economic growth and poverty alleviation efforts.”
The hydel plant with three units – each churning out 72 MW of electricity – is expected to be commissioned in October 2024, though hydel projects have never been completed in time in Nepal.
The developer and the Energy Ministry signed a project development agreement (PDA) in December 2016. According to the agreement, the sponsors – a Korean consortium, local promoter and IFC – will be responsible for the design, engineering, financing, construction, completion, commissioning, ownership, operation and maintenance and transfer of the project.
The energy generated from the project – being developed by Nepal Water and Energy Development Company (NWEDC) – will be supplied to the Nepal Electricity Authority (NEA). The two parties signed a 30-year power purchase agreement (PPA) in January 2018. The state power utility has agreed to buy the energy under a take-or-pay arrangement.
The NEA – while signing a power purchase agreement (PPA) – also agreed to pay in US dollars for a period of 10 years or until the portion of the investment made with foreign loans is recovered by the developer, whichever comes first. “It will be exposed to a foreign exchange risk of around $300 million, if the exchange rate of the US dollar rises at the rate of 3 per cent annually,” according to the NEA estimation. “And in line with the estimate, the government had asked the developer to contribute $150 million to the fund which it refused to do.”
After the row over the hedge fund, the developer agreed to provide 17 per cent of the energy to the NEA for free after 14 years of commercial operation, if it agrees to absorb the risks for the stipulated time,” the NEA said, adding that unlike dollar billing for power purchased from other projects under the build-own-operate-transfer model, billing for electricity produced by the plant will be done in Nepali currency after 10 years of commercial operation which will result in financial benefit to the NEA whenever the dollar depreciates. “Also, the developer will absorb risks in equity which amounts to $194.2 million,” it said, adding that the NEA and the government will not be exposed to heavy risks, if the company does its financial closing and manage funds in time.
The Cabinet had accepted – just before the Investment Summit in March – the developer’s offer to provide free energy after 14 years of operation and asked the electricity authority to implement the agreement with the amended terms.
“As per the hedge fund agreement, the developer will contribute one-third of the amount and the electricity authority and the government will put up two-thirds of the required fund maintained by Nepal Rastra Bank,” said Prabin Raj Aryal, spokesperson for the Energy Ministry without disclosing the size of the hedge fund.
The electricity generated by the plant will be evacuated to the Upper Trishuli 3B hub over a 10-km 220 kV transmission line connected to the national grid.
Apart from the $90 million loan, the Beijing-based bank has also provided Nepal with $900,000 for the proposed Tamakoshi 5 hydroelectric project and $1 million for a power distribution system upgrade and expansion project from its project preparation special fund. The special fund helps eligible AIIB members to mobilise grants for preparation of various projects.
Nepal is one of the 22 signatory countries that signed a memorandum of understanding to establish the bank in 2014. In January 2016, Nepal was elected to the bank’s board of directors.

IBN to publish detailed feasibility study notice for metro rail tomorrow

The Investment Board Nepal (IBN) is publishing a notice seeking expression of interest (EoI) to conduct the detailed feasibility study of the Nagdhunga-Koteshwor-Dhulikhel metro rail project tomorrow.
The 21-day notice for Route Number 2 of the metro rail project will be open for all national and international companies, according to the board.
According to the chief executive of the board Maha Prasad Adhikari, Route Number 2 of the metro rail project comprises Nagdhunga-Kalanki-Koteshwor in the Kathmandu Valley and Dhulikhel of Kavre district. "It will be 37-km long," he said, adding that the preliminary study of the project was jointly prepared by the Department of Railways and Japan International Cooperation Agency (JICA).
The government had earlier on April 30 directed the board to prepare a detailed feasibility study of the Nagdhunga-Kalanki-Koteshwor-Dhulikhel section (Route Number 2) of metro rail project. The 30th executive board meeting held under the chair Prime Minister KP Sharma Oli had mandated the board to conduct detailed feasibility study.
The board that is planning to select a company within six months. The shortlisted company will have to complete detailed feasibility study within 15 months.
"The detailed feasibility report will give a clear picture of investment model of the project," Adhikari sadi, adding that and the detailed project report will also make clear actual cost and time that will be required to build the project.
The metro rail will be operated under the public-private partnership (PPP) model, he said, adding that the board will select a company that also has experience of building projects under the PPP model, though the domestic companies have almost no experience of building any project under PPP model.
Likewise, the proposed Route Number 1 of extends from Budhanilkantha in Kathmandu to Satdobato and Khokana in Lalitpur. The $800-million monorail project has been delayed also due to the disagreement with yet another company earlier.
Earlier, the board was planning to sign a memorandum of understanding with Kathmandu Monorail Company (KMC). But the board has postponed signing since the company failed to fulfill all the requirements, it had agreed earlier.
The board had written a letter to prospective builder on May 3 asking it to deposit the performance security, according to the preliminary Memorandum of Understanding (MoU). But the company was unable to deposit Rs 100 million that was required as performance security forcing the board to search for new company, the board informed. "It has failed to deposit the performance guarantee."
However, the company – that was planning to construct the Kathmandu Monorail Project under build, own, operate, transfer (BOOT) model – said that it is not convinced with three clauses in the MoU, though it had shown interest earlier. "We are not comfortable with the clause that the company will have to forfeit the deposit amount as performance security, if it is unable to complete the DPR on time,” said chairman of the company DN Thapa.
Likewise, the company has also reservations on right of the DPR. According to Thapa, the company is also unhappy about the clause that reads that 'if the government is not satisfied with the DPR, it can ask another company to prepare a new DPR.'
The board has given Kathmandu Monorail Company two days to deposit Rs100 million as performance guarantee before signing the deal.
Two years ago, the company had submitted a proposal to the board showing its willingness to build the monorail along the ring road in the Kathmandu Valley. After receiving the proposal, the board – in consultation with National Planning Commission (NPC) – had formed a committee under the leadership of a member of the planning commission.
After committee has recommended the board to let Kathmandu Monorail Companyt to prepare a DPR for the project. The panel had also suggested the board to include a provision in the understanding clearly stating that the government will not bear the cost of the DPR, if the project is dropped meaning if the board – by any chance or condition – decides against developing the monorail project, it will not be liable to pay the company for the DPR. Likewise, if the board decides to award the construction project to some other developer, Kathmandu Monorail Company will receive payment only if the other party agrees to purchase the report.
The builder found the clauses unacceptable forcing the board to call for new expression of interest to conduct the detailed feasibility study.

NEA plans six cross-border interconnection corridors

Nepal Electricity Authority (NEA) has identified six cross-border interconnection corridors and 11 transmission lines with 22,000 MW generation capacity added within 2035.
Speaking at an interaction on Transmission Network System of Nepal organised by Energy Development Council (EDC) in Kathmandu today, managing director of NEA Kul Man Ghising said that the power utility has identified and planned six cross-border
Interconnection corridors and 11 transmission lines with a proposed 22,000 MW generation within 2035, as part of its strategy to optimise the energy grid.
Saying that a robust transmission and distribution system is the need of the hour for reliable power supply he informed that NEA was also going to study the requirements and feasibility of major transmission projects such as East-West transmission highway of 400 kV and 765 kV, Mid-hill transmission corridors of 400 and 220 kV, and North-South corridors of 220 and 400 kV.
He, on the occasion, also highlighted the current structure of transmission network in Nepal.
The discussion that featured talks from various stakeholders in the energy sector of Nepal saw officials from NEA and Independent Power Producers (IPPs) brainstorm on an outline on the current power scenario of Nepal.
On the occasion, IPPs also lamented discrimination by NEA while evacuating power. They said that compensation rate is different for different hydropower projects – from 45 per cent to 90 per cent. “Therefore, NEA has to be transparent and equal to power producer companies,” they said, adding that there was a special provision for transmission line for foreign producers but not to domestic producers.
The IPPs also stressed the need for a stable policy and more coherent approach from NEA. Giving an example where the construction of double-circuit instead of single-circuit could have evacuated more energy, they further said that IPP are ready to adopt Build-Own-Operate-Transfer (BOOT) model or even take the responsibility in land acquisition and procurement if allows. “IPPs are ready to adopt any favorable modality and are open to help the NEA to build transmission line,” they said, asking the government power utility to end the discrimination on transmission line construction. "There is a special provision for transmission line for foreign producers but not for national producers and that needs to end," they added
On the occasion, managing director of Liberty Energy Atma Ram Ghimire stressed the need for a stable policy and more coherent approach from NEA. Giving an example, where construction of double circuit instead of a single circuit transmission line could evacuate more energy and avoid duplication, he said that NEA has to synchronise the effort and have better coordination.
NEA has given top priority to install double circuit high capacity transmission network to enhance the quality of power supply.

Delay in construction of expressway costing the country Rs 8 billion annually

The government is starting construction of Nepal's first expressway very soon as the delay has been costing the country dearly, according to minister for Physical Infrastructure and Transport Ramesh Lekhak.
Speaking at the meeting of Parliamentary Accounts Committee (PAC) today, Lekhak said that he would forward the proposal to start construction of the Kathmandu-Tarai Expressway in the cabinet very soon.
The delay in construction of the express highway has been costing the country more than Rs 8 billion every year. Due to recurring controversies and delays, the project’s original cost estimate of Rs 56 billion has doubled to Rs 112 billion in seven years, which means the price tag has been swelling by Rs 8 billion annually after adjusting for inflation.
The minister also told the parliamentary committee that the government would set up a special purpose vehicle to build the expressway as per the report of the Study Committee led by National Planning Commission (NPC) vice chair Dr Min Bahadur Shrestha.
The committee led by Shrestha has recommended to the government set up a separate mechanism for construction of the expressway.
He also informed that the ministry is dealing with three processes simultaneously – resource management, procurement model and establishment of a separate mechanism to execute the five-year project in line with the recommendation of a government committee.
“We will soon prepare a project modality and table it at the Cabinet," he said adding that that a separate mechanism would be formed to execute the ‘public expressway’ as it could be a ‘reference document’ to call for bids under the EPC model. "The report will be used as a bill of quantities (BOQ), a document usually used in tendering in construction projects."
However, the Indian firm IL&FS has sought Rs 600 million from the government for the DPR.
The 76-km expressway that connects Kathmandu with Tarai-Madhesh in just an hour can be split into at least two sections to procure contract services, the study committee had suggested, recommending to build the first of its kind of expressway in Engineering Procurement and Construction (EPC) modality to save time and money.
Speaking at the meeting, transport secretary Dhan Bahadur Tamang told the parliamentarian that the 76-km expressway project may go for the EPC model instead of the build own operate transfer (BOOT) model proposed earlier.
The EPC contract binds the contractor to deliver the project at a stipulated time with predetermined price regardless of any increase in cost that the contractor may incur after the contract is signed.
Once the contract for the project is awarded, the contractor will prepare a detailed engineering report which will ascertain the real cost. The IL&FS – in its DPR submitted to the government in 2015 – had estimated Rs 112 billion, whereas a study conducted by the Asian Development Bank (ADB) in 2008 had estimated the project to cost Rs 56 billion. The cost was revised to Rs 96 billion in 2014.
One of the reasons for the project's delay is also the recurring controversies regarding the price tag.
In the meeting too, a number of lawmakers said that the cost estimate for the scheme was unrealistic.
Lawmaker and former finance minister Bishnu Poudel, on the occasion, said the government should agree to the EPC model and invite bids immediately. "We need to prepare a time-bound calendar to successfully execute the project," he said, warning that it will remain a distant dream, otherwise.
The government has recently announced that it will construct the highway by allocating around Rs 20 billion every year for five years.
Poudel also asked the government to immediately start the construction of the highway without further delay according to the previous government's plan. "The previous government had also allocated Rs 10 billion budget for the expressway," he added.
Poudel as the finance minister – in the erstwhile government led by KP Sharma Oli – had allocated Rs 10 billion for the project in the current fiscal year. But the budget has not been spent at all because of the delay in finalising project development and financing modality.
However, the National Pride Project has not been able to spend its budget due to various technical problems including dispute in compensation for land to be acquired for the project.
Kathmandu-Tarai-Madhesh expressway project chief Satyendra Shakya said that the change in construction modality has also delayed the project.
Lawmaker Ramhari Khatiwada said Nepal’s roads were being used as trial and we should be careful on whether the fate of the expressway would be like that of the BP Highway, a section of which crumbled a couple of days ago.
Likewise, the Lawmakers, on the occasion, demanded the government to expedite the construction of Kathmandu-Tarai-Madhesh expressway as it will be a milestone in the country's transportation network and can cut transportation cost, fuel consumption and time taken for transporting goods and traveling significantly that would also strengthen the national unity, the committee opined.
Concluding the meeting PAC chairperson Dor Prasad Upadhyay said the next meeting is expected to discuss the issues of the expressway again and come up with a substantive decision on the matter.

Track to be opened to motor traffic
The Department of Roads said that it was planning to open the track of the proposed Kathmandu-Tarai-Madhesh expressway to motor traffic. Director general of the department Devendra Karki said that they had been conducting repairs at Chhaimale, Dakshinkali and Nijgadh to allow vehicular movement. The Nepal Army started work to open a track in 2009 November as per the government’s instructions. It was completed in 2013.

Five years down the line KKH Tunnel Road still a pipe dream

Nepal Government permitted Purbadhar Bikas Company Ltd (PBCL) to construct Kathmandu-Kulekhani-Hetauda (KKH) tunnel road in 2012. The private infrastructure company planned to complete the road in four years. But the road project has not been able to move forward.
Ministry of Physical Planning and Transport had permitted PBCL to start the mega project – the first project under the Build-Own-Operate-and Transfer (BOOT) Act in Nepal – that was supposed to be operational by the end of 2016.
The project that could have become the successful PPP was and still is commercially viable as it would save travel time and cost. Currently, the distance between Kathmandu – the Nepalese capital – and Hetauda through the existing Tribhuwan Highway is 133-km and through Prithvi Highway, it is 227-km with around a six-hour driving time. But the KKH tunnel road is expected to shorten the travel time to only one hour and distance to 58-km.
The KKH tunnel road could also bring socio-economic transformation as it would not only connect people to the market but also bring changes in their lifestyle. Likewise, the express way would also save around Rs 15 billion annually on fuel and spare parts.
The Asian Highway standard 58-km tunnel road with three tunnels is planned with a four-lane expressway that would not only save time and fuel but also create new economic hubs at the sides of roads, besides helping shift population pressure from the Kathmandu valley.
The PBCL was planning to mobilise funds from four parties — private sector, locals, government, Non Resident Nepalis (NRNs) and financial institution — with each party having 25 percent stake. It has also prepared Detailed Project Report and got good support from the government as the concessioner. The government has awarded the company the project licence for 30 year with five year extendable option. It also has the option to change the toll rate on the request of licence holder. The government has also agreed not to charge any royalty from the project during the construction period. It has promised to help acquire private land, guaranteed not to nationalise the land, buildings, investments and infrastructure of the project.
Initially, the project was estimated to cost Rs 20 billion but the delay in decision by both the parties has increased the cost to Rs 34.5 billion from the earlier estimation.
The tunnel road that has a payback period of eight to 12 years, as users will have to pay toll fee, would be transferred to the government in 30 years. The project with a commercial viability, reasonable return, and guaranteed traffic failed to kick start due to government's emotional decision to award to only one company that was pushing the project. The government did not bother to call for competitive bidding and awarded the contract to the one that was lobbying for it.

EDF in talks to buy GMR stake in Upper Karnali Hydropower project

French government-owned power utility Electricite de France SA (EDF) is planning to buy stake of GMR's hydropower project in Nepal.

The EDF is currently in talks with Bangalore-based infrastructure conglomerate GMR Group to acquire a stake in 900-megawatt (MW) Upper Karnali hydropower project, according to the French company that confirmed EDF's interest in acquiring stake in the hydel project.

The GMR will still be lead investor in the hydropower project as the EDF will have less than 51 per cent stake.

Though the value of the possible deal is not confirmed, the EDF’s interest in the Indian energy sector has been reflected by its earlier investment in ACME Solar Energy.

EDF’s renewable energy arm and EREN, another French company, plans to invest a total of Rs 8.80 billion in New Delhi-based ACME Solar to set up solar power plants in India.

As the GMR Group has previously articulated its 'asset light, asset right' policy to 'develop, build, create value, divest and reinvest', the deal looks possible, the company added.

The group has sold several of its power, road and airport projects. GMR has 15 power generation projects, of which eight are operational and seven are being built. It also has nine road projects, of which seven are operational.

GMR Infrastructure had a total stand-alone debt of Rs 6.52 billion. The group’s consolidated debt stands at 642.22 billion as of September 30.

GMR Infrastructure’s loss widened to Rs 7.05 billion in the quarter that ended in December compared with a loss of Rs 3.47 billion a year ago and Rs 6.28 billion in the preceding quarter.

GMR Group today said that it had sold a 74 per cent stake in GMR Ulundurpet Expressways to India Infrastructure Fund of IDFC in a deal that releases capital to the tune of Rs 3.16 billion and reduces debt on its books by Rs 7.20 billion.

As executing a hydropower project is a time-consuming, costly and tedious process that includes a thorough survey and investigation, preparation of a detailed project report, relocation and resettlement of the affected population and infrastructure development, the GMR changed its policy to 'asset light, asset right'.

A consortium comprising GMR Energy and Italian-Thai Development Public Company (ITD) is developing the 900-MW Upper Karnali hydropower project on Karnali river on build, own, operate and transfer (BOOT) model.

While the country is suffering 12 hours scheduled load shedding everyday, most of the investors, mostly Indian investors, have been interested in developing hydropower, also due to its huge untapped potential, but prolonged political transition has delayed the projects.

Budget to target six per cent growth

The government is projecting a growth of six per cent in the budget for the next fiscal year 2013-14.

Addressing a pre-budget interaction organised by Management Association of Nepal (MAN) here, today, finance minister Shankar Koirala said that the budget will focus on higher economic growth and inclusive development. "The budget will also try to protect the private sector's investment," he said, adding that the government and private sector are the key players, though the private sector could be further bifurcated to cooperatives or other sectors. "Through the budget the government will help create an investment friendly environment to encourage the private sector to invest."

However, the private sector has limitations and the budget will concentrate on five priority sectors, the finance minister said.

"Energy, infrastructure, agriculture, tourism, and import substitution and export promotion will be key focus areas in the fiscal policy that will have non-controversial and non-political programmes," the former bureaucrat turned minister said, elaborating that generation of energy — with government incentives — and construction of transmission lines will get first priority in the budget.

"Likewise, infrastructure that is a key bottleneck for economic development that has never been a national priority agenda in the country, will get second priority and commercialisation of agriculture along with a focus on livestock and fertiliser production that will increase the contribution of the agriculture sector to the gross domestic product will get third priority, whereas import substitution and export promotion will help industrialisation," he added.

Unlike earlier ones, next fiscal year's budget will not be distributive, said finance secretary Shanta Raj Subedi. "The budget will focus on capital formation and sectors like infrastructure that will give returns in the long run," he said, adding that the government's recurrent expenditure has been increasing in such a way that revenue might not be able to meet administrative and regular salary expenses, though revenue mobilisation has been encouraging as it increased by more than 23 per cent — without changing tax rates — compared to last fiscal year.

President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Suraj Vaidya suggested the government to bring a productive budget that can create employment in the country. "Nepali youths should be involved in the construction of stadiums and airports in Nepal rather than in Qatar and Hong Kong," he said, adding that the budget should reverse the trend of increasing unemployment.

However, senior economist Tula Raj Basyal suggested the government to enhance the capacity of the public sector for effective management of the fiscal policy.

Presenting a paper on the private sector's expectations from the budget, managing director of Jyoti Group Saurabh Jyoti asked the government to involve the private sector in infrastructure projects under Public Private Partnership (PPP) model or Build-Own-Operate-and Transfer (BOOT). "The budget should provide incentives to the private sector to generate hydropower, help land acquisition, promote 'One district one product' programme, reform tax laws to encourage industrialisation, simplify customs and increase skills of foreign job aspirants in association with the private sector," he said, adding that the budget should be private sector friendly as it is the backbone for economic growth.

On the occasion, the finance minister also gave away the Manager of the Year Award to chief executive of Music Nepal Santosh Sharma and chief executive of Shtrii-Shakti Indira Maiya Shrestha.

 

Salary hike !

KATHMANDU: The government has given an assurance to increase the salary of civil servants. During an interaction with civil servant associations at the Finance Ministry, on Friday, finance minister Shankar Koirala said that the government will increase the salary of civil servants in the budget. He, however, said that the salary will be revised, according to the capacity of the budget. But the civil servants have asked for a 100 per cent hike in salary based on household survey of the central bank because there has been no increase in salary in the last three years.

Three firms show interest in two cable car projects

Some three firms have shown interest in constructing cable cars at Pathivara and Swargadwari, according to the Tourism Infrastructure Development Project, under the Ministry of Culture, Tourism and Civil Aviation.

"We have received three expressions of interest for the two cable car projects," said project chief Prakash Raghubanshi.

"Lama Construction, United Builders and Engineers, and Shahiba International; Laxmi Intercontinental with technical assistance of France-based Pomagalsky SAS; and CM/CRC developers have shown interest in constructing the cable cars at Pathivara in Taplejung, and Swargadwari in Pyuthan that attract thousands of pilgrims from within the country and from abroad," he said, adding that the ministry had sought an expression of interest on February 7 from domestic and international developers or joint ventures for both the projects. "We will shortlist the firms and ask them to submit their proposals with technical and financial experience before the final selection for the projects."

"Once selected, they will prepare a detailed project report that will provide a clear picture of the costs involved," he added.

According to a pre-feasibility study of the government, the proposed three-km cable car from Mathilo Phedi to Pathivara is expected to cost around Rs 700 million besides land acquisition costs, whereas the proposed 2.5-km cable car from Mathilo Bhingii to Swargadwari is estimated to cost Rs 600 million besides land acquisition costs. "But the detailed report of the selected party will project the actual cost," he added.

"After they are awarded the concession letter they will develop and manage two cable car projects under the Public Private Partnership (PPP) approach," said Raghubanshi.

"The government has been, however, planning to develop both the projects under the Build-Own and-Operate model under the Private Financing on Build and Operation of Infrastructure Act 2063 and Private Financing on Build and Operation of infrastructure Regulation 2064 that allow hand over of a project to the private sector for at least 30 years on lease," he added.

Though both the projects were listed in the government's Immediate Action Plan for Governance and Economic Reform 2012, progress has been slow.