Investment Board of Nepal approves investment worth Rs 8.84 billion

Investment Board of Nepal (IBN) has approved an investment of Rs 8.84 billion for the development of the 54 megawatt (MW) Lower Apsuwa Hydropower Project.

A Board meeting held today took the decision to approve the investment, IBN spokesperson Pradhumna Prasad Upadhyay confirmed.

Likewise, the IBN has decided to form a dialogue committee under the leadership of the CEO to table a proposal on project development agreement (PDA), financing modality and other issues regarding the West Seti Hydropower Project. 

The meeting chaired by the chairman of the IBN Prime Minister KP Sharma Oli has also entrusted the Board's CEO to submit the feasibility study report of Kathmandu-Hetauda-Birgunj podway project and development and operation of Panchkhal Special Economic Zone (SEZ) as well as provide the survey license for the projects.

The IBN meeting also provided approval to the developer company Karnali Transmission Company for the Environmental Impact Assessment (EIA) and feasibility study of the new route alignment for the development of transmission line for the Upper Karnali Hydropower Project of 900 MW.

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, Physical Infrastructure and Transport Minister Devendra Dahal, National Planning Commission (NPC) vice chairman Prof Dr Shivaraj Adhikari, chief secretary Eaknarayan Aryal, central bank governor Dr Bishwo Nath Paudel and other top ranking officials attended the meeting.

Government approves EIA Report of electricity transmission project

The Ministry of Forest and Environment has approved the Environmental Impact Assessment (EIA) report of the Electricity Transmission Project (ETP) to be implemented by Millennium Challenge Account Nepal Development Board (MCA-Nepal) with the grant funding from the Millennium Challenge Corporation (MCC), USA, and co-funding from Nepal.

The EIA report, approved on April 29 April by the government with a ministerial level decision, is a major part of the project preparatory works now underway for the construction of transmission lines and substations under the ETP project, according to a press note issued by the MCA-Nepal office.

"The achievement is an important milestone to help meet one condition related to site access before the MCC Compact can enter into force,” executive director of MCA-Nepal Khadga Bahadur Bisht said, adding that the other important milestone will be ratification of the MCC. "The report has established the existing status of the physical, biological, socio-economic and cultural environment within the project’s footprint, and has suggested measures to mitigate the potential impacts."

The detailed EIA report, prepared according to existing laws in Nepal, is in compliance with Nepal's Environment Protection Act (EPA), 2019 and Environment Protection Rules (EPR), 2020.

The EIA used a robust methodology for data collection and analysis, and included a number of consultations and public hearings in all 30 municipalities, rural municipalities of 10 districts in the project’s footprint.

It has proposed measures to avoid, minimise or mitigate/manage adverse impacts and to optimise project benefits as per Nepali environmental laws and regulations, and international best practices.

As a requirement of the EPA (2019), the EIA includes a detail Environmental, Social, Health, and Safety Management Plan (ESHSMP) to ensure safety of workers and communities affected by the project during implementation. It also includes an Environmental Monitoring Plan, and specifies an environmental audit process to identify any non-compliance including corrective actions to ensure fulfillment of the commitments in the EIA report. Following the approval of the report, MCA-Nepal will now initiate a process to receive the approval for the use of national forest area and removal of trees and plants.

Nepal and the US MCC signed a Compact in September 2017 for undertaking two projects that the Government had identified to address major constraints to Nepal’s development.

ETP is one of the two projects under MCC, and Road Maintenance Project (RMP) is another projects. The transmission lines will pass through 30 municipalities, and rural municipalities in 10 districts. The project will also ensure affected local stakeholders benefit through partnership program and strengthen the power sector in Nepal.

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.

IFC joins hands with Nepal to raise environmental and social standards in hydropower projects

International Finance Corporation (IFC) – a member of the World Bank Group – has signed an agreement with the Forest Training and Research Centre (FTRC), under Ministry of Forests and Environment, to improve adherence to environmental and social standards in hydropower development in Nepal.
Under the pact, IFC will provide advisory services to increase private sector compliance with environmental and social standards by improving development and implementation of regulatory frameworks for hydropower sector, including trainings in all seven provinces. The programme will also facilitate investments in hydropower sector by providing guidance on environmental and social standards and supporting inclusive development of hydropower in Nepal.
As a part of its support, IFC will focus on development and adoption of best practices, including capacity to implement the new Hydropower Environment Impact Assessment (EIA) Manual, released last year by the ministry and supported by IFC.
“To implement the EIA manual, we need to train our staff at all levels. This support will help us build our capacity as an oversight agency for environmental impact and to ensure effective compliance with environmental standards,” director general of FTRC Deepak Kumar Kharalsaid.
Given the vast environmental and social challenges Nepal faces, capturing the impacts and risks associated with hydropower development remains critical to ensuring sustainable development in the country.
“This will enable both the public sector as well as the private sector to have a clear guidance on what is expected to identify risks and manage the impact associated with hydropower projects as well as assess cumulative the impact while managing river basins holistically, particularly where multiple hydropower projects are being planned,” IFC’s resident representative in Nepal Mohammad Rehan Rashid said.
The programme, funded by the governments of Australia, Japan and Norway, has a strong social inclusion component focused on building resilience in communities affected by hydropower projects.
IFC – a sister organisation of the World Bank and member of the World Bank Group – is the largest global development institution focused on the private sector in emerging markets. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.

FCAN announces protest programmes against strict construction regulation

The Federation of Contractors’ Associations of Nepal (FCAN) is halting all construction works from July 17, if the government does not amend some of the provisions included in the recently passed Public Procurement Regulation (sixth amendment).
Organising a national convention of contractors from across the country in Kathmandu today, chairman of FCAN Ravi Singh also announced a series of protests programmes like returning the contract licence to the government and wearing black armband, until government hears them right.
The amended Public Procurement Regulation has a provision that states that a contract will not be extended for more than half of its original deadline to ensure that projects that are on the verge of completion would not be affected by the regulation, according to the government officials.
Likewise, the contractors have also protested other provisions of the amended regulation that restricts certain individuals from bidding projects. The provision states that any bidder – firm or individual – that faces a corruption case in court, according to the law, is barred from bidding for projects either as an individual or in the form of a joint venture unless the court gives a clean chit.
The contractors today also organised a rally in Kathmandu demanding changes in the regulation before a ‘special gathering’ that has agreed to protest and bring all the construction works to a standstill after July 17, if the government does not give them an ear.
Several development projects are facing time and cost overruns due to contractors’ ignorance and the government’s failure to clear the site and public protests, but the contractors have critisised the tough amendment that the government has introduced to force contractors to complete their work on time, with warning of contract termination.
Likewise, the government officials also said that the new provisions will be good for new projects, it could not be practical for the old ones, particularly those ones which are facing time overrun due to the failure of the government agencies themselves.
According to the government officials themselves, the provision of not extending the deadline – irrespective of who is responsible for the delay – could lead to the termination of many contracts.
According to a study by the Commission for Investigation of Abuse of Authority (CIAA), some 1,848 projects worth Rs 118 billion under seven ministries are incomplete and past their deadlines.
According to secretary at the Ministry of Physical Infrastructure and Transport Devendra Karki, “The provisions of the newly amended regulation is all right for the projects to be awarded in the future but the concern is about how to complete projects whose deadline has been extended beyond 50 per cent of original deadline due to genuine reasons like the government officials failing to clear site, public preventing the contractors to work and utility facilities not being cleared to start work.”
But there is also a risk that even projects that are over 90 per cent complete but have not completed as per deadline extension provision in new regulation would face contract termination as these projects will be delayed further for inviting fresh tender. “It will also increase the cost of the project because tender should be based on new price range,” said a higher government official.
The government officials and contractors both agree on the implementing this provision for the new projects. “The government should at least let the contractors finish the work they have started,” said the FCAN.
According to the amended regulation, the government agency should not call tender until the site is cleared, the budget is enough for providing compensation for acquired land and a report about Environmental Impact Assessment (EIA) has been approved, which FCAN also opines is right.

After Upper Marshyangdi 'A', Sinohydro eyes Upper Kaligandagi

After successfully completing 50-MW Upper Marshyangdi 'A' Hydropower Project, SinoHydro Resources Ltd has set its sights on 65-MW Upper Kali Gandaki Hydropower Project.
Talks for power purchase agreement (PPA) of the Upper Kali Gandaki project, which will be based in Myagdi district, is underway. Environment Impact Assessment (EIA) study of the project has already been completed, according to higher official of the SinoHydro.
The generating license of the project is held by Global Trade Link. It is learnt that SinoHydro will form a joint venture with Global Trade Link to develop the project.
“We are planning to build more hydropower projects in Nepal as the country is rich in water resources,” chairman of the Sino Hydro Resources Ltd – a Chinese government undertaking – Sheng Yuming said.
Sharing his experience in hydropower development, Yuming sad four factors – time, safety, quality and cost – are very important for hydropower projects.
However, the Upper Marshyangdi 'A', which was delayed by 10 months due to last years' earthquake and the economic blockade – has witnessed cost escalation of 8 per cent from the initial estimation of Rs 16 billion. The project went on floor on 2012.
Criticised for delaying the projects like Kulekhani I, the Chinese government undertaking has completed the project with the private sector almost on time.
Comparing the investment scenario in the countries like Pakistan and Lao PDR where SinoHydro has invested in power generation, Yuming said that Nepal is comparatively a safer destination for investment.
Power generated by Upper Marshyangdi 'A' is being connected to national grid on Monday.
SinoHydro Resources owns 90 per cent stakes in SinoHydro-Sagarmatha Power Company, the developer of Upper Marshyangdi 'A'.
Energy minister Janardan Sharma and ambassador of the People's Republic of China to Nepal, Wu Chuntai, are jointly inaugurating the power plant on Monday. The 25-MW will be added to the national grid on Monday and remaining 25-MW will be added in a couple of days, according to the SinoHydro-Sagarmatha Power Company.
Upper Marshyangdi 'A' will be the largest project, in terms of installed capacity, to start generation after the Madhya Marsyangdi (70 MW) which started generation in 2008.
A 20- km transmission line built as per the contingency plan by the developer itself connects the power generated by Upper Marshyangdi 'A' to the substation of Madhya Marsyangdi in Beshisahar of Lamjung.
Upper Marshyangdi 'A' is the first hydropower project built with Chinese foreign direct investment (FDI) and financed by China Exim Bank.

Investment Board to approve Rs 25 billion cement factory

Investment Board of Nepal is going to approve Rs 25 billion cement factory.
The board meeting after the Tihar festival is going to approve India's Reliance Industries' Rs 25 billion cement factory for foreign direct investment, informed external affairs head of the board Ghanashyam Ojha.
The board – chaired by the Prime Minister Sushil Koirala – has received the proposal from the Reliance Industries that is owned by India's Ambani group, he said, adding that the company is planning to set up the cement factory in either the central region or the eastern region of the country. "The Department of Mines and Geology has already given its permission to the factory in mid-July."
The approval got delayed due to the board's busy schedule with the project development agreement (PDA) on Upper Karnali Hydropower Project with another Indian firm GMR.
After the board's approval – post Tihar festival that ends on October 25 – Reliance will conduct environmental impact assessment (EIA). The company will then submit the EIA report to the board, through Ministry of Environment.
After the clearance of the EIA from the board, Reliance will start the work to set up the factory, Ojha added.
Reliance has, however, demanded that the government provide 60 MW of uninterrupted supply of electricity to the factory, he said, adding that the company has demanded that it should be provided subsidy in the import of coal or other fuel for generating electricity, in case the government is unable to provide uninterrupted supply of electricity.
More cement companies both domestic and foreign investment are coming up lately as the demand for cement has increased due to construction of big infrastructure projects including hydropower projects lately.
The government – to encourage the cement industries – promised to provide access road and electricity to new cement factories. According to Trade and Exports Promotion Center (TEPC), import of cement has gone down by 19.2 per cent to Rs 3.18 billion in the fiscal year 2013-14 compared to a fiscal year ago in 2012-13, when the country saw Rs 3.94 billion worth cement import. But the country has seen rise in import of clinker as most of the domestic cement factories are dependent on imported raw material for cement that is clinker. Only few of the cement factories rely on domestic mines and majority of them have been importing clinkers.
According to central bank, in the fiscal year 2013-14, the country imported Rs 9.71 billion worth cement and clinkers that is some three per cent higher than that of a fiscal year ago in 2012-13, when the country imported Rs 9.42 billion worth cement and clinkers.

Kathmandu-Kulekhani- Hetauda Tunnel Highway construction to start from November 11

Nepal Purwadhar Bikash Company (Nepal Infrastructure Development Company) has decided to start the construction of Kathmandu-Kulekhani- Hetauda Tunnel Highway from November 11.

During the annual general meeting here today, chairman of Nepal Purwadhar Bikash Company Kush Kumar Joshi said that the company will start the 58-km tunnel road construction from November 11.

The AGM of the company that was established to construct big infrastructure projects like tunnel roads, has also planned to simplify the process to include more interested individual investors and institutional investors in the tunnel road that is expected to not only shorten the distance between Hetauda and Kathmandu but also save fuel consumption.

The company is however, yet to complete environment impact assessment (EIA) study – that is mandatory – of the project.

The Environment Protection Act 1997 has made it mandatory for developers of large scale project to complete EIA study – that will assess the possible impacts of the project on environment, social and economic aspects in the project sites and devise measures to mitigate such impacts – before the ground-breaking.

The Rs 34.5 billion ambitious tunnel highway that links Kathmandu with Tarai reducing the distance to 58-km has received the permission to begin EIA study with approved Terms of Reference and scoping document in January from the Ministry of Science, Technology and Environment.

The proposed tunnel highway that has three tunnels – with the longest one of 3.4- km long – and 15 bridges, is the first of its kind of infrastructure that is being financed and constructed by the public.

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