MCC grant agreement expected to be signed by September

The Millennium Challenge Corporation (MCC) – an independent foreign aid agency of the US government working to reduce global poverty through economic development – has said that it is finalising the projects under its $500 million grant to Nepal. It expects that an agreement will be signed with Nepal for the five-year-long compact programme, by September this year.
In addition to the US grant, Nepal will contribute $130 million, making a total of $630 million, which will be invested into energy transmission and road transportation projects, according to senior officials of the MCC.
They said that they expect the US and Nepal governments to sign the agreement in September after finalising ‘some key next steps’ in the coming weeks that includes cabinet approval of the compact programme and then its voting by MCC’s board of directors and the US Congress for approval.
A visiting US MCC team led by regional deputy vice president for Europe, Asia, the Pacific and Latin America for the MCC Fatema Z Sumar today said that the MCC and the Nepal have agreed to invest in the Electricity Transmission Project (ETP) and the Road Maintenance Project (RMP). "MCC and the Nepal mutually agreed to focus on binding constraints for MCC compact investment, the inadequate supply of electricity and the high cost of transportation,” she said, adding that following the signing of the agreement, the MCC will finalise the preparatory works that is required in order for us to start the actual five-year compact.
The ETP project will include the component of construction of up to 300-km 400 Kv transmission lines that stretches from eastern to western Nepal, three hydropower substations and an additional cross-border transmission line, according to Sumar.
Similarly, the RMP projects will include components of road maintenance of cumulative 305-km and introducing smart and efficient technology to undertake robust road regime, she said. According to MCC, out of the $630 million of total funding, transportation project would be of around $55 million and the power sector of around $520 million while remaining funds will be spent on administrative activities.
Referring to works from the Nepal like finalising all issues related to land acquisition and regulatory reform including the passage of the bill on electricity regulatory commission, she said that the MCC will begin the ‘five-year clock’ to complete the project. "When the five-year clock starts, the country will have five years to fully start and complete all the infrastructure and construction within that time frame."
The MCC compact is the funding that requires the recipient country to complete the projects ‘on time and on budget’. The MCC does not go for the lowest cost while selecting the contractors, but go for the best value, and from start to completion of the projects, MCC will hold people accountable at each layer for delivering what they are supposed to do to complete 'on time and on budget.'
Nepal is the only recipient of the MCC compact assistance in South Asia while the funding is the largest grant from the US to Nepal. Following Nepal’s strong performance on the MCC policy indicators like economic freedom, rule of law, and control of corruption, Nepal was selected as the eligible country to develop the compact in December 2014.
The signing of the MCC compact funding also coincides with the celebration of 70 years of US-Nepal friendship.

PROJECTS 

Transmission line projects
400kV Hetauda-Ratmate
400kV Ratmate-Damauli
400kV Damauli-Butwal
400kV Ratmate-Lapsiphedi
400kV Butwal-Gorakhpur (Nepal segment)
Power substations in Ratmate, Damauli and Butwal

Road maintenance projects
Charali-Phidim
Dharan-Basantapur
Hetauda-Bhimphedi
Amelia-Tulsipur
Tulsipur-Salyan (under consideration)

Global consumer demand for gold at unprecedented levels, China world’s largest gold market

Consumers around the world bought gold in record amounts in 2013, led by demand in China and India, with China becoming the world’s biggest gold market, according to the latest World Gold Council Gold Demand Trends report.

In Western markets consumer demand also remained strong with the US, in particular, having a robust year in the jewellery, bar and coin sectors.

In 2013 the gold market saw 21 per cent growth in demand from consumers which contrasted with outflows of 881 tonne from ETFs. The net result was that global gold demand in 2013 was 15 per cent lower than in 2012, with a full year total of 3,756 tonne.

Annual global investment in bars and coins reached 1,654 tonne, up from 1,289 tonne in 2012, a rise of 28 per cent and the highest figure since the World Gold Council’s data series began in 1992.

For the full year, Chinese and Indian investment in gold bars and coins was up by 38 per cent and 16 per cent, respectively. Although much smaller markets in terms of volume, in the US, bar and coin demand was up by 26 per cent to 68 tonne and in Turkey it was up by 113 per cent to 102 tonne, demonstrating solid support on a global basis.

Meanwhile demand for jewellery, the other component of consumer demand, increased by 29 per cent from 519 tonne to 669 tonne in China, and by 11 per cent from 552 tonne to 613 tonne in India, reaching 2,209 tonne globally, the highest figure seen since the onset of the financial crisis in 2008.

"2013 has been a strong year for gold demand across sectors and geographies, with the exception of western ETF markets," managing director of the Investment Strategy at the World Gold Council Marcus Grubb commented.

"Specifically, it was the year of the consumer," he said, adding that although demand has continued its shift from West to East, the growing demand for gold bars, coins and jewellery is a global phenomenon. "Taken together, the statistics demonstrate the resilience of the gold market and the unique nature of gold as an asset class, rebalancing to reflect the economic environment."

The key findings of the report are:

• Consumers remain key drivers in the demand for gold: Globally, consumers bought 3,864 tonne of gold last year, 21 per cent higher than in 2012.
• Jewellery demand: Jewellery demand for the year rose by 17 per cent to 2,209 tonne, while investment in bars and coins was up by 28 per cent to 1,654 tonne.

• China and India both recorded increased demand in 2013. Consumer demand in China rose by 32 per cent in 2013 to a record level of 1,066 tonne, while in India demand rose by 13 per cent to 975 tonne.

• Global consumer demand strengthens: Across the world there were large increases in consumer appetite for gold in both emerging and developed markets. Demand in Turkey was up by 60 per cent, Thailand up by 73 per cent and the US up by 18 per cent.
• Indian demand remained strong: Despite several import related curbs during 2013, gold demand remained buoyant, with a full-year total of 975 tonne compared to 864 tonne in 2012. Unofficial imports estimated almost doubled compared with 2012, to compensate for the decline in official imports.

• Central banks: Although down by 32 per cent on 2012 they continued to be strong buyers of gold, a trend which began in 2009. The year 2013 saw net purchases in all four quarters, totalling 369 tonne, meaning 12 consecutive quarters of net inflows.

• ETFs: There was a net outflow from ETFs of 180t in Q4 as investors continued to re-evaluate their portfolios in response to market conditions. In total, investors redeemed 881t from ETFs in the full year.

• Technology: Technology demand reached 405 tonne in 2013, virtually unchanged from the figure of 407 tonne in 2012.

• Average price of gold for the year was $1,411/oz, down by 15 per cent on 2012.

• Global demand for jewellery was 2,209 tonne for the year, up by 17 per cent on 2012.

• Globally, there was record bar and coin demand for the year, which was up by 28 per cent on 2012, to 1,654 tonne.

• Demand in the technology sector was 405 tonne, virtually unchanged from the 407 tonne seen in 2012.

Gold demand and supply statistics for the fourth quarter of 2013

Consumer demand in China was up by four per cent in fourth quarter of 2013 compared with the same period last year. Consumer demand in India fell by 16 per cent to 219 tonne. Overall, global jewellery demand was up by six per cent, while total bar and coin fell by six per cent. Central banks were net purchasers of gold for the 12th consecutive quarter, while there were outflows totalling 180 tonne from ETFs in the quarter.