Central bank eases opening foreign branch regulation

Any commercial bank that has been fulfilling regulatory capital fund requirement since the past one year can now open a representative office in foreign countries. Nepal Rastra Bank (NRB) has removed the provision that required banks to maintain one per cent buffer capital additional to regulatory capital fund to open such offices in foreign countries. Class A banks that have fulfilled capital requirement, have non-performing assets of less than five per cent, and have directors, who have not been penalised by the central bank in the last six months, can open such branches. Under the provision, Global IME Bank and Himalayan Bank are planning to open their branches out of the country. 

Government bows down to petroleum traders’ syndicate

The government bowed down to pressure of petroleum traders' syndicate and decided today to withhold implementation of Petroleum and Gas Trading Monitoring Directives-2013.
"After the talks with the minister for Commerce and Supplies Shankar Koirala today afternoon, the government has decided to withhold implementation of the directives," informed coordinator of the struggle committee and president of Nepal Petroleum Transporters’ Association Khageshwor Bohara.
The government has agreed today to bring Petroleum Act through parliament, he said, adding that they have withdrawn all their protest programmes from today.
However, the parliament is not in sight as the election council has not yet fixed the date of election, without which parliament is a distant dream.
Earlier, the government had brought the directives on February 22, and petroleum traders have threatened to take the country hostage from April 7, by completely halting the distribution of petroleum products, if the government did not roll back the directives, which had opened the petroleum business to the private sector.
The petroleum traders' — Nepal LP Gas Industries Association, Nepal Petroleum Dealers’ Association and Nepal Petroleum Transporters’ Association — syndicate has plagued the country since long making the public suffer time and again.
The government's decision to withhold implementation of directives has strengthened the state oil monopoly — Nepal Oil Corporation (NOC) — and petroleum traders, who have been socialising the losses and privatising the profits forcing the consumers to suffer, according to a source at the ministry.
"The private sector's entry in the petroleum business with a strong regulatory mechanism would have weakened state oil monopoly and the traders bargaining power and consumers would have benefitted," he said, adding that the state oil monopoly has failed to ensure smooth supply of the petroleum products, despite profits in all the petroleum products except LPG, which reflects the incompetency of the Nepal Oil Corporation and its cartelling with the petroleum traders.

FNCCI to focus on energy development strategy

The private sector is planning to formulate a hydropower development strategy.
On the occasion of the 47th annual meeting, and Industry and Commerce Day-2013 on April 10, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) will organise a brainstorming session on energy development as the country is passing through an acute power shortage and finalise the hydropower development strategy.
"The umbrella organisation of the private sector is trying its best to make political parties agree to a common economic agenda, especially for the development of hydropower," said FNCCI president Suraj Vaidya, here today.
The private sector is concerned about the prolonged political transition and instability, he said, adding that an economic agenda has to be given priority for the overall development of the country. "We will try to get written commitments from political leaders on hydropower development," he added.
Since long, political parties have been treating hydropower development as a political issue, whereas it is a commodity and needs to be exploited for the development of the country.
Vaidya added that political parties should lead the country towards prosperity and that without economic development, politics cannot be sustained.
The annual meeting with a theme 'Change for Development Starts now' will see various experts, who have vast experiences of hydropower development, from around the globe.
The first session of the annual meeting will witness an interaction on 'International Best Practices for Hydropower Development', where various experts including joint secretary at the ministry of commerce and industry, India Arvind Mehta, assistant president of China Three Gorges Corporation, China Dr Lu Guojun, and chief hydro expert at World Bank Jean Michael will address.
Similarly, in the second technical session there will be a brainstorming on 'Together for Hydropower Development in Nepal' by various national and international experts.

Petroleum traders take country hostage

Consumers are again going to feel the heat as petroleum traders have threatened to take the country hostage from April 7, by completely halting the distribution of petroleum products, if the government does not roll back the Petroleum and Gas Trading Monitoring Directives-2013.

The traders' — Nepal LP Gas Industries Association, Nepal Petroleum Dealers’ Association and Nepal Petroleum Transporters’ Association — threat against the entry of the private sector in the petroleum business is not only going to hit consumers hard but will also test the incumbent technocrat government's capacity to handle the petroleum business-syndicate that has plagued the country since long, making the public suffer time and again.

Currently, the traders are — with full cooperation of Nepal Oil Corporation — socialising the losses and privatising the profits.

According to a report of the Auditor General for fiscal year 2010-11, the state oil monopoly has been incurring losses since long and as of the end of fiscal year 2010-11, it had a negative networth of Rs 12.70 billion, besides a suspicious investment of Rs 48.68 million. "The additional burden of the interests of the Rs 7.61 billion loan would also add up to its liability," the report had stated.

However, consumers have always been paying for NOC's incompetency and the red tapism in the petroleum business.

"NOC and traders are currently taking benefit by socialising the losses as they have been passing it over to consumers but after the entry of the private sector, they will not be able to enjoy the privilege," according to a source at NOC.

"Their commission could also come down as they will not be able to bargain with private companies like what they have been doing with NOC," the source said, adding that they might also have to work on lower margins as there will be more competition, unlike the current monopoly of NOC.

Every time traders threaten to halt petroleum distribution, NOC and the Ministry of Commerce and Supplies — that overlooks the technically insolvent NOC — bow down to them, bleeding the national coffers and burning a deeper hole in the consumers' pocket. "But the entry of the private sector will make it harder for them to bargain," he added.

According to former managing director of NOC Digambar Jha, the entry of the private sector will ensure smooth supply of petroleum products.

Despite the profits that NOC is making currently in all petroleum products, except LGP, consumers still have to queue at petrol stations.

According to NOC's projection, its monthly loss has come down to Rs 95 million for this month. Consumption of LPG — the only loss making product — will decrease in summer months bringing the losses lower. "Yet, consumers have not been getting petroleum products smoothly," said Jha, blaming the incompetent state oil monopoly and its mismanagement that has made it necessary for the private sector's entry in the business.

However, it would have been better had the government brought an ordinance — due to the absence of a Parliament — of Petroleum Act instead of directives, he opined.

The Petroleum Act was presented in the House during late Girija Prasad Koirala's premiership too, but it could not get through, he said, adding that the country needs a strong Petroleum Regulatory Board — with a legal teeth that is Petroleum Act — to monitor the private sector in the competitive market.

In the absence of competition in the market, traders and NOC officials are currently minting money, whereas consumers have been suffering.

Three days back, when traders announced the complete halt of petroleum products, NOC quietly increased their commission. "Traders have collected Rs nine million to influence NOC and ministry officials to increase the commission," according to the source at NOC. "Though the hike in commission was recommended by an expert committee, a lot of money has been involved in influencing the decision."

A three-member expert committee led by Dr Puskar Bajracharya had suggested an increase of Rs 0.23 commission for a litre of diesel and kerosene, and Rs 0.40 for a litre of petrol.

Finance Ministry gives guarantee to NAC to buy Airbus

The Finance Ministry has finally agreed to give a guarantee for the national flag carrier to purchase aircraft from Airbus.

"Writing a letter yesterday to NAC, the Finance Ministry has asked it to go ahead with the purchase process of aircraft from Airbus, as the government is ready to give a guarantee," according to the corporation.

However, the ailing Nepal Airlines Corporation (NAC) also needs to make structural changes besides adding new aircraft to perform well as it has to compete with international airlines that have strong financial and structural foundations.

Earlier, on March 16, Airbus representatives and NAC had agreed to continue with talks as Airbus has also agreed to send a new price list based on the increased factory price of the aircraft soon.