Tuesday, February 24, 2015

Treasure of tailoring


"The mushrooming of tailoring shops at every nook and corner has increased unhealthy competition in the business"

Sujata Awale

Kathmandu

After gaining experience of tailoring from different garment factories and tailoring shops for six years, Raj Bahadur Maharjan, Proprietor of RB Tailors, commenced his own tailoring business in 1991. Started with an initial investment of Rs 80,000 at Machhindra Bahal, Lalitpur, he had only one assistant to support him then. Reminiscing the earlier days of his business, he said, “The business was tough and I had to rely on my only assistant for everything. Gradually, I learnt the craft of the trade and things got better.”

According to him, the tailor shop reached new heights only when it was shifted to Lagankhel in 1996. Citing that the business was good during 1998, he said, “There used to be only a few tailoring centres and the business reached its peak," adding that now there is tough competition in the market. "The mushrooming of tailoring shops at every nook and corner has increased unhealthy competition in the business," he said, adding that one needs to offer the best services to stand out in the market.

Specialised as a gents tailor, the shop has all custom tailoring of shirting and suiting along with readymade clothes. RB Tailors has an array of fabrics from the local market and fabrics imported from India, China, Thailand and Taiwan. Customers can order formal attire, business and wedding suits, along with Nepali costumes such as daura suruwal, waistcoat, jwari-coat et cetera that costs anything from Rs 2,500 to Rs 12,000. The tailoring charge of a shirt and pant is Rs 350 and Rs 450 respectively, while that of sewing a daura suruwal and suit is Rs 1,000 and Rs 3,500 respectively. Along with custom tailoring service, the shop also offers readymade clothes such as shirts, pants, suits, daura suruwal and trousers among others.

“The finest custom tailoring service and prompt delivery system are our unique selling proposition,” said Maharjan, adding that is why their customers frequent the shop. According to him, loyal customers' word of mouth has done magic to his business.

Festive seasons like Dashain, Tihar, the wedding season and new academic sessions are the peak time for the business. "To cash it on these occasions, we offer a shirt, tie and coat cover for free on the purchase of suit," he said, adding that the majority of customers comprise of youngsters from middle class strata.

Today, RB Tailors employs six staff and makes an annual turnover of Rs 600,000. Citing that power cuts is the main hurdle to the business, he said, “It has become a challenge for us to meet commitments to deliver products on time. So, we have to work in the wee hours following the deadline.”

“Custom tailoring is not easy and it is hard to retain good staff," said Maharjan, adding that growth and expansion is further restricted due to the unavailability of skilled manpower. He complained, "Marred by load shedding and due to the lack of skilled manpower, we are compelled sometimes not to take orders." However, he added, "I want to extend with a new outlet in the near future."


 
 Published on The Himalayan Times, Perspectives February 22, 2015

Saturday, February 21, 2015

Brihat coming with bold new projects

First phase of BCL-Bhainsepati to introduce 32 standalone houses

Himalayan News Service

Kathmandu, February 21

Brihat Investments Pvt Ltd (BIPL) is all set to introduce Brihat Community Living-Bhainsepati, by mid-March. In the first phase of BCL-Bhainsepati, the company will introduce 32 units of standalone houses on a project area of 20 ropanis. Targeted at customers of middle strata, the minimum price of the two and a half storey buildings will be priced at around Rs 10 million. The minimum built up area for the project will be 1,500 sq ft with an area of three annas. The Brihat Community Living-Ramkot, Brihat Community Living-Balkhu and Brihat Cluster Maitidevi are three ongoing projects of the company.

“We are working on designs for the project and as soon as we finalise it, we will launch the project,” informed Nischal Man Singh Pradhan, Chief Operating Officer at BIPL. Citing that demand and inquiries have soared, he said, “Compared to the corresponding period last year, we are witnessing double the inquiries and bookings for the projects these days.” According to him, of late, along with end-users, investors are also booking houses.

The ongoing project — BCL-Ramkot is spread over 32 ropanis of land that consists of 76 individual houses. According to the company, they have completed construction of 85 per cent of the project. “We have sold 51 units till date and 25 families have already shifted in,” said Pradhan, adding that they provide facilities such as swimming pool, gym hall, temple, garden among others. The price of the individual houses start from Rs 10.4 million depending upon built up area and size. The company offers 13 different types of house models. The company also provides slight customisation options for the convenience of customers.

The smallest size house will have at least three bedrooms, three bathrooms, kitchen, dining, living and laundry room. "Design is another main efficient aspect of all our housing projects," he claimed, adding that their design ensures maximum utilisation of the area.

The unique selling propositions of the projects are — a range of eco-friendly products and concepts such as solar electricity for streetlights, rainwater recharging for water conservation, proper garbage disposal system, use of UV protection stickers and use of concrete lightweight blocks instead of bricks for reduction of carbon monoxide emission and conservation of soil.

Spread over 105 annas, BCL-Balkhu is another ongoing project of the company. There will be 24 individual houses that are priced at Rs 12.19 million to Rs 19.5 million depending on the different sizes. “We have received bookings for 60 per cent of the houses in this project,” said Pradhan, adding that construction is in progress. The company targets to handover the project in mid-August.

Brihat Cluster Maitidevi is a small project consisting of seven individual homes. “We have introduced this project targeting city dwellers who do not want to shift from the core areas,” explained Pradhan, adding that they have already sold five units. The two and a half storey building with three bedrooms are priced at Rs 14.4 million to Rs 19 million.



Projects in the pipeline


BCL-Bhainsepati: 32 individual houses

BCL-Ramkot: 76 individual houses

BCL-Balkhu: 24 individual houses

Brihat Cluster Maitidevi: 10 cluster houses 









 Links: http://epaper.thehimalayantimes.com/epaperpdf/21022015/21022015-md-hr-14.pdf


Thursday, February 19, 2015

PACOSAN-II commits to an open defecation free Pakistan



ISLAMABAD: Pakistan Conference on Sanitation (PACOSAN–II)  renewed its commitment to Human right on Sanitation adopted by the United Nations and endorsed by SAARC nations to work progressively to achieve an open defecation free and hygienic South Asia through accessible, affordable, appropriate, acceptable and environmentally safe sanitation and hygiene services that all people can use and maintain with dignity, safety comfort. Pacosan II unanimously agrees and commits to an open defecation free Pakistan by 2025 and to progressively move towards sustainable environmental sanitation.
The Ministry of Climate Change in collaboration with key development partners, government ministries, departments and international non-governmental organisations, including Unicef, Plan International and WaterAid (UK), held the conference on February 17 and 18.


Pakistan is the first country in South Asia to hold a minister-level national conference on sanitation. The first national conference was held on May 28–29, 2009 in Islamabad. From Nepal — Ram Chandra Devkota-Joint Secretary of MoUD , Rabin Lal Shrestha of WaterAid, Dr Sumitra Amatya of SWMTC, Lajana Manandhar of FANSA national convenor Nepal and Guna Raj Shrestha of WSSCC Nepal Coordinator had participated the meeting. — Compiled by Sujata Awale


Declaration of PACOSAN II








Tuesday, February 17, 2015

Power crisis cutting into economy

Ratna Sagar Shrestha/ THT

The cost of power for domestic industries has sky rocketed due to constant power cuts


Sujata Awale

Kathmandu

The valley is once again suffering from a severe power crisis of up to 11 hours per day. Long hours of power cuts have not only hampered city dwellers but are hampering the whole economy. The cost of production for domestic industries has sky rocketed rendering them incapable of competing against with imported products in terms of price. Dependency on trading business has also increased which is not a good sign for the economy. Due to acute power cuts, industrialists state that existing industries are facing a hard time and it is impossible to start new ventures. While load shedding has affected the whole economic chain, the government is yet to prioritise the construction of domestic and international hydel projects on line.

High demand low supply

Owing to less energy production, high demand and problems in ongoing hydel projects, Nepal Electricity Authority (NEA) is importing power from India to mitigate the crisis. As of now NEA is importing around 235 MW electricity from India, which is 55 MW more as compared to the same period last year.

NEA had extended an hour of load shedding a few weeks ago stating that the Mid Marsyandi Hydropower Project was scheduled for maintenance. “We have completed the maintenance work and now the hydropower is functional,” said Bhuwan Chettri, Chief of the Load Dispatch Centre at NEA, adding that the project contributes 36 MW power to the national grid in the dry season. “We are planning to import more power from India to decrease the load shedding hours. However, the process is pending due to conductor upgradation on the Indian side,” informed Chettri.

Electricity demand this year has swelled by 10 per cent as compared to last year. The current demand for electricity is around 18.6 million units per day and there is a good chance this demand will grow. Citing that the demand for power has increased unexpectedly this year, he said, “The current demand is what we expect in the months of mid-February and mid-March usually, but the urgency this year could also be because of the shortage of LP Gas in the country.” He further said that the load shedding hours may extend in days to come if demand increases. To meet the current demand, the country needs to generate 1,250 MW of electricity. However, NEA can supply only around 400 MW through domestic hydroelectric projects and by importing 235 MW.

SAARC miracle

It is a well known fact that the valley did not suffer from power cuts during the SAARC Summit held in November, 2014. This fact does not sit well with Kathmanduites given the long hours of power cuts immediately after the conclusion of the Summit.

When asked about the reason behind this miracle, Chettri commented, “We had totally disconnected the power of industrial areas and had increased load shedding hours in other parts of the country to maintain smooth supply in the valley during SAARC Summit. Therefore, there were no power cuts during the period.”

No priority, no power

“The power cuts will not come to an end anytime soon as we don’t have capacity to meet soaring demand,” said Khadga Bahadur Bisht, President of Independent Power Producers Association of Nepal. Citing that there is no proper planning from the government side, he said, “As Mid Marsyandi Hydropower Project was shut for maintenance during the peak dry season when the power crisis was up, people had to suffer felongated load shedding.”

Bisht stated that the only solution is to import from India during the dry season. He said, “We face severe power cuts since the last seven years and the problem will remain same if the government doesn’t take any initiative and proceed with developing new hydel projects.” He further stated that the government should expedite the process of giving approvals for new domestic and foreign hydel projects. He opined that the government should solve the issues regarding project development agreements, power trade agreements and construction of transmission line connections to solve load shedding problems in future. “Otherwise the problem will hover around in future too and the country will be in a worse state than now,” he warned.

Wasted energy

While the country is reeling under severe power crisis, generated power is wasted due to lack of transmission line connection. Mai Hydropower (22 MW) promoted by Sanima Hydropower Pvt Ltd (SHPL) has completed the construction of the project and is ready to generate power since December 26, 2014. However, the transmission line of Kabeli Corridor 132 kV transmission line from Damak to Godak is yet to be completed. As the main transmission line project could not be completed, NEA has worked on an alternative way to connect the project with the 33 kV Godak to Puwa transmission line for the dry season.

“It has been a month since we completed our project and are ready to generate power. However, we could not go for generation as NEA could not complete the transmission line on time,” said Dr Subarna Das Shrestha, CEO of SHPL. According to him, they got an alternative transmission line to transmit eight MW power produced in the dry season. “If the 132 kV transmission line from Damak to Godak project is not completed within few months, our power will be wasted,” he said.

“The work of alternative transmission lines have been completed but due to technical problems at the project site, the power production has been halted,” informed Chettri. He said that NEA is working on the 132 kV line and that they target to complete it by mid-July. Reportedly, of late, only 26 towers have been erected out of 95 towers.

Impact on industries

The industrial sector is in the dark due to load shedding. Industrialists complain about difficult working environment and going at la huge oss. “Power is the back bone of industries. No work can be done without power,” said Pradeep Jung Pandey, President of the Federation of Nepal Chambers of Commerce and Industries. “To mitigate this power crisis, we use diesel generators which increases our cost of production by five times,” he complained, adding that generator produced power costs Rs 35 per unit. Citing that most of the load shedding hours are during working hours, he said, “As industries cannot run full-fledged due to prolonged load shedding, unemployment problems increase. Moreover, with the increase in cost of production, Nepali products have not been able to compete with other imported products.”

Pandey is of the opinion that without proper supply of power, the country cannot have GDP growth. Stating that the government should proirtise hydropower and industrial sector, he opined, “Political will should be there to solve this power crisis. Timely policymaking and implementation should take place. And the government should create a favourable environment for investment in hydel projects.”

Economic turmoil

The dependency of trading business and imported products has been increasing by the year. “Nepal’s economy is stagnant at the moment,” said Chiranjivi Nepal, Economic Advisor of Prime Minister. He further stated, “Our economy is dependent on trading business each year which is unhealthy for the economy. The trade deficit has increased and we are depending on other countries for almost everything.”

As per the latest report of Nepal Rastra Bank, Nepal has already imported Rs 350 billion worth of products during the last six months of the fiscal year 2014-15 and the country witnessed Rs 300 billion trade deficit. Last year, the country had Rs 618 billion trade deficit which exceeded the allocated budget of Rs 617 billion.

According to him, “Electricity is vital for the development of internal economy. Despite having 83,000 MW potential for hydropower projects, the country could not make the most of it.” Stating that solar power and diesel plants are not feasible in the country, he said, “Solar does not have long life cycle and we have to import all instruments from aboard while diesel plants are expensive. The only option is to develop the hydropower sector.” He said that strong political will is lacking to boost the sector. “Political leaders have to crack down on the hydropower issue and commit to increase power production for the prosperity of the country,” he said.

  Published on February 15, 2015 on THT Perspectives
http://epaper.thehimalayantimes.com/Details.aspx?id=1259&boxid=29017508&dat=2/15/2015

High demand low production

Sujata Awale

Kathmandu

As industrialists cannot meet the increasing demand for milk every year, the milk industry depends upon import. Despite having 10 per cent growth in demand each year, the production of milk could not meet demand. According to data of Nepal Dairy Association (NDA), the country produces 1.5 million tonnes milk per year, which is still not enough. To mitigate the demand, industrialists import 300,000 to 400,000 litres of milk daily.

“The domestic production of milk is only enough for five months while for the remaining seven months we have to import from other countries,” said Megh Raj Bhandari, Immediate Past President of NDA. Citing that lack of production is the main challenge in the industry, he said, “There is 10 per cent growth in demand, but we only have four per cent growth in production each year.”

As per the Census report 2011, more than 80 per cent of the population depends upon agriculture while 57 per cent of the population is engaged in cattle farming in the country. The milk industry has contributed about nine per cent to gross development product (GDP) and 450,000 families are directly employed.

The milk industry's demand and production is indirectly proportionate in Nepal. The peak season for milk production starts from mid-October to mid- May when the demand goes low. On the other hand, demand goes up while milk production dips. “To mitigate this uneven scenario, we, industrialists, have no choice rather than to impor raw and powder milk from India and other third countries,” said Bhandari. “If only we could attract youth to the agriculture sector, with grooming 40,000 livestock, the situation will be corrected and 13,000 families will get employment,” he added. He stressed on the need to provide easy and affordable agricultural loans to increase the participation of youth in the milk production sector.

The government recently increased the price by Rs eight per litre on December 31, 2014 citing that farmers are not gaining much profit from the sector as they face high production cost. Of the revised price, the government allocated 69 per cent share to farmers and 31 per cent to industrialists.

“The price increment in milk is our compulsion as the production cost including daily wages, machinery, packaging, and fodder has increased by 50 per cent,” said Sumit Kedia, President of NDA. He futher said, “As we are facing a problem with production of milk, the government should plan to attract the younger generation with easy loans and subsidy.” Moreover, he said that as 60 per cent of farmers are relying on fodder, the government should conduct awareness campaigns for feeding green grass to livestock. He informed that the number of cows and buffaloes are high whereas milk production is comparatively low. According to him, local cows give only six litres per day while in other countries cows give 25 to 30 litres milk each day.

Kedia stressed on the immediate need to provide trainings and awareness about quality assurance to milk production and upgrade technology for better quality assurance. Besides these, power cuts and lack of skilled manpower are also hassles for the industry.

According to NDA, DDC the state owned milk producer enjoys 40 per cent of market share while the private sector enjoys 60 per cent market share. Pokhara, Butwal and Kathmandu are major markets where milk consumption is high.

Raj Govind Rajkarnikar, Manager of Quality Control Department at DDC, said, “The market is growing, however due to low production from farmers, we have to rely on imports.” According to him, the valley alone has 250,000 litres of milk consumption per day and DDC produces 140,000 litres of milk. According to him, there are more than 100 dairies in the valley alone. Citing that still the private sector could not gain public trust, he said, “DDC being a government owned company, we retain quality check however, many companies play foul to gain profit without having concerns about quality.” He further said that there should be a timely quality control mechanism.

Published on February 15, THT Perspectives

Friday, February 6, 2015

Development forward or backward?

Last minute capital expenditure does not take the country anywhere but it will backfire the whole economy dramatically


Sujata Awale

Kathmandu

Providing top priority to infrastructure development, agriculture, tourism and energy sector, the government has aimed to accelerate Nepal from least developed country to developing country status by 2022. To achieve the target, Finance Minister Ram Sharan Mahat has set six per cent economic growth at the end of this fiscal year. Despite of these commitments for development activities, the government always fails to spend the allocated budget on time, which directly results inflation in economy, a liquidity surplus and hurts development endeavours.

The first half of this fiscal year has already passed and the government’s expenditure is limited to 12.34 per cent (Rs 67.7 billion) of the total allocated budget Rs 618.10 billion for this fiscal year. Out of the total budget, Rs 398.95 billion has been allocated for recurrent expenditure, Rs 116.75 billion for capital expenditure and Rs 102 billion for financial management. Till November 3, only Rs 4.34 billion — 3.73 per cent — was spent under capital expenditure. The delay in capital expenditure shows the low fund absorption capacity of development projects and loophole in the public financial management system.

Why delay?

According to the government officials, delayed in budget approval from the Cabinet, early approached festive season and rainy season has lowered the expenditure this fiscal as compared to the same time last year.

President of Federation of Contractors Association of Nepal, Jaya Ram Lamichhane, says, “The whole process from budget approval to contract awarding process is cumbersome and time consuming.” The budget presented on July 13, was approved on October 20 from the Cabinet. He says, “It took three months to get budget approval from the Cabinet and will take four other months to get green signals for tender, initiate bidding process and awarding the projects to contractors.” Citing that whole procedures kill three quarters of the fiscal, he comments, “Contractors get projects at their hand by March-April and within two months they are forced to complete their projects whatsoever. The government should shorten these cumbersome and lengthy process for the better outputs.”

Pointing on the wrong mentality of the working habit of bureaucracy and whole system, Lamichhane stresses on the need of introducing fiscal year from mid-April to mid-May (Baishakh). He further says, “While November and December are best time to work we have to stay back leisure, whereas we are compelled to work on last minute during rainy season which definitely decreases the sustainability and quality of the projects.” According to him, there are many infrastructure development projects of roads, schools, bridges, irrigation, water supply, electricity projects compelled to complete on last minute without concerning about the quality.

Trend and its outcome

However, Tulasi Prasad Situala, Secretary of Ministry of Physical Infrastructure and Transport, says that they work throughout the year but the transaction of the projects will be done on last two months. Citing that they are keeping their pace on projects, he says, “We are continuing a national priority projects along with some new road projects to increase the connectivity.”

There is no doubt that capital expenditure will surge during the last quarter of every fiscal. Once again this shows the habitual trend of expediting spending only at the eleventh hour which does not really help development.

Economist Bishamber Pyakurel says, “This trend needs serious correction as haphazard spending for the sake of spending, only contributes to inflation and ineffective outcome.” He elaborates, “In the last fiscal year, the government could only spend 32 per cent of total capital budget in 10 months. But in the last two months, the spending accelerated up to 80 per cent.” Citing that the country follows expansionary fiscal policy, he says, “To have effective impact on gross development products, sustainable development and employment generation from the capital expenditure, there should be need basis budget allocation and distribution.”

According to him, instable government, lack of political will, unfavourable environment, centralised system, policy wise and legal difficulties are reasons for lower capital expenditure. He complains, “About three dozen Acts and Policies desperately needed for developmental activities are pending with Parliament. These pending Acts and Policies have been barriers to development programmes and projects.” He is of the opinion that the government needs to immediately endorse the policies and acts including Procurement Act to speed up the development works.

Wrong practices

On this Netra Prasad Subedi, Deputy Financial Comptroller General at FCGO, says that the bottom up approach on developing plans and programmes is compulsory. Moreover, human resources turnover and procurement act are responsible for least expenditure in development activities. “Development is only possible with function driven programmes but here we have money driven approach. Centralisation system and lack of enabling local bodies further added to least development,” he says.

While experts comment on the hefty expenditure at the end of fiscal year, Suman Prasad Sharma, Secretary of Ministry of Finance, accepts that the budget expenditure is flown uneven throughout the year. Citing that low expenditure in the first quarter of fiscal year is not a serious issue, Sharma says, “Although we have allocated budget on time, it took much time to get budget approval from the Cabinet. And the early approached festivals and extended rainy season also resulted for lower capital spending as compared to the last year.” Citing that this year the capital expenditure will be better, he says, “We prepared well before allocating budget. Only well defined projects are given funds.”

Need of serious concern

It is undeniable that development of infrastructure only can add the growth to GDP. Urban Planner Sanjaya Uprety says, “Capital investment in roads, hydropower, irrigation and other infrastructure development is essential to develop the country. However, instable political situation and unclear policies could not secure the investments of national and international investors.” Stating that urban contribution to GDP is high, he says, “Eighteen per cent of urban concentration of the nation is contributing 64 per cent on GDP. This clearly shows that urbanisation is must to uplift our GDP.”

According to him, increasing road accessibility is major area to improve the whole economy. Uprety says that private resource mobilisation plays vital role in development activities. “National and international investors are reluctant to invest on infrastructure development as the government fails to create favourable and secured environment. Moreover, there is no clear provisions of risk bearing, exchanges, facilities and others,” he adds. Meanwhile, he suggests the government to focus on developing regional bigger towns than developing small cities and municipalities, which does not decrease on the pattern of migration in the capital city.

Published on November 09, 2014 / THT Perspectives

Super six could be at super risk

Despite the government according top priority and fast tracking these projects, possible delays in transmission lines creates uncertainty

Sujata Awale

Kathmandu

The super six projects, which are envisioned by the government to mitigate the soaring power crisis in 2009, is still in limbo. Although the government had awarded licenses to private sector companies in June 2010 based on competitive bidding, developers have not been able to construct the projects till date.

Despite the government providing top priority to their construction, negligence over evacuation and transmission lines has invited an uncertain situation in hydel development. Delay in proper planning for both project construction and transmission lines and lack of coordination between ministries and government agencies, contradictory and unclear policies, cumbersome lengthy processes and instable government are other reasons for the delays.

As per the National Electricity Crisis Mitigation Plan 2008, the super six projects were envisioned to minimise the acute problem of load shedding. The government intended to develop eight hydel projects of different capacities under the Build, Own, Operate and Transfer (BOOT) model through competitive bidding as per provisions in article 35 of the Electricity Act, 2049. However, developers showed interest in six projects which later on took on the term of super six projects. Solu (23.5 MW), Lower Solu (82 MW), Khare Khola (24.1 MW), Maya Khola (14.9 MW), Singati Khola (16 MW) and Mewa Khola (50 MW) are the projects.

Except for Mewa Khola, Nepal Electricity Authority (NEA) has concluded the power purchase agreement (PPA) for the other five in November 2013.

Unmet commitment

After four years of struggle, Solu reached financial closure on September 28. CEO of Upper Solu Hydroelectric Company, Shashi Rajbhandari, said, “We have taken high risk and finally arranged loans from banks to initiate construction work.” Citing that it took them more than three years to sign the PPA, he complained, "Although 'Request for Proposal' clearly mentioned that NEA shall purchase electrical energy generated from the super six projects at the posted rate at the time of signing the PPA and that NEA would construct the trunk portion of transmission lines, time and again we were troubled unnecessarily." According to him, the government in its preliminary study showed that the total project cost would be Rs 1.2 billion but the project cost has soared and the present target completion cost of the project is Rs 4.1 billion.

With assurance from NEA to complete the transmission project by April 2018, the company had arranged a loan of Rs four billion. Rajbhandari said, “If the government fails to complete the transmission line as per its commitment, we will face huge losses. In four years we have already spent Rs 242 million."

Elaborating on the hassles that they faced since the license was gained, Rajbhandari said, “It shows the failure of the government that despite having written commitments, it could not implement what it committed to. Developers get nothing but a loss and unnecessary hassles." He also stated that the blame game and lack of coordination between NEA, Department of Electricity Development and Ministry of Energy further worsens the situation.

Transmission delays?

Agreeing with him, Sandeep Garg, Director of Essel Clean Hydropower Project (ECHP) the developers of Lower Solu, said, “The government has trapped private developers with attractive commitments which were never delivered." Citing that the super six was supposed to 'super fast track' projects, he said, "Lack of strong political will, stereotype work culture of government officials, lack of coordination and frequently changing governments delayed the whole process."

Reportedly, the private sector bid and paid Rs 43 million for license of six projects, which were many folds higher than the normal price. "Despite paying five times higher royalty, guaranteed performance bond and 45 per cent penalty if developers don't complete their work, we have not enjoyed any special consideration. Rather we are tangled in the whole government process," he said with disappointment. As per the PPA, a penalty can be charged to both investors and the government if any party does not finish their work within the scheduled time.

According to him, the project cost of Lower Solu has increased by Rs three billion during these four years. Reportedly, the 82 MW project is in the process of achieving financial closure within a few months from the Dutch Development Bank with a cost of Rs 180 million per MW. Garg said that the government should not delay the construction of transmission lines if it is serious about making this a government and private sector success story. He said that there should be a one door system and problem mitigation committee. But most importantly the government must deliver on its commitments.

Uncertainty over constructing of transmission lines by the stipulated date is a major reason that developers are in wait and watch mode even after the PPA. As per plans, the Koshi Corridor 220 kV double circuit transmission line will evacuate Maya and Mewa Khola projects, while Solu Corridor 220 kV double circuit transmission line will take care of Lower Solu and Solu. Lamosangu Singati 132 kV transmission line will evacuate generated power from Singati.

Snail pace work
According to NEA, the process of transmission line projects is not delayed, it is on track. Rajan Dhakal, Deputy Manager at Grid Development of NEA, said, "There is no doubt that the government has neglected the importance of developing transmission lines before providing license to private developers." He further said, "While issuing license of the super six projects, no work had been done for Solu Corridor and Koshi Corridor transmission line projects."

According to him, Indian Exim Bank has already agreed to invest USD 250 million on the Solu and Koshi Corridor transmission line projects. "We have appointed Wapcos India for Koshi and Lahmeyer India as consultants for the Solu Corridor projects and by the end of December we will open bidding for project contracts," adding that these consultants are working on formulating detailed project reports and estimating the project cost.

Dhakal stated that if everything goes smoothly, the construction of the Koshi Corridor transmission line will be completed by 2019. However, even he had his doubts. He said, "The situation of no law and order in the country has created difficulties working in the field. Moreover, lack of coordination and assistance from various ministries and government authorities further delays development of transmission lines."

Right of way, land acquisition problem, unfavourable and contradictory policies further make developing transmission lines a challenge. He complained that they do not have sufficient manpower, instruments, equipment, technology or the allocation of budget to expedite the construction of projects.

Janardhan Gautam, Project Manager of Solu Corridor Transmission Project at NEA, said, “We have completed paper work for the bidding process. But in the absence of a managing director at NEA the process has been delayed.” According to him, a 90-km 132 kV transmission line is expected to be completed by April 2018. Reportedly, there will be approximately 300 towers in the corridor from Mirghaiya, Siraha to Pingala, Solukhumbhu. “If the project is completed by the stipulated date, the corridor will be able to evacuate power from six hydropower projects in pipeline,” he added.

He further said if objection from locals and forest clearance does not create problems, it will surely be accomplish on time. The government has already agreed to provide Rs three billion in loan for the project in the initial phase.

On the need to appoint an MD at NEA, Rajendra Kishore Kshatri, Secretary of MoE, said, "The absence of the MD in NEA certainly impacts decision making. However, it is not a major excuse." He informed that the Cabinet has already appointed Mukesh Kafle as the new MD for NEA and he will resume office within few days. Agreeing that lack of serious concern over transmission line construction is a major reason for delays in the project, Kshatri said, "We have found that transmission line projects were not given priority during PPA which is why the construction of projects is getting delayed."

According to him, the transmission line project is plagued with problems of land acquisition, right of way, compensation of demand to locals, unclear policies to coordinate with government agencies. He stressed on the need of clear policies to develop hydel projects along with transmission lines. "There should be consolidate national interest among all government agencies, stakeholders and locals, only then the development of the hydropower sector will be possible," he opined.

Published on November 2, 2014 / THT Perspectives

What's delaying transmission projects

Tender and contract awarding process needs serious correction to avoid problems and delays


Sujata Awale

Kathmandu

Delayed construction of transmission line projects is no surprise in the context of Nepal. Problems like land acquisition, right of way, forest clearance, environment impact assessment, agitation by locals have plagued development projects and delayed process. Weak enforcement of the law, lack of coordination between government agencies, lack of prioritising development projects, unclear and contradictory provisions and lack of political will are reasons why the aforementioned problems remain unsolved.

Apart from these problems, the tender and contract awarding process also needs serious correction to avoid problems in projects. Reportedly, transmission line projects such as Lamosanghu-Singati 132 kV, Bharatpur-Bardaghat 220 kV, Hetauda-Bardaghat 220 kV, Hetauda-Bharatpur 220 kV and Kabeli Corridor 220 kV, among others projects are facing problems due to delays by construction companies and contractors. While a few companies are only supplying material rather than mobilising manpower, some are bankrupt and struggling for funds.

Financial problems

“We have already sorted out the problem of land acquisition and forestry, however, till date no construction work has started as the Indian contractors are yet to mobilise workers at the site,” says Rajan Dhungel, Project Manager of Lamosanghu-Singati transmission line. The Lamosanghu-Singati project was awarded to Arawari Indian Company, which recently supplied insulator hardware and conductors at the site but the work is still in limbo. The 40-km long project will have 120 towers from Lamosanghu to Singati. Despite continuous effort, the company cannot be reached for comments.

Dhungel also adds, “We are not informed formally why the contractor has delayed the project. But we have heard that there are financial problems in the company.” Citing that the problem has been invited by problematic procedures, he says, “As per the Public Procurement Act (PPA) the government should award the contract to the lowest bidder rather than a competitive bidder.” He informed that the tender is awarded based on presented documents. Later on there is no mechanism to trace the financial situation of contractors. On being asked what the next step would be to break this deadlock, he said, “The contractor is committed to start work so we will give them a last chance.”

Although there is the provision to terminate the contract, he stated that it almost next to impossible, as the whole process is lengthy and cumbersome. According to him, if the contractors initiate site work this fiscal, the project will be completed within one and a half year. Stating that cash flow and coordination among main contractors and sub-contractors are major problem seen, he said, “The Procurement Act should be amended as soon as possible to minimise delays by contractors and to cross check the financial status of the company.”

Unresolved issues

This is not just one case. There are many projects which are in a similar idle state but because of different reasons. “As employers fail to make timely decisions and provide favourable conditions to initiate work, we contractors have no option other than to sit and count days,” said Ajay Mudhbary, Managing Director of Mudhbary and Joshi Construction, contractor for Lamahi-Gorahi 132 kV and Kusum-Hapure 132 kV transmission line projects. He says, “It has been two years since we are awarded these projects, but Nepal Electricity Authority can’t solve the issue of right of way,” adding that they have already established the project office and supplied necessary materials.

Complaining about the government’s failure to address problems in transmission projects, Mudhbary says, “Why does the government call for tenders and award contracts when they have not acquired land, solved right of way and other issues. It should first acquire the land and only then start the contract bidding process.”

He says, “We know NEA and our employers and the problems that may crop up. Contrary to us, foreign contractors may not know the situation and may face financial and other problems because of such delays and this creates questions about the viability of such projects.”

Danger in delays

According to him, while awarded projects could not be completed within the time period of 18 to 24 months, overhead cost, inflation in construction materials, operating cost naturally goes above what was signed in the contract. “This creates a risky situation for contractors,” he said. Mudhbary suggests the government starts price justification while evaluating contractors so that fake contractors can be filtered automatically.

According to stakeholders, the process of awarding contracts to the lowest bidder also contributes to the present problems. Many projects which submitted proper cumentation for the tender process, later on are seen to have problems. Documents are presented only for acquiring the project and there is no mechanism to trace and cross check facts and financial situation which ultimately creates delays.

Who's to blame?

Kanhaiya Kumar Manandhar, Officiating Deputy Managing Director of the Transmission directorate at NEA, said, “If any contractor fails to work as per the contract, there is a provision in the PPA to impose upto 10 per cent liquidity damage of the contract cost, employers can lead the project, make terminations and black list the company as well.” Manandhar further said that no project till date has been blacklisted or terminated.

“Terminating the project means re-tendering the project and a waste of time and money, which is why we keep it only as the last option,” he added. He admits that delays are not only because of contractors. He says, “The government itself delays in acquiring land, forest clearance and solving other problems. In such cases, we have to extend the time for project completion.”

Awaiting amendments

Tanka Mani Sharma, Secretary at the Public Procurement Monitoring Office (PPMO) informed that they have already sent the Procurement Act for needed amendments to the Cabinet. He said, “We have amended 35 different clauses in the Procurement Act to make both government offices and private companies more accountable for completion of public projects within the stipulated time,” adding that the amendments will guide and provide clarity to the existing act.

As per Sharma, if the amendment is endorsed by Cabinet, the act will have a standard bidding rate and even provisions to take action against even government offices who are not able to complete projects on time. Contractors who are not able to complete projects on time will be blacklisted, collateral will be seized and the company will be fined and made to pay the additional expenses for the re-bid of the project. Moreover, the lowest bidder will have to pay 25 per cent extra collateral as bid amount. Time extension will not be granted except under grave consideration. Presently companies get up to 20 per cent cash as advance for mobilising and purchase of materials at the site. New amendments will require the bidder to supply material to the site before they can claim the mobilising amount. Citing that amendment process is with Parliament, he said, “Once the Act is amended we can implement it accordingly.”



Published on January 7, 2014 /THT Perspectives

Piling up agreements or paving the way?

Government must create a favourable environment for foreign investment


 
Sujata Awale

Kathmandu

Nepal successfully hosted the 18th SAARC Summit and concluded it with the signing of a regional energy cooperation pact among SAARC countries in November. The SAARC Framework Agreement for Energy Cooperation (Electricity) has opened the door for electricity trade between member countries by promoting competition, planning of cross-border interconnection and exemption of taxes and duties while exchanging electricity between entities.

Nepal also signed a bilateral Power Trade Agreement (PTA) with India in September, which allows both countries to import and export electricity. Now with the signing of these regional cooperation agreements, Nepal has opened up doors to sell electricity to other member countries as well. Experts state that Bangladesh has emerged as a promising market for Nepal to sell power via India.

Constructive venture

At a time when electricity is the biggest crisis for South Asian countries, it is the determining factor to develop these nations. With the regional cooperation agreements, SAARC nations can now depend upon each other for mitigating the shortage of power and related woes.

"The agreement permits any private or public power producer under the laws of member states to buy and sell electricity within and outside the country and it could compliment their resources," said Keshab Dhoj Adhikari, Spokesperson at the Ministry of Energy (MoE). He further stated, "It also allows member countries to establish regional grid connectivity, enhance power trading, harmonises policies, facilitate the supply of electricity in power deficit cities by exempting taxes and duties gradually."

Citing that Bangladesh has shown interest to buy electricity from Nepal, Adhikari said, "This is a good sign and Bangladesh is keen to have bilateral power trade with Nepal. This has widened the market scope for Nepal." Informing that India has already signed a bilateral power trade agreement with Bangladesh, he stated, "As India and Bangladesh have transmission line connections, this regional cooperation has enabled Nepal to trade power via India to Bangladesh. And India can be the transit for regional integration." According to him, the agreement has created the environment further for investment in hydropower.

Power pack

The Khimti-Dhalkebar 420 kV double circuit cross border transmission line project will be the first cross border transmission line that connects and enables import and export of up to 1,200 MW electricity between Nepal and India. As the supply of electricity swells during the monsoon season, there is an electricity surplus. And during the dry season, due to lack of water in rivers, the country faces a power deficit. Therefore, the country needs to export surplus power during monsoon and import power in the dry season.

“We have immense potential for hydropower projects in the country. The production of electricity in the wet season swells to six times the electricity produced during the dry season. And this fluctuation in electricity generation makes it hard for investors to develop projects,” said Gyanendra Lal Pradhan, Chief of Energy Committee at Federation of Nepalese Chamber of Commerce. Stating that bilateral and multilateral agreements make hydel projects more viable, he said, “Previously developers had to design projects in Q30 and Q40, but now developers can optimise their project capacity and power generation will be cheaper and more saleable.” He also said that as Nepal has signed the PTA with India and India already has 500 MW connectivity with Bangladesh and 1,500 MW with Bhutan and they are in the process to develop a 1,000 MW transmission line with Pakistan, India can play a mediator among these countries to sell generated power from Nepal. According to him, Nepal can be a net exporter of electricity as there is a high demand for power during monsoons in Bangladesh and India.

Pradhan further said that the agreement is only the starting point and the government should now create the environment. “There is no assistance for developers to develop projects from the government side. Differences and lack of collaboration between the Ministry of Energy and Environment, CIAA and NEA creates problems,” he said, adding that FDIs could not materialise due to these hindrances.

Enabling environment

Donor agencies see the new regional cooperation as a huge opportunity to invite FDIs. Although it is a positive sign, they are still waiting for it to bear fruit. "The agreement has paved the way for generating revenue but the donor agencies and FDIs are still hesitant to invest," said an official at International Finance Corporation (IFC). An official further said, “We (Nepal) don’t have a clear investment policy that can lure investors. It takes much time to get approvals and visas,” adding that the government should streamline the process and add facilities for investors. Citing that investors are interested to invest in hydropower projects, an official said, “The government should create the environment and sincerely welcome them with a constructive environment in the local scenario.”

Pradeep Jung Pandey, President of Federation of Chamber of Commerce and Industries, said that the agreements and SAARC regional cooperation is a positive sign. However, he stressed on the need to implement the signed agreement. Citing that hydropower development directly impacts the industrial sector, he said, “Electricity is needed for any industry to operate and we are hopeful that the government will give priority to this sector and do the needful to develop the whole sector.”

Khadga Bahadur Bisht, President of Independent Power Producers´ Association Nepal (IPPAN), said the agreement is an extension of the PTA between Nepal and India that broadens the regional electricity market. Bisht said, “NEA has stated that after 2016, it would not be in a state to purchase produced power. With this agreement, investment in hydropower will increase and invite more FDI in the country.” According to him, Nepal will be able to export electricity by 2030. Although the agreement shows positivity, he said, “The local issues at the Bhotekoshi Project have sent a negative message in the international market. The government should take charge and solve the problem as soon as possible.” He stated that lack of stable local government has caused difficulties to carry out development activities.

Adhikari stressed on the need to create a more investment friendly environment. There should be consensus between political parties to give priority to retaining foreign investors, ensuring security, introducing land acquisition and right of way policy with the implementation of land use policy.

Left high and dry

Water woes in the valley will not end even if the Melamchi drinking water project is completed


Published on January 25, 2015 / THT Perspectives

Sujata Awale

Kathmandu

Every year Kathmandu denizens face severe water crisis especially in the dry season. It has been a decade and a half since the government invested in the Melamchi Drinking Water Supply Project (MDWSP) to ease out the water crisis of the valley. However, city dwellers have only got extensions on every deadlines for the project. Stakeholders state that with the completion of the Melamchi project, the valley will have 170 million litres of extra water. However, even that water supply will not be enough to cater to the growing demand of the valley at the time the project is actually operational.

Prolonged problem
It was in 1998 that the feasibility study was completed and MDWSP was formally initiated in January 2001 with the target to be completed in December 2007. As no progress was made even till the deadline, Asian Development Bank (ADB) the main donor agency started to show disinterest in the project. Then, the project was reformed in January 2008 and a new completion date was set for December 2013. The government terminated the Chinese company CRCC-CMIIC JV Company for their failure to complete work within the stipulated period in September 2012. After that the project was terminated and work was halted for one and a half years.

Later the government awarded project to the Italian contractor CMC di Ravenna Company for Rs 7.72 billion and again extended the deadline to September 2016. According to the latest survey report conducted by the Legislative Parliament, only 10.8 kms of tunnel have been constructed of the total 27.5 kms. This constitutes 17.51 per cent of the total work completed while spending 40.28 per cent of project time. The terminated Chinese company had earlier accomplished construction of 6.4 kms of tunnel. The government has also spent about 60 per cent of total project cost — USD 287 million on the project till date.

“According to our observation, the Melamchi project will not be completed by the stipulated date. However, there is hope that the contractors will complete their task if another six months is allowed,” said Rabin Adhikari, Chief of the Development Committee. Citing that the work pace of the consultant is at snail pace, he said, “While the work of excavation of canals should be at 40 m per day from six different places to complete the project on time, the consultant is now excavating at 20 to 25 m per day.” According to him, lack of technical manpower, geographical difficulties, lack of political will and monitoring are the main reasons for continuous delays. “There was lack of coordination and commitment from the government side and contractors are seen reluctant to complete the task on time," said Adhikari.

Citing that the government should introduce a fast track and one door system, he said, “The government should be committed, there should be a proper and frequent monitoring mechanism and all stakeholders should join hand and focus to complete the project.”

Lacking commitment

The government awarded the project to Italian contractor CMC di Ravenna Company in October 2013. However, till date the company has been able to dig only 4.4 kms of tunnel. "We handed over the project to the company as it submitted strong documents and was found competent to work with," said Ghanshyam Bhattarai, Executive Director at MDWSP. He complained, "There is no external problem that delays contractors. We found that there is a lack of commitment from the contractors to complete projects on the set deadline of April 2016." Citing that they offered an incentive scheme for motivating them, he said, "We offer them an incentive of 0.05 per cent of the total contract cost per day if they complete the project before September 2016."

Bhattarai pointed out that the contractors lacked mobilising manpower, equipment, construction material and site management. However, he is optimistic that if the contractors speed up work, the project can be completed by September 2016. He informed that work of constructing water treatment plants, road network expansion and improvement and social empowerment activities in affected communities is in progress.To maintain the safety and quality of water, the government also plans to construct a water filter centre at Sundarijal, which will have the capacity to filter 85 million litres of water each day.

Too little, too late

According to data at Kathmandu Upatyaka Khanepani Limited (KUKL), the demand for drinking water in the valley is 350 million litres per day, whereas it can only provide 120 million litres in the dry season and 200 million litre in the wet season. Government officials also stated that of the total provided water, 40 per cent is wasted due to leakage.

Water Expert Prakash Amatya stated that the water woes in the valley will not end even if the Melamchi drinking water project is completed. He said, "Melamchi water will just prevent the situation of water woes getting worse by the time it is introduced." Pointing out that Melamchi is not a sustainable solution, he said, "The government should not forget about underground water which supplement the resources in the valley. Along with Melamchi the government should intensify preserving underground water resources and the traditional water system."

He stressed on the need to assure water quality and quantity with reasonable tariffs. Citing that water has been politicised, Amatya said, “The government and concerned authorities are playing foul by not completing the project on time.” He said, “Unless consumers are aware and actively involved in pressurising the government, the projects won’t be completed any time soon.” According to him, there should be management reforms in government offices with lesser influence from political parties. Moreover, the government should intensify rainwater harvesting, water recharge and conservation campaigns to sustain water resources.

Agreeing with this, Bhattarai said, "As Melamchi will not be enough, we have already identified Yangri and Larke Rivers as additional sources. We have also done financial closure to conduct these Environment Impact Assessment studies." According to him, the valley will then get total 680 million litrse of water if the projects succeed.

Enhancing distribution

Besides tunnel intake and treatment plant construction, the government has initiated the work of bulk distribution system, network distribution and sewers line management projects under Project Implementation Directorate (PID). PID is planning to have 77 kms of bulk distribution and nine reservoirs to check leakage and ensure quality water distribution.

“Recently, we have already appointed contractors for 55 kms of distribution and six reservoirs. In a few weeks we will be appointing contractors for the remaining 22 km and three reservoirs at Kirtipur, Bhaktapur and Thimi,” informed Tej Raj Bhatt, Project Director at PID of Kathmandu Upatyaka Khanepani Limited. Bhatt said, “The work of replacing pipelines within the Ring Road is going on. We have already replaced 160 kms of pipeline in the targeted 622 km to ensure minimum water leakage.”

According to him, they plan to reduce leakage from 40 per cent to 15 per cent. “To ensure minimum leakage, we will be placing bulk metering systems for the locality and ensure leakage is not more than 15 per cent. For better and transparent construction, we will take 15 per cent collateral from contractors too. Furthermore, we are using rust free pipelines made up of ductile iron and polythene,” he added.

Link: http://epaper.thehimalayantimes.com/epapermain.aspx?queryed=9&eddate=1/25/2015