Power producers lament “worst budget”

Ratna Sagar Shrestha/ THT

Sujata Awale

Kathmandu

The bold announcement that the government made to end the power crisis within three years now seems next to impossible as the budget has not prioritised the energy sector. Though the energy sector can rejuvenate the country’s economy by managing the trade deficit, generating more employment opportunities and enhancing the living standard of people after the destructive earthquake, the government seems indifferent to problems relating to the sector.

As many as 19 independent power producers’ projects directly suffered damage and 14 projects came to closure which resulted in 40 MW power disrupted from connecting to the national transmission grid. Stakeholders said that the government has not offered any relief package and incentives for the energy sector in the budget.

WHAT’S IN THE BUDGET ?

The government has allocated Rs 45.72 billion for hydro-power production, transmission and distribution and Rs 5.49 billion for alternative energy. Though the budget ceiling has been extended as compared to last year, stakeholders said that the allocated fund is not disseminated properly. “The budget does absolutely nothing to address the energy needs of Nepalis in this fiscal year. It did not take a single measure to bring more electricity into the homes of Nepalis,” said Sujit Acharya, Chairman of Energy Development Council. He further said, “Instead of working to reduce the consumption of imported cooking gas or imported petroleum products, the government wasted taxpayer’s valuable resources in funding projects that will probably take 20 years to complete.”

Pointing out weaknesses in the budget, Acharya said, “The Ministry of Finance does not seem to understand that the energy sector budget heading needs to make an impact on the energy situation of all Nepali’s living in Nepal.” He opined that the energy sector would have been positively impacted if the budget announced zero duties on electric vehicles and electric cooking stoves which would have made many people less dependent on petrol and gas based products.

As per the budget, Rs two billion has been allotted to complete the Upper Tamakoshi Hydropower Project within two years. Similarly, Rs 3.37 billion is appropriated to initiate the first phase of construction work of the 1,200 MW Budhigandaki Hydropower Project and additional budget will be made available to the project depending on its work progress.

The government will also start construction of Tanahu Hydropower Project (140 MW) and detail design of the Nalsinghgadh Hydropower Project with a budget of Rs 470 million. The budget provides for accomplishment of required preparatory work for the commencement of the implementation of Pancheshwor Multipurpose Project and the construction of West Seti Hydropower project that will be initiated through the attraction of foreign direct investment.

“This fiscal budget is the worst budget ever for the energy sector,” said Gyanendra Lal Pradhan, Chairman of the Energy Committee at the Federation of Nepalese Chambers and Commerce Industry. He questioned, “Where is the commitment that the government made earlier to eradicate load shedding within three years?” Citing that the government could make it more in favour of development of the nation in this harsh situation, he said, “This year’s budget has come as a confused budget over the earthquake and its issues. It could have been the most effective budget for the energy sector to boost recovery of the nation.”

THE MISSING POINT

According to Pradhan, the budget plans only to provide shelter to the earthquake victims without electricity. He said, “The development of the hydropower sector means more employment opportunities, lights to households and it could also slash the trade deficit of the country by reducing consumption of petroleum products.” He added that the budget allocation of Rs 4.85 billion for portable metallic rocket stoves for the family of earthquake affected districts is the only positive thing.

“There is nothing new that the budget has addressed for the energy sector,” said Khadga Bahadur Bisht, President of Independent Power Producers Association of Nepal. Citing that the budget is abstract, he said, “There is no concrete statement on how and what facilities and concessions will be continued from the earlier budget which is creating confusion among developers.” Complaining that the government has no provisions for projects affected by the earthquake, he said, “We have requested the ministry to address the problem by making provisions to provide soft loans to rehabilitate these projects. This was not addressed.”

According to him, the announcement that transmission lines be constructed through Build-and-Transfer method including the private sector under the National Transmission Grid and commitment to establish an Electricity Trading Company for national and international electricity trade are positive aspects of the budget. “With the establishment of the Electricity Trading Company, the path will be paved for power trade with India,” he asserted.

For the construction of transmission lines, the government has allocated Rs 12.73 billion and committed to solve the problem of land acquisition and tree logging in a coordinated way. NIDC Development Bank and Hydropower Investment and Development Company will be restructured to make these organisations capable of increasing investment in infrastructure.

UNATTENDED URGENCY

The private sector is unhappy with the budget not addressing current issues and problems of the energy sector and the Ministry of Energy (MoE) has also agreed to it. “As we had prepared the budget proposals by the end of March, the budget did not include any of the problems that appeared post disaster,” said Sameer Ratna Shakya, Joint Secretary at MoE. He further said that the budget is bigger in size than the previous year and will benefit projects in the long run.

Informing about relief packages for earthquake affected projects, Shakya said, “Relief packages and provisions will be addressed through the Reconstruction Authority.” According to him, 456 MW Tamakoshi Hydropower Project which was supposed to be completed this fiscal will be completed by the next fiscal due to the earthquake. He further said that it will hamper the target to curtail power cuts to eight hours this fiscal.

Assuring that the government will create a favourable environment for the development of the sector, he said, “Both the government and private sector should fulfil their responsibilities.”

Published on The Himalayan Times, THT Perspectives July 26

http://thehimalayantimes.com/business/power-producers-lament-worst-budget/

 

Prefab gaining popularity

 Market for prefab products witnessed 30 per cent increase

 

Himalayan News Service

Kathmandu

After the earthquake that hit the country, the demand for prefabricated homes often referred to as prefab houses is on the rise. Traders claimed that demand has risen by as much as  30 per cent post earthquake. Less time consuming for constructing the structure than traditionally built buildings, light weight, environment friendly, reliable, easy to assemble and dismantle are some key features that have attracted customers  to these products. 

Prefab homes are manufactured off-site in advance using precise engineering. The components are then easily shipped and assembled. Prefab homes were introduced here more than a decade ago, however, they did not appeal to public for residential purpose. After the devastating earthquake struck, people are now gradually taking prefab into consideration owing to safety reasons. As the demand for prefab houses has increased in the market, many new players have also entered into the market.

“Previously, prefab houses were used only in projects like hydropower, schools, colleges, organisational buildings et cetera. But now, people are gradually using it for residential purposes in earthquake affected districts,” said Narendra Maharjan, Business Development Manager at Arati & Company. Citing that the price of prefab houses depends upon design and material, he said, “We have constructed 50 two-bedroom houses in Sankhu where most of the houses collapsed during the earthquake at Rs 250,000. The price may differ with the requirements of customers and design.”

 

According to him, they  face a material and man-power crunch due to the rise in demand. Citing that the government has decreased custom duty on prefab imports, Maharjan said, “This is indeed a positive step towards prefab and will certainly assist in making products more affordable to the general public.” He further said that the earthquake has created a good business opportunity and many companies have put their hands into prefab houses.

“The earthquake has widened the scope for prefabricated products in the market. The traditional mindset that prefab is only for temporary structures is gradually changing,” said Sailesh Sthapit, Site Supervisor at Bira Furniture, which also offers prefab houses.

According to him, the prefab market has witnessed 30 per cent growth after the earthquake. Citing that there is no competition in terms of products, he said, “Though many players have entered this business, they have their own product lines like UPVC, wooden boards, cement, PU boards et cetera. So the competition is healthy.”

Prefab panels are available in different sizes and types. Panels can be obtainable in two- and three-inch thickness. EPS sandwich panel, rock wool sandwich panel, pu sandwich panel, corrugated steel sheet, fibre cement board, et cetera are materials that are used for wall, roof, ceiling and floor. Reportedly, customers prefer cement panel boards which lasts for 30 years.

“We have witnessed maximum inquiries after the quake, however, we do not have as much business as expected,” said Nilmani Sapkota, CEO of Himalayan Prefab. He further said, “As the government is due to introduce a revised National Building Code, people are still in wait and watch mode to decide for construction.” 

Citing that the exemption of custom duty for prefab is a positive decision, he said, “Prefab is still expensive when compared to other materials. Owing to its utility, the government should work to make it more affordable.” Moreover, he stated that manufacturing prefab panels in Nepal still cost 15 per cent more than imports. According to him, the price of prefab panels starts at Rs 1,100 per sq ft which can go up depending upon quality and design.

Traders mainly import prefab panels and boards from India and China. Prefab structures are reportedly also being preferred especially by resorts, schools, colleges, hotels, cafés, showrooms, party palaces and other project sites including residential buildings.

Published on July 25, The Himalayan Times, THT Property Plus

http://thehimalayantimes.com/real-estate/prefab-gaining-popularity/ 

Way to planned urbanisation

 Developers find the budget promising, but still doubt its implementation

Sujata Awale

Kathmandu

After facing huge loss of human settlements and lives owing to haphazard urbanisation on April 25 earthquake, the budget for the fiscal year 2015-16 has adopted various measures to ensure planned urbanisation. As per the budget, land will be allocated to develop new residential colony or settlement by implementing land use policy. Individuals and companies will require prior approval from local authority for plotting the land for residential purpose. Moreover, settlement development will be permitted by ascertaining easy access of basic infrastructures. And integrated and organised settlements will be developed by transferring those areas that were geologically eakened by the earthquake where there is no possibility of resettlement.

The government promises to introduce the provisions to allow foreign nationals to purchase apartments with an ease. The government plans to prepare the master plan to develop Kathmandu valley, Lumbini region and Nijgadh as a smart city. Moreover, budget has allocated for the infrastructure development of 10 modern cities in Mid-Hill highway. 

Real estate developers said that the budget has provided proper provisions to develop new settlements in planned way. “We have been demanding for mandatory provisions to develop managed settlements and planned urbanisation from the beginning. After incurring huge loss of properties in the earthquake, the government is working towards having smart cities and well planned settlements which is praiseworthy,” said Om Rajbhandary, Third Vice President of Nepal Land and Housing Developers’ Association. He further said that the budget has mentioned every aspect to construct new structures in planned way. “Implementing land use policy for residential area, incorporating earthquake resistant designs, mandatory approval for land plotting, strictly enforcing building code and building by-laws to regulate unorganised urbanisation is a step forward to have safer cities,” he added.

Rajbhandary said, “The government announcement to provide refinancing facility and interest subsidy under central bank for the sectors including earthquake affected residential home and businesses have further relieved in the sector,” adding that Nepal Rastra Bank has already announced the measure to have loan rescheduling.

Despite all these positive  commitments, real estate developers still doubt as many commitments in previous budget were merely confined in books. “The government should finalise the directives within the first quarter of this fiscal year in order to implement these policies,” said Rajbhandary, adding that it will also help developers to plan new projects as per the requirements. He further stressed on the need for the implementation of the promised provisions. Being optimistic about the scope of the sector in days to come, he said, “The government has provisioned to have Rs 2.5 million loans to construct completely damaged houses which will create employment opportunities as well as increase the volume of the new housing products.”

“The announcement of the government to allow foreign nationals to purchase apartments with easy process has provided  some relief to apartment evelopers as many developers have suffered by the earthquake,” said Bijay Rajbhandary, Chairman of CE Constructions. He further said, “This provision not only helps boost the sector but  also assists in reviving charm of apartments in domestic market.” According to him, the realty sector will emerge in more scientific and responsible way with the provision to have prior approvals for land plotting for residential purpose. However, he pointed on the need to live up to the promises made by the government for the development of the country.

Complaining that the government could not implement its previously introduced provisions, he said, “The sector could not achieve any significant progress earlier chiefly because of the government’s failure to keep its promises.” He further said that the implementation of announced provisions will depend on how quickly the government responses. 

Published on The Himalayan Times July 18, 2015 

http://epaper.thehimalayantimes.com/epaperpdf/18072015/18072015-md-hr-14.pdf

 

My Interview on 'Moin Uddin Show'

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https://www.youtube.com/watch?v=rkXuw4r9IPE

Real estate once again in wait and watch mode

Government policies will decide its future

Himalayan News Service

Kathmandu

Real estate developers are optimistic about growth in the real estate sector this upcoming fiscal. The realty sector, which was inclining after years of down turn, is expected to see normal growth. Although the massive earthquake has stagnated transactions of housing and apartments recently, developers are still hopeful for growth and rise in demand for housing projects.

As the government is still in the process and yet to introduce new housing policies, developers are in wait and watch mode. Developers stated that the government’s policy on National Building Code (NBC), Building By-laws and zonation will decide the future of the realty sector. As per the Nepal Land and Housing Development Association (NLHDA), of the total constructions housing developers hold only three per cent market share while 97 per cent of all houses are developed by individuals.

“The step that the government has taken to introduce a revised National Building Code is a positive decision. We had these policies a decade ago but the government could not implement them,” said Minman Shrestha, Secretary of NLHDA. Citing that the earthquake has taught many lessons about the importance of abiding by policies, he said, “This is the right time to introduce and implement Building By-laws, NBC and zonation map strictly for managed urbanisation.” He further said that customers have already acknowledged the importance of community living and the demand will surely increase. According to him, mandatory provisions for six metre road access, structural analysis, seismic resistant structure, height restriction and zonation for residential areas should come into force for organised urbanisation.

New guidelines

Shrestha claimed that the products that developers offered are constructed according to NBC and by-laws which withstood the quake. “The real estate sector was in an inclining phase and had recovered by 35 per cent last year and we are hopeful that this coming fiscal year will also witness growth in the sector,” he asserted.

Developers stated that the realty sector will not face huge demand for property, however, with clear policies the attraction towards developers’ products will surely increase. “Post earthquake people have realised that not only their own house should be safe but the surroundings and neighbouring houses should be safe too. Otherwise, there will be threat. And this awareness will certainly attract people to community living where design, quality, height and other facilities are available 24/7,” said Bijay Rajbhandary, Chairman of CE Constructions. However, he said, “As the government is still to introduce new guidelines and policies for the housing sector, we are in a wait and watch phase for introducing new projects.”

According to Rajbhandary, the government’s policies will determine the development of the real estate sector. “Banks and financial institutions have liquidity surplus, however, it is yet to see how the government will address monetary policy. Without assistance from banks, it will be a tough period for the real estate sector,” he said. Citing that the imposed construction ban created chaos in the industry earlier, he said, “The government needs to introduce practical policies being more farsightedness and transparent as it directly affects the price of products which ultimately puts pressure on the customers.” According to him, the price of properties will increased by 15 to 20 per cent owing to increase in land price and approval cost.

Demand for standalone houses

The earthquake affected thousands of houses in the valley. According to NLHDA, developers have 1,000 units of standalone houses in ongoing projects and 4,500 units of apartments to be sold in 83 apartment projects. Developers stated that they have got maximum inquiries following the earthquake. “People are gradually coming back to normal and inquiry for standalone houses have increased significantly,” informed Nishal Man Singh Shrestha, Chief Operating Officer at Brihat Investments. Stating that the inquiry for apartments is nil, he said, “Although apartment projects are structurally safe, people have not gained confidence about skyscrapers which will certainly take more time.” He said that due to the earthquake and situation that arose, people are attracted towards community living and housing projects.

Citing that the demand for housing will grow significantly in the upcoming fiscal, he said, “As there are few developers in the industry, the supply of well managed housings will be in short supply.” According to him, community living is gaining charm for its quality, design, open space, basic facilities such as water, electricity, transportation and safety.

Published on July 4, The Himalayan Times, THT Property Plus