Sunday, June 26, 2016

Delays continue to plague NRA performance

Another monsoon increases the woes of quake victims whose homes were destroyed


Sujata Awale 
Photo: Sujata Awale/ THT
Kathmandu 

A resident of Barpak VDC - 4, Ram Ghale lived for over a year under a temporary shelter made up of wood and tin. He has been waiting for the government’s grant to reconstruct his house which collapsed in last year’s earthquake. With yet another monsoon here, life has become more painful. After a storm blew away his tin roof and rainwater drained into his living space, he had to shift to his cousin’s house in search of shelter with his family.

“ We are hearing about the government’s aid since last year, but we have not got anything till date,” said Ghale in disappointment. Recently he was asked to sign an agreement that said the grants will soon be made available. He said, “ We were informed that after the agreement we will get Rs 200,000 to construct our house but we are unaware when and how we will get that sum.” He also informed that the list published by the government for assistance does not include all victims and even those listed as earthquake victims could not seal the agreement due to lack of all documents.“ The government should know that due to their delays we are suffering the most,” he said. Ghale is just another example of thousands, affected by the earthquake and still suffering because of the attitude and failure of the government to do its job. It has been 14 months since the earthquake caused the loss of over 9,000 lives, however, the government has not yet been able to provide relief to the victims who survived.

According to the government’ own data, 608,155 residential buildings were completely destroyed whereas 298,998 were partially damaged. Furthermore, 2,687 government buildings ( including schools and health posts) were totally destroyed and 3,776 were partially damaged.

Politics at play 

The National Reconstruction Authority ( NRA) was established through an ordinance in August by the Congress led government in 2015. However, the authority was dissolved soon after due to interparty disputes. Four months later NRA was resurrected in December 2015 with the appointment of CEO Sushil Gyewali.

Six months have passed since the authority has been established to oversee the entire task of reconstruction, rehabilitation and provide relief to the victims. However, no significant work has been done till date. The budget allocated remains unused due to the absence of proper plans and difficulty in implementation. With the monsoon here, hundreds of thousands of quake- displaced people are still forced to live under tarpaulins, tents and other makeshift shelters.

“ The collapse of NRA for mere political vested interest by political parties a major reason for the delay in reconstruction,” said Govind Raj Pokharel, Former Vice- Chair of National Planning Commission who was also briefly CEO of NRA ( for two weeks). He further said, “ Incapable political appointees and lack of pragmatic and innovative ideas to drive the reconstruction work are reasons for the delays.”

Huge challenges ahead 

According to Pokharel, Nepal reconstruction work has huge challenges of mobilisation and management of human resources, collaboration and coordination among the government and nongovernment organisations, mobilisation of resources and quality construction material, developing norms, standards, capacity and institutions. Citing that lots of work can be done simultaneously to solve these challenges, he said, “ Providing training on a mass scale to local people and engineering students, carrying out integrated settlement studies by experts, establishing committees to include the private sector which is totally neglected, planning for appropriate and quality construction material to reconstruct is the way forward. However, the government seems clueless about all these things.” 

He accused the governing body of lacking vision and innovative plans to speed up reconstruction work. “ NRA is a national body that has extra- ordinary jurisdiction, however, it has not been able to use this power and speed up reconstruction work,” Pokharel said. He warned that reconstruction work will be a total failure if politicisation, bureaucratisation and corruption take place and the government should be aware of it. He further said that NRA is wasting their their time without innovation, coordination and pragmatism. He said, “ The political parties should learn from their mistakes and the country should have higher priority than party.” 

A race against time 

While the government has been criticised for not doing their job, the NRA defends its achievements. “ We are speeding up the process of signing agreements in 11 most affected districts. In six districts we have already started dispatching grants via banks,” said Ram Prasad Thapaliya, Spokesperson at NRA. However, the issue of which bank to allot to distribute the grants, establishing banking facility in rural areas, communicating and educating locals about the banking process still stand tall as challenges.

To ensure every quake- victim gets the grant, Thapaliya said, “ We have conducted detailed household owner survey and field visits with balance and control mechanism.” However, the issue of politics in the name list for grants has also emerged as an issue.

While asking about the vulnerability assessment of the most affected districts and study of fragile settlements, he said, “ The government has not instructed people to construct right after getting the grant. All this will take time.” While people are desperate for the grants and to reconstruct their houses as soon as possible, prolonged delays and such official comments are seen as irresponsible and disheartening for those without a shelter in the monsoons.

According to NRA, it has dispersed Rs 21 billion for reconstruction work out of which Rs 14 billion is allocated to housing grants. Thapaliya informed that they have budget for Rs 65 billion. The NRA estimated that USD 6.7 billion will be required for successful postearthquake recovery and reconstruction in the country. NRA has established four Central Level Project Implementation Units ( CLPIUs) under four ministries. The Ministry of Urban Development ( MoUD) has been given the responsibility to reconstruct housing, integrated community development, public buildings and urban infrastructure development.

Shiva Hari Sharma, Project Director at CLPIU of MoUD, said, “ We have recruited 2,700 technical professionals in quake- affected districts of which 1,346 are engineers, 650 are sub- engineers and 575 are assistant sub- engineers.” Agreeing that reconstruction has been delayed, he said, “ Now we are working faster. People are in the process of getting housing grants via bank accounts.” He claimed that about 115,000 agreements have been sealed and funds have been sent to about 5,000 bank accounts.

Citing that the reconstruction of public buildings has started, Sharma said, “ As it will take time to reconstruct permanent public buildings, so transitional office buildings are being constructed in 11 districts.” The government is also yet to decide on what to do with central government office buildings affected by the earthquake. Not even the assessment of these buildings have been completed. “ We are yet to decide whether to demolish or retrofit the Western wing of Singha Durbar,” Sharma said, adding that they are still in the process of assessment of Singha Durbar, the President and Vice President’s residential buildings and Nepal Rastra Bank’s building at Thapathali and Baluwatar among others.

Pointing out that there is also a lack of skilled manpower for reconstruction work, Sharma said, “ In monsoon we cannot initiate reconstruction work, so we are planning to utilise it by providing training in masonry, carpentry, plumbing et cetera .” According to him, they will be in need of 30,000 skilled workers to initiate reconstruction work. He blamed political leaders for politicising and delaying the formation of the Reconstruction Authority.

Private participation

 

The private sector which can operate much more faster and efficiently has also been ignored in a way. “ Private sector has always been a partner for development.

And the sector can contribute a lot in many ways for reconstruction process too. However the government seems to be indifferent,” said Bhawani Rana, Vice President at Federation of Nepalese Chambers of Commerce and Industry. She added that as there are district chapters of FNCCI in affected districts, it would be faster to work on reconstruction.

However, she said, “ We had meeting with NRA but till now we are not given tasks to contribute on reconstruction process.” “ Reconstruction is national issue and the private sector will corporate to the policy that the government will take out,” said Om Rajbhandary, Chief of Urban Development Committee, FNCCI. He said that the private sector is ready to go hand in hand with the government for collaborative approach. Citing that there is a problem of human resource management, he said, “ The government as well as private sector should involve in developing competent human resources via long term and short term trainings.” 

 Leading by example


While many are waiting for the government’s grants and assistance to reconstruct their settlements, locals of Pilachhen at Patan have initiated rebuilding the settlement on their own. Maya Foundation conceptualised the project ‘ Pilachhen Reconstruction and Tourism Promotion Programme’, in which 82 totally destroyed houses will be reconstructed bearing the traditional style.

Ramesh Maharjan, President of Maya Foundation said, “ We want Pilachhen to be a model project and convey the positive message that locals are capable of rebuilding their own settlements.” said Maharjan. According to him, they estimated Rs 500 million as the project cost for constructing a quake- resistant four and a half storied house. To finance the reconstruction 25 per cent will be met by house owners, 25 per cent by donation, 25 per cent by reuse of remnants and volunteer work and 25 per cent via banking loans. According to him, they plan to handover the project within 30 months. CE Engineering is providing all required technical support to prepare architectural designs. 


Published on The Himalayan Times, Perspectives  June 26, 2016


Thursday, June 9, 2016

On slippery ground

The recently tripled duty on palm fatty acid distillate has discouraged soap industrialists



Sujata Awale
Kathmandu


At time when industrialists have been advocating with the government for removing the existing five per cent duty on import of raw materials, 15 per cent duty on a basic ingredient to produce soap has added burden to the industry. Moreover, illegal import of soaps from the open Nepal- India border has increased unhealthy competition in the market.

“ If the imposed duty is not removed soon, the industry might be facing a hard time to sustain,” said Mahesh Jaju, Managing Director of Himgiri Soaps and Chemical Industries. Citing that increased duty directly affects the price of finished goods, he said, “ At present domestic products cannot compete with illegally imported Indian soaps as they are 20 per cent cheaper than local products.

With the rising duty on palm fatty acid distillate, domestic players can’t compete.” Jaju informed that Indian products are cheaper as the Indian government has made zero per cent duty on importing essential raw material for manufacturing soaps.

He added that the government has to learn from the neighbouring country and help boost the industry which is contributing to the direct employment of 1,000 people. According to him, they produce superior quality products, however, due to lack of proper market monitoring many players play foul on weight and quality. “ Every year a huge quantity of illegally imported soap penetrates the market posing unhealthy competition of domestic producers,” said Jaju, adding that there is a need to strictly monitor open border areas.

Additionally loadshedding, tough competition, labour crunch, strikes and increasing cost of transportation are other hassles for the industry. “ Though we have an installed capacity of producing 125 metric tonnes per day, we can only produce 60 per cent of our total capacity,” said Ghanashyam Kabra, Managing Director of Quality Soaps and Chemicals. Citing that last year’s Madhesi strike affected his business, he said, “ Due to strikes we had to suffer a lot and as a result we did not witness any growth last year.” Kabra further said, “ While we are lobbying for zero per cent duty on raw material imports, the decision has disheartened all manufacturers.

Once again the government has pushed us into the same situation seven years ago where many soap factories faced closure as they could not survive.” He further added that with the increased 15 per cent tax on palm fatty acid distillate, domestic products become 30 to 35 per cent dearer than Indian products. “ The market presence of domestic product will definitely decrease with this vast difference in price,” he stated.
He claimed that it is likely to led to an increase of five per cent on domestic soap selling price.

Adding that government policy plays a vital role in boosting domestic industries, he said, “ We are optimistic that the government will address our problem and bring favourable policies to uplift the industry.” Citing that a decade ago Nepal used to export to India especially Bihar, he said, “ However, now due to unfriendly export policy, the cost of Nepali products has increased and export has come to full stop. It is high time the government sketched policies to create and assist export oriented businesses.” According to him, Nepali companies are fulfilling 60 per cent of the demand for laundry soap while imported ones enjoy 40 per cent market share. The domestic soap industry manufactures round soap that sells in kilograms targeting local costumers. The cost of such local soaps starts at Rs 75 to Rs 90 per kilogram while it costs Rs 90 to Rs 115 for industrial produced products. There are altogether 40 big and small domestic soap manufacturers in the country.

Reportedly, companies import almost all raw material like soap oil, palm crude, coconut oil, castic soda, et cetera from India, Malaysia, Australia, Thailand and China whereas minimal per cent of vegetable oil used is found locally.

 http://epaper.thehimalayantimes.com/epaperpdf/2952016/2952016-md-hr-21.pdf
Published on The Himalayan Times, Perspectives, May 29, 2016 

Sunday, June 5, 2016

Nepal Seeks Investors for 10 GW of Hydropower Projects by 2026

Sujata Awale


  PM KP Oli was inaugurating Nepal Power Investment Summit at  Kathmandu
With the keynote that Nepal requires US$20 billion to develop 10 GW of on-grid hydropower projects in the next 10 years, the largest power investment conference concluded successfully today in Hotel Yak & Yeti, Kathmandu.

The Energy Development Council (EDC) — the umbrella organization of the entire energy sector — organized the four-day summit ‘Nepal Power Investment Summit 2016’ with the government partnership Ministry of Energy and Investment Board of Nepal.

The summit also declared the need for a US$5 billion investment in high-voltage transmission line projects to complete by 2035. Budhigandaki 1,200 MW, Nalsingad 410 MW, Tamor 762 MW, Andhikhola 180 MW, Tamakoshi V 87 MW, Upper Tamor 415 MW, Tamakoshi III 650 MW and Thuli Bheri 530 MW projects were identified as prominent opportunities for investors.

Investors expressed interest in exploring investing in mid- and large-scale power projects in Nepal worth billions of dollars provided the investment environment improved and Nepal’s ranking in the ease of doing business increased. They have also expected to soon have a one-window policy to get all necessary approvals and permits for doing business.
Photos By: Kishor Shrestha

While under the Nepal Electricity Authority (NEA) and private power producer (PPP) model, NEA is construct 1,046 MW of hydropower projects. NEA also is conducting feasibility studies for projects, such as Dudhkoshi, Upper Arun, Tamor and Uttar Ganga, among others.


EDC at the summit launched the book “Inventory of Rivers of Nepal,” which identifies 11,614 rivers and rivulets. In addition, the organization will soon carry out the study of the potential of hydropower projects of those rivers and rivulets in a second phase.

During the summit, 40 speakers from India, Singapore, Thailand, Bhutan, China, the U.S., and the U.K., among others, highlighted the investment challenges and opportunities on energy and infrastructure development in Nepal. Speakers also emphasized the need to develop alternative source of energy.

Aliana B Teplitz, Ambassador of the U.S. Embassy for Nepal said: “Despite having a huge potential of generating more than 40,000 MW of electricity, the installed capacity of Nepal is merely at 780 MW. There is still [a lot of] room for development.”

She also said there is a need to have better policy and legislation to improve the present scenario.

NEA presented that altogether 1,330 MW projects are under construction and will be completed on 2020.

“We need to invest about US$20 billion in the next 10 years for generating 10,000 MW in a decade,” Lila Nath Bhattarai, Deputy Managing Director at Engineering Services Directorate, NEA, said.

NEA also said that it faces various geological problems, contractors not working efficiently, technical problems in structures and other issues.

“Tedious and elongated processes for acquiring necessary approvals and permits for doing business in Nepal is one of the biggest hindrances for investors,” Allard Nooy, CEO at Infraco Asia, said.

In a presentation at the summit, Nooy outlined the challenges for investment in the energy and infrastructure sector in Nepal. Nooy said: “No coordinated approach to get necessary approvals and permits and lack of adequate background information required of projects and related risks are major challenges for the investors.”
Participants at NPIS

Noting that hydroelectric projects are in great need for the country, he said that “the government needs to introduce a more transparent regulatory framework with more satisfactory return in order to attract foreign direct investments to have economic transformation.”

According to Nooy, the generation of electricity increased twofold from 2001 to 2013, while the import from India has increased by four times.

Zachary Smith, CEO of Radiance Renewable Technologies, said that foreign investors look for lower political risks, ease of doing business, long-term incentives packages and policy that bridges between investors and locals to better understand the environment. According to him, the government policy has to be precise and clear and also have a framework that allows flexibility in order to allure investors.

There were more than 200 participants at the summit, hailing from China, the U.S., Canada, Bulgaria, Norway, India, Bhutan, Slovenia, Czech Republic, Thailand, Vietnam, France, Austria, and the U.K., among others.

(The article is published on renewableenergyworld.com, June 3, 2016)

What investors want?


Nepal’s first power investment summit highlighted the gap between what investors want and what the government talks about but seriously lacks in implementation



Sujata Awale
Kathmandu 

Nepal’s first power investment summit ‘ Nepal Power Investment Summit 2016’ concluded with the realisation and declaration that Nepal requires USD 20 billion to develop 10,000 MW on grid hydropower projects within the next 10 years.

At the summit organised by Energy Development Council and Neoventure, the government announced that Nepal needs as much as USD five billion in order to invest in high voltage transmission line projects and substations to be completed within 2035. According to the government, altogether 3,800 MW hydropower projects are waiting investment, including projects such as Budhigandaki 1,200 MW, Nalsingad 410 MW, Tamor 762 MW, Andhikhola 180 MW, Tamakoshi V 87 MW, Upper Tamor 415 MW and Tamakoshi III 650 MW among others.

Despite all these facts that Nepal needs investment and has huge potential for investment opportunities, investors pointed out that they are facing difficulties in making decisions to invest. They stressed the need for investment friendly policies, one- window system for necessary permits and approvals and improving Nepal’s ‘ Ease of doing business’ ranking.

Conducive environment 

 Lengthy process that stretches out for years to get necessary approvals to initiate hydropower projects is one of the major roadblocks. Moreover, lack of coordination among authorities to get approvals is another challenge. “ In Nepal, there is no single authority responsible for providing necessary approvals. There is uncoordinated approach between authorities and that makes the whole process tedious and lengthy,” said Allard Nooy, CEO at Infraco Asia, Singapore. Talking about their experience with financing, he said, “ When we initiated Kabeli A ( 38 MW) project, we faced insufficient liquidity in local banks in order to obtain dead financing in projects. This is why we have to turn to multilateral agencies. However, the situation has changed and local banks now have liquidity but the risk of finance is still present.”

 Nooy stressed on the need to have sufficient background information on construction cost, geological conditions and overall operational cost. He said, “ As investors, developers and stock investors, we require sufficient and reliable data that provides us detailed information about higher risks of overruns or others factors to project in lifetime costing.”

He suggests the government have a more collusive policy framework to implement hydroelectric projects in the country and break down barriers between various different authorities. “ It is important to have one agency to coordinate with Ministry of Finance, NEA, Department of Electricity Development, Ministry of Environment and other responsible bodies for public private partnership and foreign direct investments ( FDIs).” According to him, working on an Energy Policy and transparency on tariff setting is must to attract investment and develop the sector.

Nooy said that Nepal should realise they are competing with other nations and that the more difficult it is to get projects approved here, lesser the appetite there will be for FDIs. He is of the opinion that the government must plan for building transmission line projects and substations as ultimately generated power needs to be supplied. “ Access to the project site and dealing with local people also emerges as challenge while implementing the project,” he added. He further said, “ One should not forget that private sector is spending significant development capital in terms of structuring projects. And time is money for investors.”

On the other hand, according to him, no restriction on foreign investment and foreign ownership unlike other countries, improved liquidity status in local banking institutions and requirement of hydropower projects are positive signs to invest in Nepal.

Returns and incentives 

Lucrative returns and incentives are required for developers to invest in Nepal. Zachary Smith, CEO at Radiance Renewable Technologies said that foreign investors look for lower political risks, ease of doing business, long term incentive packages and policy that bridges between investors and locals to better understand the environment. According to him, the government policy has to be precise and clear and also have a framework that allows flexibility in order to allure investors. 

He also stressed that the government provide updated background information to easily analyse the risk. Citing that good economic incentive is key to attract investors, he said, “ The government should provide long term i ncentives to mitigate risks for long term investors otherwise there will be the risk of inviting wrong kind of investors.” 

Nepal has some of the finest policies. However implementation through Parliament is weak and the biggest challenge for the government.  At the summit, Prime Minister KP Oli stressed his commitment to creating a favourable condition for FDIs. However, it is yet to be seen how committed this government is about bridging these gaps in the development of the hydropower sector.

“ It is well known fact that Nepal has huge hydro potential which is not something new. The job of the government should be implementing policy to bridge the gap between investors and locals,” said Smith. He further said that the government should plan to mitigate financial risk by introducing PPA in dollar denomination for the first couple of years so that investors could recover their equity. According to him, long term vision is required to invite investors in the country.

Commitment in action not talk

 While the government is tall in promises about creating a conducive investment environment, Statkraft a Norwegian investment company has given up on developing Tamakoshi III ( 650 MW) project a few months ago. The decision came as a result of a thorough about commitment of the  assessment of all aspects of the project, including commercial, technical and regulatory factors. The company got survey license in 2007 and completed feasibility studies, environment impact assessment and other required studies in 2011. The project started to negotiate with the government for Project Development Agreement in 2011, however it could not conclude the negotiations and decided to quit the project.

“ Lack of viable power off take option, lower electricity price forecasts, insufficient transmission capacity for power evacuation and absence of necessary policies and regulatory framework for operational power sales are to blame,” said Dr Sandip Shah, Vice President and Country Director Nepal for Statkraft. He further said, “ It also reflects the increased bureaucratic hurdles for foreign investments, a fragile political situation and a geo- political situation leading to a non- conducive project development environment.” 

According to Dr Shah, the project incurred a USD 10.7 million loss in the project. When asked about commitment of the government to create a favourable environment for investment, he said, “ In 2006- 07, the government promised us the same commitment to a favourable environment and we were ready to invest. However, no real improvement has been felt till date.” He further said, “ Implementation of signed policy’s and agreements is the weakest part of the government,” adding that “ Due to lack of proper coordination between various ministries and the Investment Board of Nepal, we could not conclude our PDA and had no option than to give up the project.” 

Citing that 2014 was positive year for hydropower sector, he said, “ Two projects got PDAs, PTA was done with India and Nepal signed the SAARC Framework, however even after two years also the government has not been able to introduce regulatory regime to implement those commitments.” He further said that the government needs to revise the regulatory framework in order to make the investment process easy. He said that the investors should focus on domestic supply rather than export oriented projects.

(The article was published on The Himalayan Times, Perspectives, June 5, 2016)

Saturday, June 4, 2016

Is Nepal ready for investment?

Nepal Power Investment Summit 2016 will showcase projects for foreign investment and provide a platform to meet, interact and conduct business

 
Sujata Awale
Kathmandu

With an aim to attract foreign investors in renewable energy projects, Energy Development Council ( EDC) is organising the largest international energy summit ‘ Nepal Power Investment Summit 2016’ ( NPIS) in Kathmandu. The Investment Board of Nepal ( IBN) is the government organiser and the Ministry of Energy ( MoE) is co- host of the summit that intends to send the message that Nepal is ready for business. The conference offers business- to- business and business- to- government opportunities and a match making platform for foreign investors with potential energy related projects in Nepal.

About NPIS

 Foreign investors across the globe will be participating in the four- day long summit scheduled for May 31 to June 3. China International Water and Electric Corporation, Infraco Asia Singapore, WAPCOS India, Dragon Capital Thailand and Power Trade Corporation of India among others are some of the significant companies participating in the summit. The government and private sectors from Nepal will showcase various hydropower projects totaling 2,500 MW capacity, 20 high voltage transmission line projects and other clean and renewable energy projects.

At the conference, national and international high- ranking delegates and speakers will share their expertise, views and experiences on various topics related to the energy sector. Allard Nooy, CEO of Infraco Asia, Radhesh Pant, CEO of IBN, SC Agrawal, CEO of SAPDC, and Kuenga Namgay, Director of O& M Druk Green Power Corporation are among the prominent speakers. The summit also includes a ‘ Project Expo’ where national and international energy related companies will showcase their projects and products.
According to organisers, the summit is the best platform to showcase, meet, interact and conduct business with key decision makers from the energy sector from South Asian countries. “ This is probably the first time a summit will bring together foreign investors, contractors, consultants and high powered speakers from all over the world,” said Sujit Acharya, Chairman at EDC. 

Citing that this summit is a combination of conference and exhibition, he said, “ This event is an initiation for business deals where investors and project developers can interact on a project level.” While every year the country hosts various conferences on hydropower and other related issues, the question of actual outcome is always questionable. When asked what is different about this summit and how it will actually attract investment, Acharya said, “ Through this summit, EDC will present why Nepal is the number one destination in South Asia for investment and among the top three emerging markets in Asia for renewable energy investments.” Furthermore, he said, “ If any investor finds a showcased project attractive, EDC will definitely help facilitate invetsment at every step.” Improving investment environment It is a fact that investors will not come to Nepal for the love of the nation. The investment climate and rate of returns should be attractive, comparative and competitive with other countries. Process of getting license, approvals, risk mitigation schemes, ease of doing business, clear policies and other rewards should be highlighted to attract investments.

Acharya stated that the risk lies in the frequent change of government and the hassles it brings in doing business in Nepal. He also pointed out that with such risks investors also certainly find corresponding higher rewards than in other countries.

He is of the opinion that it is the responsibility of the government and private organisations to step in to mitigate risks in required areas. He claimed that Nepal offers the highest power purchase rates in South Asia for hydropower and solar energy. And the country offers immense scope for urban solar and hydropower projects development. 
EDC plans to take NPIS overseas next year where the investors are located. “ There is no doubt that development of the energy sector can only transform the nation and we will continue our duty to invite and assist foreign investors to Nepal,” he added.

 Positive outlook

 “ Investors from around the world have shown keen interest in investing in hydropower projects after the promulgation of the new constitution,” said Radhesh Pant, CEO at IBN. Citing that this is the right time to conduct the summit in order to send the message that Nepal is ready for business, he said, “ Hydropower developers, investors, contractors and suppliers are all positive and attracted towards Nepal for investment and this summit will certainly send a positive message.” Stating that the investment climate has changed lately, Pant said, “ As the country is no more in transitional phase, we are ready to move in for economic transformation through hydropower development.” 

Furthermore, he said, “ IBN has already signed in two bankable documents — Project Development Agreements ( PDAs) of international standard which has created conducive environment for other export oriented projects also.” Citing that earlier Nepal had a limited market for energy consumption, Pant said, “ After the bilateral Power Trade Agreement ( PTA) in 2014 between Nepal and India, the problems of the market has been solved as Nepal can sell generated power to India.” Moreover, he said that SAARC Framework Agreement for Energy Cooperation ( Electricity) has expanded the electricity market with scope for SAARC countries. Talking about the market requirement of India, Pant said, “ The energy requirement of India alone will be 730,000 MW by 2030. This means on the basis of PTA, Nepal can export generated power to India.” Political consensus is a key component for the development of any sector. “ The government has introduced the ‘ Energy Crisis Reduction and Development Decade’ which is a positive step and it has given room to develop hydropower projects with less hassles,” he added.

Nepal has enormous potentiality in renewable energy development for up to 83,000 MW or more. But the government can only generate 700 MW till date. “ The gap between potential and what we are actually generating is huge. And this offers huge opportunity to invest for both foreign and domestic developers,” Pant explained.

According to him, IBN has 3,800 MW hydropower projects in hand waiting for investment. Agreeing that the country has a tedious and time consuming process of getting approvals, he said, “ In order to make the process less time consuming, the government should declare onewindow system via IBN.” He suggests the government have a positive attitude towards foreign investment projects and behave as partners as after 25 years or so those projects will comes under the government’s portfolio. “ Rigid policies are always hurdles so the government should be open to revise the policies and lead action to form practical laws to make a comparable and competitive investment environment in Nepal than other countries,” he added.

Flexible approach

 “ The investment environment for foreign investors is not mature, however, the government is always open to making an easier environment to attract them,” said Suman Prasad Sharma, Secretary at MoE. Citing that the concept paper that the government has endorsed as an emergency plan is a positive step, he informed, “ We are drafting the Act to implement that concept paper.” Citing that the investment environment is improving, he said, “ Tax rebate, tax holiday, PPA in dollar till loan repayment are some of the provisions that make Nepal a good investment destination.” According to him, Karnali 900 MW, Satlug 900 MW, West Seti 700 MW, Upper Trishuli A 216 MW are some projects with foreign investment. He said that land acquisition process, elongated bureaucratic process for license and approvals are actually not very different from other countries.

(The article was published on The Himalayan Times, Perspectives, May 29, 2016)

http://epaper.thehimalayantimes.com/epaperpdf/2952016/2952016-md-hr-17.pdf