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