Three Gorges asks govt to handle resettlement works - 
KATHMANDU, March 16: Chairman of China’s Three Gorges Corporation Lu Chun has urged the government to look after resettlement and rehabilitation of the families that will be displaced by West Seti Hydropower Project. 

During a meeting with Prime Minister Sushil Koirala, CEO of Investment Board Nepal (IBN) Radesh Pant and Minister for Energy Radha Gyawali, officials of the Chinese developer emphasized on resettlement and rehabilitation of people fearing that the project might have to encounter similar problems that other development projects in the country are facing. - 

The project is located in Doti, Dadeldhura, Bajhang and Baitadi districts. An estimated 20,000 people will be displaced by the project.

However, government officials have taken the visit of the Chairman of Three Gorges Corporation, the parent company of CWE Investment Corporation (CWEI) which is the developer of West Seti Hydropower Project, as a step ahead toward development of the project.

The 750-megawatt proj-ect is a storage type project. The government had signed Memorandum of Understa-
nding (MoU) with the developer in 2012. As per the MoU, Nepal Electricity Aut-hority (NEA) will have 25 percent equity investment in the project.

According to officials, Chun has sought market assurance from Nepal. He has also asked the government to build 500-km transmission line from the project site to Butwal.

Responding to Three Gorges officials, Minister Gyawali said they do not have to worry about market as there is an option of exporting power to India. She also said preparation of master plan to build cross-border transmission line between Nepal and India was under way.

Talking to Republica, IBN CEO Pant said Three Gorges wants Nepal to carry out resettlement and rehabilitation program so that they can focus on other construction works. On their concern on market and transmission line, Panta said he told the delegation that the government will stand by its words of purchasing electricity as stated in the MoU. “The signing of Power Trade Agreement (PTA) with India and Project Development Agreements with two mega projects as well as formation of stable government must have encouraged the Chinese developer,” added Pant.

CWEI has already sought foreign direct investment permission worth Rs 150 billion from IBN to invest in the project.
The Chinese delegation arrived Nepal on Friday.

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Kaymu found evading taxes

RUDRA PANGENI 

KATHMANDU, March 12: It has been revealed that Kaymu Nepal Private Limited is evading taxes while purchasing goods from over 4,000 shops in Kathmandu Valley and supplying them to customers who place order through kaymu.com.np -- an online platform operated by Kaymu.

Republica has learnt that staff members of Kaymu Nepal Private Limited, a 100 percent foreign investment firm established for website and software development, take goods from those shops by giving them Kaymu receipt vouchers.

Receipt vouchers issued by Kaymu to shopkeepers, which have been obtained by Republica, clearly indicate 'movement of goods'. Kaymu also does not take invoice issued by the shops. This suggests that Kaymu either issues its own invoice to customers or doesn't issue any invoice at all.

A Chabahil-based shopkeeper told Republica that Kaymu staffers did not take invoice issued by his shop. "I don't know whether Kaymu issues invoice to customers or not," the shopkeeper said, seeking anonymity.

Joint secretary (Revenue) of Ministry of Finance Laxman Aryal said that any movement of goods, except transfer from a firm's godown to in its own store, is subject to Value Added Tax (VAT). "If a firm is buying goods from one store and selling to others without paying any taxes, it is a clear case of tax evasion," said Aryal.

Kaymu denies that it is involved in trading of goods. Its officials say it is only promoting products of others through its online platform.

But Kaymu's modus operandi suggests that it is involved in trading which it is not allowed to do.

Sources privy to the Kaymu's business model say Kaymu collects goods from different shops in Kathmandu Valley, stores them at its Naxal-based office for few days and deliver to consumers by using courier companies. "Courier companies collect payment from consumers, hand it over to Kaymu. Kaymu then pays back the money to the shops," they said.

Talking to Republica over telephone, Kaymu's Corporate Lawyer Anjan Neupane insisted that his client is not involved in trading of goods. "Courier companies collect goods ordered by customers via Kaymu's online portal and deliver to their doorsteps. Kaymu is not involved in trading," he added.

'KAYMU HAS ADMITTED ITS MISTAKE'
KATHMANDU (REPUBLICA): Maheshwar Neupane, director general of Department of Industry, told Republica on Tuesday said that Kaymu's officials have acknowledged that they are involved in activities which they are not permitted to do.

"They have expressed commitment to including 'advertising' in their 'objective'," said Neupane.

Earlier, Neupane had told Republica that he would take action against the firm as per the Article 25 of Industrial Enterprise Act starting from seeking clarifications.

Talking to Republica on Tuesday, Neupane said he would seek clarification from the firm and ask it to furnish details of income generation.

From Republica 

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Political leaders lobbying to include petty projects in central programs 

Rudra Pangeni 

KATHMANDU, March 10: Political leaders, particularly parliamentarians, have started piling pressure on ministries to put petty projects of their respective areas in the list of priority projects without holding needful consultation at the local level.

Such acts will hinder the reforms initiated by National Planning Commission (NPC). NPC has said that it won’t publish ‘Part Two Book’ in the coming fiscal year to focus only on priority projects. It has decided to delegate the authority of selecting and implementing small-scale projects and programs to the concerned district development committees (DDCs). 

Gopinath Mainali, joint secretary of National Planning Commission, told Republica that reform initiatives taken by the apex planning body will become useless if petty projects are included in the list of P1 projects as demanded by political leaders.

Mainali, who looks after infrastructure projects at NPC, has already received request to include more than 200 small road projects into the list of P1 projects. Many leaders have sought budget for small projects like roads, bridges, irrigation, and drinking water projects, from central level even though NPC has already decided that central authority will focus on only large-scale projects.

NPC, in December last year, gave a budget ceiling of Rs 79.66 billion -- 7.6 percent higher than the allocation of 2014/15 -- to all 75 districts. Village development committees (VDCs) and municipalities and have to select local projects on their own and get them approved from DDCs, ending the practice of selecting local projects from Singha Durbar -- country’s administrative center.

“Instead of going to their village and select projects, political leaders are trying to include petty projects in the budget allocated by the ministries and departments,” NPC officials say.

NPC has already issued guidelines to DDCs on selecting the projects by holding discussions and setting priorities. It has formed a panel led by its member Chandra Mani Adhikari to sort out any problems arising in setting priorities.
“We have been organizing workshops in different districts to help local authorities in selection and implementation of the project,” Adhikari told Republica.

During regional workshops held in each development region last month, NPC officials found that division offices of Ministry of Physical Infrastructure and Transport, Ministry of Urban Development and Ministry of Irrigation were not allowing local authorities to select projects on their own, stating that they do not have such line agencies in the districts.

Adhikari said NPC has already dispatched a guideline to all districts on how to identify the projects and set priorities. The guideline clearly states only the large-scale projects and projects of national importance will be included in the budget.
Talking to Republica, Director General of Department of Irrigation Madhav Belbase said their working modality is different as they do not have line agency in each district. “We select projects through a participatory approach of beneficiaries and they are clearly defined compared to other projects like road and bridges,” he added.

In the regional workshop, officials of local bodies complained to NPC officials that they were asked to include additional projects from ‘Part Two Book’ but were given additional funds.

Adhikari said local bodies have to be selective and should not have more than three projects in each sector to deliver better results. “Rather than the distributing approach taken over the past years, we should focus on effective implementation and result oriented development,” he added. - See more at: http://new.myrepublica.com/economy/item/16887-political-leaders-lobbying-to-include-petty-projects-in-central-programs.html#sthash.MPVNVI5b.dpuf

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SUB-REGIONAL BLOCS TO BE FORMED TO DISCUSS COMMON ECONOMIC AGENDAS

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• RUDRA PANGENI
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Sub-regional blocs to be formed to discuss common economic agendas KATHMANDU, March 8 : Realizing the need to raise sub-regional economic agendas in the South Asian Association for Regional Cooperation (SAARC) member countries in a proactive manner, a regional organization of private sector has come up with a plan to form sub-regional blocs focusing on specialized common agendas. 

Given the diversified economic agendas of member countries, SAARC Chamber of Commerce and Industry (SAARC CCI) intends to make different sub-regional on common economic issues as part of achieving broader regional cooperation.

समाचार सार

• SAARC CCI Action Plan for 2015

Making public the action plan for SAARC CCI for 2015, Officiating President of SAARC CCI Suraj Vaidya said the sub-regional blocs will address common agendas at sub-regional level in the beginning and later on set priority for connectivity, infrastructure, investment, trading and others. "As energy and grid connectivity are the common agendas of Nepal, Bangladesh, Bhutan and India, these countries will be under a proposed sub-regional bloc for economic cooperation," Vaidya said, adding that western sub-regional bloc will have Afghanistan, Pakistan and India, who are in need of railway and other connectivity to increase bi-lateral and tri-lateral trade, as members. Similarly, Sri Lanka, Maldives and India, whose common agenda is use of sea route for trading, will be the members of the proposed southern sub-regional bloc.

Though SAARC is already 30 years old, intra regional trading is still very nominal.

Vaidya said that the private sector, for the first time, has introduced the concept of sub-regional blocs for prioritizing economic agendas and addressing closer issues of three to four countries at the beginning.

Experts say the idea of sub-regional blocs can be more pragmatic as SAARC has not become able to give due priority to economic agendas.

SAARC CCI has been credited for playing a major role in getting the SAARC Framework Agreement on Energy from the 18th SAARC Summit held in November last year. A committee led by Vaidya had forged coordination among private sector of the member countries.

Vaidya also said that Nepal has its own agendas like getting hassle-free access to the nearest port, draw more investments in energy and other sectors, as well as promoting tourism.

SAARC CCI's ACTION PLAN FOR 2015

The SAARC CCI is holding its 63rd executive committee and general assembly in New Delhi starting from Tuesday. The meeting will endorse the action plan for 2015.

Setting up of South Asian Investment Caucus that aims to bring across the table the board of investments of SAARC member countries and potential investors to deliberate on investment issues and pursue public private partnership model to encourage and promote free flow of investments is one of the programs included in the action plan.

Vaidya also said that the SAARC CCI has scheduled a number of meetings for the year in different countries focusing on different agendas. The meetings will be organized in a proportionate manner in all member countries, he added.

SAARC CCI also plans to launch CEOs' Forum to engage leading enterprises and industries both in trade and organizational mechanism and provide a forum for deliberations so that they can identify areas of cooperation and initiate mega projects with their counterparts in South Asia.

Similarly, establishing SAARC Shipping Company and SAARC Transport and Logistics Company for swift and easy intra-regional trade is also in the list of plans included in the action plan. Likewise, the chamber also plans to bring investors for hydropower development in Bhutan and Nepal as well as developing required infrastructure for smooth transmission of energy to neighboring countries. It plans to organize different events to discuss on cooperation and investment in hydropower development.

SAARC CCI is planning to hold its meeting in Pakistan on April 29-30 coinciding with the SAARC Ministerial Meeting to be held in Islamabad. The ministerial meeting is discussing on motor vehicle agreement that ensures free movement of vehicles at the regional level.“

"SAARC CCI and national chamber of commerce of all member countries will lobby for the agreement," added Vaidya.

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Indecisiveness on foreign currency PPA affecting hydropower projects

RUDRA PANGENI  KATHMANDU, March 7 : Indecisiveness of Public Accounts Committee (PAC) of legislature-parliament on signing power purchase agreement (PPA) in foreign currency is affecting development of different hydropower projects across the country. PAC, after holding discussion in August last year, had formed a sub-committee under the leadership of lawmaker Top Bahadur Rayamajhi to study the issue and make policy direction to the government. The sub-committee hasn´t submitted its report yet. PAC meeting has not convened since the second week of January. The meeting has fallen into uncertainty as its Chairman Janardan Sharma, who is a UCPN (Maoist), is protesting against the government. UCPN (Maoist) lawmakers are not participating in parliamentary committee meetings. “Several hydropower projects developed with loan investments or foreign investments are waiting for the committee´s decision on the issue. But we can´t say when the committee will come up with a decision," Keshav Dhwaj Adhikari, spokesperson of Ministry of Energy, told Republica. After studying previous PPAs in US dollar signed by Nepal Electricity Authority (NEA) with the developers of Upper Bhotekoshi and Khimti hydropower projects and loss faced by NEA due to devaluation of Nepali currency vis-à-vis US dollar, PAC had directed the government not to sign PPA in foreign currency until it comes up with a final decision. Speaking at a discussion program organized jointly by Development Committee, and Good Governance and Monitoring Committee of the legislature-parliament on Sunday, Minister for Energy Radha Gyawali had blamed indecisiveness of PAC for delay in signing PPA with several hydropower projects. Upper Trishuli-1, Kabeli A, Tila-1 and Tila-2 hydropower projects have applied to NEA for signing PPA in US dollar. But NEA has not been able to start PPA negotiations with developers of those projects due to direction of PAC. PAC´s initiation to provide policy direction on signing of PPA was welcomed in all quarters. Now the parliamentary committee is drawing flak for its indecisiveness. Khadga Bahadur Bisht, president of Independent Power Producers´ Association Nepal (IPPAN), said PAC´s indecisiveness is affecting project being promoted by foreign investors. "NEA should sign PPA with developers after evaluating risks on its own. The indecisiveness should end immediately," added Bisht. Spokesperson Adhikari said the energy ministry has started internal homework on taking policy decision on signing PPA in foreign currency. He also said the ministry will table the draft policy in parliament for approval. Experts and officials are of the view that NEA and developers should devise a risk-sharing model which is beneficial for both the parties. Going for PPA in US dollar for loan repayment period, and PPA in Nepali currency for remaining period can be a good option, a hydropower expert said. Meanwhile, sub-committee coordinator Rayamajhi said they were giving finishing touches to the report. "We will submit the report to PAC Chairman very soon," he said, adding, "Our party is likely to sit for political talks. It will pave the way for PAC meetings." REPUBLICA

Investment growth key to economic development

Investment growth key to economic development

RUDRA PANGENI KATHMANDU, March 6: Sluggish investment has remained one of the major impediments to Nepal´s economic growth. Though the country is seeing a rise in foreign investment commitments in recent years, only a few of them are translated into reality. The country desperately needs new investments, but it lacks necessary laws, infrastructure and workforce to attract them. Investors have to pass through a long and time-taking process to register the business. Acquiring approval for foreign investment, land acquisition, forest clearance, and environmental and social safeguard clearances is a herculean task. Worse still, they have to deal with civil servants many of who are not friendly and unaware of the benefits of having new investments. Former industry secretary Krishna Gyawali feels civil servants are not friendly to investments -- either they do not have good intention or they lack the capacity to serve investors. “Civil servants can play a great role to create investment-friendly environment in the country. But their performance is not up to the mark, maybe because of the outdated and unclear laws," he added. "Files of investors remain stuck for weeks. Decision-makers try to come clean by putting blame on outdated laws and provisions," he said, adding that many officials seek benefits for approving such files. In his keynote speech at Nepal Infrastructure Summit 2014 held in Kathmandu in November, Indian Minister for Road, Transport and Highway Nitin Gadkari had said indecisiveness of government can inflict huge loss on prospective investors. "A delay of single day in my ministry can inflict loss of Rs 5 billion on investors," he added. Stating that land acquisition, forest clearance, and approval of environment safeguards were the major problems that investors face, Gadkari said that there is a tendency of discouraging investors instead of facilitating them. Officials say the situation is no different in Nepal. Nepal ranks at the second position (108th) in doing business indicators in South Asia. Only Sri Lanka is ahead of Nepal in South Asia. But the pace of reforms in investment facilitation, particularly adopting automated service deliveries, shortening days of registering business, and seeking investment permission, has remained rather slow. A recent World Bank statement said it takes 86 days for a businessman to get permission for building a warehouse. Similarly, investors have to pass through eight ministries to get a license for starting a business. For investment above Rs 2 billion, one needs to seek approval of Industrial Promotion Board led by Minister for Industry which takes even months. Pashupati Murarka, senior vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said negative attitude is common among civil servants regarding new investments. "Some hesitate to take decision, fearing action by oversight agencies even though their decisions can bring huge benefits to the country," he added. Govind Raj Pokhrel, vice chairman of National Planning Commission (NPC), acknowledged that civil servants are not investment-friendly. Instead of putting blame on civil servants, Pokhrel wants to introduce a program to make them understand the value of investment to create investment-friendly environment. The budget for the current fiscal year includes a program to provide special trainings to around 400 government employees. Private sector had welcomed the program, saying that it will improve the way civil servants behave with the investors and take decision in time. But the program has fallen prey to red tape. The program has not take off; even program details have not been prepared. Pokhrel is worried that the current investment environment won´t help to improve per capita income to US$ 1190 or above from existing $540 by 2022. The government has set a target of graduating the country to a league of developing countries by 2022. To achieve the target, it should be able to increase per capita income to at least $1190. Two other key indicators -- economic vulnerability and social indicators -- are achievable, according to Pokhrel. Nepal needs to have investments of around $100 billion over the next years to achieve economic growth of 8 to 9 percent annually to achieve the target

Govt issues Foreign Investment and One Door Policy

RUDRA PANGENI Names five priority sectors for foreign investment KATHMANDU, Feb 28: The government on Friday issued Foreign Investment and One-Window Policy 2015, defining priority sectors to bring in foreign investment and introducing one-window service center to cater betters services to foreign investors. The policy has named hydropower, transportation infrastructure, agro-based and herbal processing industries, tourism, and mines and manufacturing industries are the prioritized sector for foreign investment. The Cabinet Committee on Financial Infrastructure and Development led by Finance Minister Ram Sharan Mahat on Friday approved the much-awaited policy with some minor corrections. Officials privy to the issue told Republica that the corrections include explanation of mass media industry which has been listed as a prohibited industry. Similarly, a provision has been added in the annex in which the government will remove or add priority industries listed in prohibited list by publishing a notice in Nepal Gazette. The objectives of the policy is achieving sustainable and higher economic growth, and creating jobs by mobilizing foreign investment, technology, skills and knowledge in the prioritized sectors. The policy replaces the Foreign Investment Policy of 1992 with an elaborate document which assures short-term and long-term visa for investors and their family members, their representatives as well as for manpower not available in the country. Similarly, the policy states that the government will facilitate foreign investors in land acquisition, industrial security and repatriation of investment and profits. It has clearly defined mediation and dispute resettlement process, among others. The policy states that foreign and domestic investors will be treated on par and that the government will not nationalize industries run by foreign investors. If such industries have to be acquired for the sake of public interest, the policy states that the government will do so by paying appropriate compensation. According to a statement issued by Ministry of Industry, Minister for Industry Mahesh Basnet said that the policy will be a base to trigger industrial revolution in the country by attracting foreign investment. The policy has also opened retail trading to foreign firms. However, the government needs to draft necessary laws to open the sector for foreign investors. The government is in the process of drafting Foreign Investment and Technology Transfer Act. The act is likely to be tabled in the parliament for approval within this fiscal year. The policy has not included any investment threshold for foreign investors. Government officials say such threshold will be included in the new act. Likewise, the policy has barred foreign investment in basic agricultural activities and limited such investments in herbal-based industries. Companies with foreign investment can also buy securities in the secondary market, according to the policy. As per the policy, the Ministry of Industry will restructure the existing Industrial Promotion Board as Foreign Investment Promotion Board. Priority sectors for foreign investment • Hydro-electricity (generation and transmission) • Transport infrastructure (expressway, railway, tunnel highway, cable car, metro rail, flyover and international airports) • Agro-based, food processing and herb processing industries • Tourism industry • Mining and manufacturing industries Prohibited sectors for foreign investment • Micro-enterprise and traditional cottage industries (except for technology transfer) • Arms and ammunition industry, and weaponry, explosives and gunpowder industries • Currencies and coinage business, and security printing • Real estate • Multi-brand retail trade with investment of less than Rs 500 million in fixed capital. (For larger investment, traders should have operations in more than two countries) • Owning or operating provider of tour guides, trekking and mountaineering guide, porters (also horse, mule and yak), cook for tourists • Priority sectors in agriculture including poultry, fishery, beekeeping • Industries involving radioactive material • Mass media industry