Despite the prolonged transition and the continued delay in the promulgation of the new constitution, Nepal is experiencing a profound hunger for new infrastructure. The mandate received by ‘pro-business Nepali Congress and CPN-UML parties in last November’s Constituent Assembly election seems to have sent a positive message to investors, both local and international. A flurry of activity has thus been experienced in the Capital in recent days; the Nepal Infrastructure Summit 2014, organised by Confederation of Nepalese Industries (CNI), being the latest one. The two-day Summit, which wrapped up on Wednesday, saw a host of speakers who stressed the need for the development of urban infrastructure, harmonisation between the government’s policies and their implementation, and greater investment in road connectivity, electricity, and telecommunications. Beyond rhetoric, a few works of real substance have materialised recently. Namely, the signing of a Project Development Agreement (PDA) with an Indian developer on the Upper Karnali Hydropower Project along with the signing of a Power Trade Agreement with India seem to have reassured investors. Back in August, Indian Prime Minister Narendra Modi, during his visit to Kathmandu, also assured Nepal of a $1 billion line of credit, half of which Nepal is reportedly going to be investing in the 600MW Buddhi Gandaki Hydropower Project. There is much more in the pipeline. A PDA is expected to be signed during the upcoming Saarc Summit for the Arun III Hydropower Project and have been finalised for the construction of two new regional international airports in Bhairahawa and Pokhara. These are all welcome developments, especially given that Nepal’s infrastructure remains one of the poorest in the region. But going by the government’s stated goal of graduating from least developed country status by 2022, Nepal still needs steady investment of $13-18 billion in infrastructure through 2020, according to the World Bank. This is a massive sum and it remains to be seen whether Nepal will be able to attract that much investment. It is clear that there is still much the government needs to do. The ambitious reforms outlined in this fiscal year’s budget must be implemented. These include a new Land Acquisition Act, new Foreign Investment and Technology Transfer Act, and amendments to the Public Procurement Act. The new and amended policies are expected to clear bureaucratic red tape and ease the investment process for local and foreign investors. However, the government must ensure that investment practices it encourages are transparent, accountable, and fair. Some experts are even advocating for the establishment of an infrastructure bank, given the country’s lack of capital. There is also the matter of the Nepal Electricity Authority, which will need to be unbundled in the face of the more complex energy regime being developed. But in the immediate, the most reassuring development for investors would be the promulgation of a broadbased constitution that is owned up by all, marking a definitive end to the uncertainty of the transition.
25.12°C Kathmandu
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