Huge resource boost for infra sector

  • Allocates more than Rs 50 billion for energy and road connectivity
  • Rs 26.1 for energy
  • Rs 26 billion for road connectivity
- SANJEEV GIRI, Kathmandu

Jul 13, 2014-

In his sixth tenure as Finance Minister, Ram Sharan Mahat has been consistently talking about infrastructure development, mainly hydropower and road connectivity for higher economic growth. Mahat’ priority has clearly reflected on the budget which has allocated over Rs 50 billion for energy and road connectivity.

In a major reform initiative, the budget has talked about unbundling the state-owned Nepal Electricity Authority (NEA) into three separate entities—generation, transmission and distribution.

The government has also announced cent percent income tax waiver for projects for the first 10 years and then 50 percent the next five years for the power projects that start electricity generation and connect it to the national grid within fiscal year 2020-21 (2079-80). They will also get subsidy of Rs 5 million per MW. Additional 10 percent subsidy will be given to the projects that connect to the national grid within fiscal year 2017-18 (2074-75).

The Energy Ministry had recommended the Finance Ministry to provide Rs 10 million subsidy to the developers exporting electricity to the national grid within fiscal year 2079-80. “Though our expectation was a bit higher, we are content with the subsidy amount announced by the government,” said Khadga Bahadur Bisht, president of Independent Power Producers Association. The government subsidy was earlier limited to Rs 1 million per MW to the hydropower project developers. “It costs around Rs 160 million for developers to produce 1 MW electricity which works out reduction of 3 percent or Rs 5 million in our cost,” said Bisht.

The budget has earmarked Rs 12.62 billion for the electricity generation and Rs 13.55 billion for the transmission line construction.

Former Finance Minister Shankar Koirala, who also served as Energy Secretary, said the budget has largely tried to address prioritise issues in the energy sector. “This is an elected government and it has talked about reforms in several acts and policies which is a very good initiative.”

According to Koirala, formation of a powerful inter-agency coordination mechanism for land acquisition while constructing the transmission line is also among laudable initiatives that the budget has taken.

The government plans to add 53 MW of electricity—28 MW from hydropower projects and 25 MW from solar projects—to the national grid in the next fiscal year.

Under the slogan ‘Ujyalo Nepal, Sambriddha Nepal’, the government has vowed to end the load-shedding in the next three years. According to the budget, the government-owned Upper Tamakoshi, Kulekhani III, Chameliya and Upper Trishuli will be adding 560 MW of electricity within three years while 42 projects being initiated by the private sector will bring in another 628 MW.

As announced by the Ministry of Energy (MoE), the budget has also pushed in for the development of solar energy. To address the power shortage in the Capital, the government will be establishing solar power plant with a capacity of 25 MW within the next fiscal year.

The energy generated from the plant will be connected to the national grid. Likewise, the budget has also come up with a provision for the NEA to purchase solar energy. Individuals or companies producing solar energy in excess of 1 KW from solar panels on their rooftop and transmitting it to the national transmission line will be purchased by the NEA.

According to Koirala, the government has given continuity to the projects introduced in the last years budget, giving higher possibility of spending the allotted funds. “Since most of the projects are either in pipeline or in preliminary phase, the potentiality of expenditure of budget is high,” Koirala said.

The budget has also prioritised the infrastructure development. “Infrastructure would be developed in such a way that it increases access, eases service flow and decrease the production cost,” said Finance Minster Ram Sharan Mahat, while presenting the budget. A total of Rs 26 billion has been allocated for the construction of roadway networks from the centre.

Rs 7.3 billion has been allocated for the construction of 125 bridges across the country, of which Rs 2.6 billion has been set aside for the construction of strategic bridges.

The budget has stated that road project under multi-year contract would be initiated in electoral constituency that does not have round-the-year transportation facility. The government has earmarked Rs 2 billion for the completion of 1,776 km Mid-Hill Highway, while Rs 250 million has been allotted for preparing a Detailed Project Report (DPR) and initiation of the construction works of Kathmandu-Tarai Fast Track.

 

Published: 14-07-2014 10:20

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