Print Edition - 2014-12-03 | Oped
Army corps of investors
- The Nepal Army, with its idle, rich coffers, could be an important investor in infrastructure
Dec 2, 2014-
The recently concluded Nepal Infrastructure Summit 2014 organised by the Confederation of Nepalese Industries (CNI) must have drawn the attention of a few promising investors. Given the conducive and investment-friendly environment that Nepal currently has, resources will not be in short supply. Ample opportunities for both domestic and multinational investment are to come. The kind of environment demanded for Public Private Partnership (PPP) and international investments would be investment-friendly government policies through various simple acts, security guarantee for the projects undertaken, and positive bureaucratic support and simplified procedures.
Infrastructure is a prerequisite for development, and this is what political leaders, businesspeople, and policymakers have been harping on about, but with no clear vision or commitment. Enough has been said, so this time around let’s start with commitments. Baburam Bhattarai initiated few infrastructure projects as ‘national pride’ projects. This was a good initiative but unfortunately, was driven less by vision and more by politically-biased motives. Nitin Gadkari, the Indian minister who was guest of honour at the CNI Summit, amply emphasised the role of infrastructure in a nation’s development with special emphasis on road networks, citing his Maharastrian experience, which we can take lessons from.
Some feasible primary infrastructures that Nepal must develop are road networks and hydropower projects, which in turn will support the development of other important sectors like tourism, industries, and services. Among the infrastructures envisaged, there could be a selected few that could attract an investment-shy stakeholder with rich coffers—the Nepal Army. The Army is the richest institution in the country with some Rs 28 billion in the private coffers of its Welfare Fund. The Fund, accumulated through the blood and sweat of Army personnel while serving under the UN as peacekeepers, carries a heavy sentimental value. Hence, the Army leadership will be willing to invest only in foolproof ventures; in other words, it will not dare to invest in risky ventures even if the return may be lucrative.
Involving the Army
Since, the Army has the compulsion to run its welfare programme, which is becoming more expensive every day, it needs to generate sustainable sources of income, which is possible only through the wise utilisation of the less productive money in its coffers. This could be done through investment in infrastructures of its choice and confidence. The Build, Own, Operate, and Transfer (BOOT) system is a new concept for Nepali investors. Though the BOOT Act is already in place, it may need few refinements to make it friendlier. Well appraised, evaluated, and managed projects under the BOOT system seldom fail to yield returns and many a time, the investment breakeven may be achieved well ahead of the estimated time. The toll bridge over the Yamuna river in Bangladesh, which is under the BOOT system, can be cited as an example.
The Army could, therefore, be convinced to become a willing stakeholder under the BOOT system. The Kathmandu-Tarai Fast Track or the Kathmandu-Hetauda Tunnel Highway or both together could be feasible ventures. Business houses and investors should join hands with the Army in such ventures. This kind of engagement will not only enhance the image of the Army but will also generate sustainable source of income to the army’s Welfare Fund. One critical aspect for the success such investments is the security of the project and the involvement of the Army would provide insurance. This way, the Army will be contributing to the noble cause of national development.
The Army as client
In this regard, the Army has already started developing infrastructure in the service sector, such as a veteran’s hospital with separate but ample hospital facilities for the public. A secondary but complementary infrastructure, in which the Army could be convinced to get involved, could be a venture on urban solid waste management. Urban solid waste has become a hazard to public health, a nuisance to urban beauty and the tourism industry, and a chronic problem. It is a pain for municipalities, town development funds, and urban development agencies. But challenges come with opportunities. Such solid waste contains more than 70 percent organic waste, which means it is combustible and can be recycled for productive purposes.
With serious research and development efforts, urban solid waste can be turned into fire briquettes on an industrial scale and the Army and other security institutions could be clients to make the project commercially viable. The Army alone spends over Rs 600 million per year for cooking kerosene. If the Army was a client, a steady market would be guaranteed and hence, such an industry would be feasible. Besides, the Army will be self-reliant and not dependent in imported fossil fuel, thus saving hard currency. This venture can also utilise invasive nuisances like Jalakumbhi (water hyacinth) and banmara, which will help preserve natural beauty and also generate few extra employment opportunities.
Though this project will be expensive from a simple business point of view, its multifaceted benefits will outweigh the expenses, and will still be beneficial. If such ventures are launched, the Army will once again become a stakeholder in national development while earning better returns from its investment. This way, public-private and military partnership will set a new paradigm for cooperation in infrastructure development.
Bhandari is a retired Brig Gen of the Nepal Army and Secretary of the Institute for Strategic Studies
Published: 03-12-2014 09:25