Nepal applies to AIIB for infra funding

- PRITHVI MAN SHRESTHA, Kathmandu

Jun 29, 2016-Nepal has submitted proposals for five infrastructure projects to the Asian Infrastructure Investment Bank (AIIB) for possible financing. 

They include two energy projects, two road projects and one urban infrastructure project, said members of the Nepali delegation who participated in the first annual meeting of the China-sponsored bank held in Beijing. The Nepali team was led by Finance Secretary Lok Darsan Regmi.  

The Sharada-Babai Hydropower Project, a storage type project planned to be built on the Babai and Sharada rivers, and the Nepal Distribution System Upgrading and Extension Project which aims to modernize the electricity distribution system of Nepal Electricity Authority are the energy related projects in the list. 

Likewise, Pokhara-Beni Jomsom Road Upgrading and Samakhusi-Tokha-Chhahare Road Upgrading and Extension Project are the two road projects for which funding has been sought. The fifth scheme is the Urban Infrastructure Improvement Project which aims to improve infrastructure in 18 Tarai districts.

“Discussions will now be held on the technical details of the projects before the AIIB board decides whether to finance them or not,” said Baikuntha Aryal, chief of the international economic cooperation coordination division at the Finance Ministry and a member of the Nepali team. 

According to him, AIIB officials have told the Nepali delegation to make the proposed projects bankable. Officials of the concerned ministries who selected the projects said most of them were new schemes. The Sharada-Babai project has hardly been discussed in public forums.

According to Gokarna Pantha, assistant spokesperson for the Energy Ministry, a feasibility study of the 80 MW storage type project has already been carried out by the Department of Electricity Development (DoED). 

“In fact, feasibility studies of the Sharada-Babai and Bherai Babai projects were carried out at the same time, but only the second project was moved forward,” said Pantha.  As per the plan, water from the Sharada River will be brought to the Babai for electricity production and irrigation.

Meanwhile, the Nepal Distribution System Upgrading and Extension Project aims to improve the electricity distribution system at major load centres including the Kathmandu Valley, Biratnagar, Birgunj and other areas where power demand is high. 

“Transformers can explode anywhere. The current distribution system is very old and it needs to be changed,” said Pantha, adding that improvements in the system will help the NEA’s plan to install smart meter boxes.

With regard to the Pokhara-Beni Jomsom Road Upgrading and Samakhusi-Tokha-Chhahare Road Upgrading and Extension Projects, Nepal had sought Chinese assistance for the first project during a finance secretary-level meeting two years ago.  

The government has planned to invest Rs56 billion under the Urban Infrastructure Improvement Project to upgrade the facilities in 18 municipalities which serve as the district headquarters. The government has allocated Rs500 million for each municipality for the next fiscal year. 

“Since the government will put up Rs28 billion or half of the proposed outlay, and external sources will be tapped for the rest, our ministry has submitted the project for possible AIIB financing,” said Dipendra Nath Sharma, secretary of the Ministry of Urban Development. The government’s budget statement has said that an intensive urban development programme will be implemented by selecting projects related to road, sewage, drinking water, renewable energy, bus park, fun park, education and health in Mahendranagar, Dhangadhi, Guleria, Nepalgunj, Taulihawa, Siddharthanagar, Parasi, Birgunj, Kalaiya, Gaur, Malangawa, Jaleshwor, Janakpurdham, Siraha, Rajbiraj, Inaruwa and Biratnagar.

Nepali officials participating in the AIIB meet in Beijing said that bank officials had asked them if other financiers were also interested in getting involved in the proposed projects. 

“The AIIB initially insisted on co-financing the projects with established institutions like the World Bank and the Asian Development Bank, and they wanted to know if other donors would be interested in becoming co-financiers,” said a delegation member.

Prior to the annual meeting of the AIIB on Saturday, the AIIB board approved funding for four infrastructure projects which would be co-financed by other international lenders.

The projects include a loan of $165 million to bring power to rural Bangladesh and a $216.5 million loan to improve Indonesian substandard housing in which the World Bank would be a co-financiers. Another loan of $100 million has been approved to finish building a motor way in Pakistan in which the Asian Development Bank (ADB) and Britain’s Department for International Development (DFID) are also involved. 

Likewise, a loan of $27.5 million has been approved for upgrading a road in Tajikistan which will have co-financing from the European Bank for Reconstruction and Development.

Published: 29-06-2016 10:13

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