The government is mulling to bring a new bill to govern the projects to be developed under the public private partnership (PPP) modality and foreign direct investment. The Cabinet meeting, last week, agreed in principal over the Finance Ministry’s proposal to draft a new bill related to management of PPP and investment. 

The Finance Ministry is planning to draft the bill and get it endorsed by Parliament before March 2019 when the government is planning to hold the Nepal Investment Summit. The ministry wants to portray this bill as a major legal reform in front of foreign investors participating in the event in order to win their confidence to increase foreign direct investment in Nepal, according to a highly placed source at the Finance Ministry.  

Once the new bill drafted by the ministry is endorsed by Parliament, the existing Investment Board Act will be scrapped and the operation of the Investment Board Nepal will be carried out under the new law. 

Under the new bill, the board will be capacitated to implement the projects under PPP modality apart from attracting foreign direct investment as mandated by the existing Investment Board Act. 

The new law envisions the establishment of two wings at IBN—a PPP Centre and an Investment Centre, according to the source. The role of the PPP Centre as per the new act is to identify projects, manage public financing, control and oversee PPP projects, develop PPP framework, advise and support agencies to implement PPP projects, act as a knowledge centre and, in some cases, also work as a project bank. Similarly, the Investment Centre will promote Nepal as an investment destination besides providing investment approvals. 

The new law will include provisions contained in the existing Investment Board Act that will allow the board to give investment approval to private projects of a certain size. 

The existing law allows the board to provide investment approval to firms investing Rs10 billion or developing hydropower projects with an installed capacity of 500 MW or more. The new act, however, might change the threshold, according to the source. 

As a majority of the infrastructure projects implemented by IBN are being developed under the PPP model, the Finance Ministry believes that the PPP Act should supersede the existing Investment Board Act, according a highly placed source at the ministry. The new act is being created to implement PPP projects via a one-door policy as envisioned by this fiscal year’s budget statement, the source added. 

The ministry is preparing the new law with the technical support from the Capital Market and Infrastructure Capacity Support Project financed by the Asian Development Bank.