Govt hopes AIIB will address Nepal’s infra financing needs


    KATHMANDU, Oct 31:The entire world was looking to China when 21 Asian countries signed an agreement in Beijing last week to establish Asian Infrastructure Investment Bank (AIIB) to finance infrastructure development in the region.

    As one of the founding members of the bank, Nepal is hopeful that the bank would support in infrastructure development which has remained one of the major impediments to economic growth and country´s overall development.

    “We have high expectations from the bank for particularly. The government is hopeful that it would fill its infrastructure resource gap by making investments in mega hydropower and road projects,” Chandra Mani Adhikari, member of National Planning Commission (NPC), told Republica.

    Nepal is among the countries having poor infrastructures. It resembles the infrastructure situation of a sub-Saharan country, according to a World Bank Report titled ´Reducing Poverty by Closing South Asia´s Infrastructure Gap´. The report also said that Nepal needs US$ 13-18 billion from 2011-2020 in order to bridge the investment gap in infrastructure sector. Likewise, NPC has also said that Nepal needs investment of US$ 100 billion to graduate to the league of developing countries by 2022.

    Experts also say AIIB can become an alternative window for Nepal to mobilize resources for development projects. As the new bank will compete with multi-lateral donors, they said it would definitely benefit countries like Nepal.

    “We hope AIIB will work on a fast track mode and comply with practical social and environmental safeguard measures so that the development aspirations of Nepalis people can be achieved at a faster pace,” Swarnim Wagle, another member of NPC, said. He also complained the Word Bank (WB) and the Asian Development Bank (ADB) conduct long study and put in place safeguard measures which do not fit in our present context.

    “The government could not mobilize security forces to complete installation of six transmission towers under Khimti-Dhalkehbar Transmission Line Project (75 km), which was obstructed by the locals, due to stringent safeguard measures put in place by the development partner,” added Wagle.

    The project, which is regarded as a key project for electricity supply system, is already overdue by nearly 35 months. Nepal Electricity Authority (NEA) is also bearing loss of millions of rupees annually due to delay in the project.

    AIIB, which will have total capital of $100 billion, will be launched by the end of 2015.


    Infrastructure development has already remained at the top of the government´s priority list. But implementation aspect has already remained week. There are several impediments to development works — lack of timely budget, lengthy process for project approval, obstruction in land acquisition, and lack of monitoring of construction works, among others.

    A total of Rs 25 billion (about 30 percent of the developmental budget) earmarked for capital expenditure remained idle in state-coffer last fiscal year. Discussions on several mega projects like the fast track road, Nijgadh International Airport, Pokhara Regional International Airport and Gautam Buddha Regional International Airport, are going on for the past many years. The government has been failing to implement them.

    Former finance secretary Rameshore Khanal painted bleak picture of the country´s spending capacity and efficiency of resource utilization allocated for infrastructure development. “Our performance in the infrastructure development has remained poor. We need to improve the foreign aid usage rate,” he added.

    Finance Minister Ram Sharan Mahat often says there is a problem in proper planning as some of the projects fail to spend money allocated them, while others face resource crunch.

    To do away with the situation, Adhikari emphasized on policy clarity and planning, defining the sectors and need of the investments to stop the trend of investing haphazardly on piecemeal basis.

    Hari Bhakta Sharma, vice-president of the Confederation of Nepalese Industries (CNI), said we have infrastructure limitations because of the lack of sufficient investment.

    Statistics of the Department of Industry shows huge foreign direct investment (FDI) commitments every year. But actual investment flow is very nominal.

    “It is high time we made proper planning for infrastructure development and also clarify the works to be done by the public and the private sector,” added Sharma.

    Experts also say amendments to some crucial Acts, as announced in the budget for 2014/15, could improve the government´s spending capacity.

    Source : Republica