$1b indian credit line
KATHMANDU, JUN 28 – It has been 10 months since Indian Prime Minister Narendra Modi pledged $1 billion line of credit to Nepal, but the government is yet to pick projects to spend the amount.
The government has identified projects related to roads and bridges and irrigation for spending half of the aid ($500 million), but has not yet picked energy projects formally although officials have been saying half of the amount will go to Budhi Gandaki Hydropower Project.
“The Energy Ministry has not yet forwarded us the projects’ name formally where $500 million will be spent, although it has been generally told that Budhi Gandaki will get the money,” said a Finance Ministry official.
Indian External Affairs Minister Susma Swaraj on Thursday announced 40 percent of the $1 billion credit line would be converted into grant, which means Nepal should not repay $400 million.
Nepal and India agreed to simplify procedures for using the Modi-pledged assistance in January. “The Indian side has repeatedly expressed interest in the projects, but we have been delaying,” the official said.According to Energy Ministry Secretary Rajendra Kishore Kshatri, his ministry will send a concrete proposal to the Finance Ministry within a few months. “Our plan is to put the money in Budhi Gandagi” Kshatri said. “However, in storage-type projects, resettlement and rehabilitation (R&R) study takes a lot of time.” A group of consultants are studying R&R at current.
According to Kshatri, the R&R alone is likely to cost around Rs 60 billion, which is why they are finalising the detailing before sending plans to the Finance Ministry. “I recently had a conversation with the finance minister, and he too seems to be positive on injecting the money in Budhi Gandagi,” Kshatri said, adding the consultants are likely to complete the R&R study within one and half months.
As far as irrigation projects are concerned, the government has identified Mahakali Irrigation Project (third phase), rehabilitation of Koshi Pump Canal and Distribution System. The cost for Mahakali Irrigation Project is estimated at $165 million, and $35 million for Koshi Pump Canal.
The road and bridges projects identified are roads in Panchthar, Dolakha, Ramechhap, Palpa, Bagulung and roads in Bara, Parsa, Siraha and Sunsari and Kanchanpur. The total length of these roads stand at 740km. The projects are estimated to cost $275 million. There is a provision of 10 percent price escalation and 10 percent physical contingency.
Project preparation has been one of the key implementation challenges in Nepal, and this has also been felt in the case for identifying projects for using the Indian aid.
Given the delay in project implementation under the previous Indian line of credit, it was expected that implementation of projects under this aid would be easier because of the procedure simplification.
Source : eKantipur