IBN doubts private sector’s capacity to execute mega projects

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    Nepal Investment BoardKATHMANDU, April 27: The Investment Board of Nepal (IBN) is not confident about the domestic private sector executing mega projects under the public-private partnership (PPP) model.

    “The Nepali private sector can form small ventures under PPP model, but it´s yet to grow and learn much in order to handle mega projects,” Radesh Pant, chief executive officer of the IBN, said.

    Interacting with media persons here on Friday, Pant said domestic private sector has to change its ´mindset´. However, Pant didn´t elaborate what exactly he meant by ´change in mindset´.

    The IBN, which was formed more than one and half years ago to facilitate the implementation of large scale projects in the country, has a mandate to execute all its projects on the PPP model. The PPP model is an arrangement between the government and the private sector to execute different projects in the country.

    “The private sector and its suitability is important to take forward the PPP model in order to execute any project,” Sanjay Poudyal, senior advisor at Centre for Inclusive Growth, said, presenting a paper on PPP model during the event. “The private sector should have capacity as well as expertise to deliver services in a competitive price to make the PPP model successful while executing projects.”

    The IBN is currently handling 14 mega projects, including five large scale hydropower projects such as 650 MW Tamakoshi III, 900 MW Upper Karnali, 600 MW Upper Marsyangdi, 900 MW Arun III and 950 MW West Seti. The other infrastructure projects include Kathmandu-Tarai Fast Track, Kathmandu Metro Railway, and project to upgrade Tribhuvan International Airport, among others.

    Meanwhile, private sector representatives have expressed dissatisfaction over the statement of IBN officials. “That´s not true,” Pashupati Murarka, one of the vice presidents of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said, commenting on the statement of the IBN officials.

    “The domestic private sector is competent enough to execute mega projects under PPP model,” Murarka told Republica over phone. “I can´t believe that such a statement can from IBN.”

    Similarly, Bhawani Rana, another vice president of the FNCCI, said the IBN should work toward creating a favorable environment for investment rather than making such statement. “Private sector is always ready to work in the PPP model if the government ensures investment friendly climate in the country,” Rana added.

    Source : Republica

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    Investment Board open to PPP model

    KATHMANDU: Public private partnership (PPP) may not be suitable for all projects, but the Investment Board has no bias against the model as long as the private sector delivers, according to experts.

    “The PPP model may not be suitable for all projects but the Investment Board will not have any bias towards it as long as there is a clear case that the private sector can deliver the service more cost effectively,” said senior advisor at the board Sanjay Poudyal during an interaction, here today.

    More than 25 countries have established PPP agencies and enacted PPP specific legislations, he said, adding that private participation in infrastructure has had many labels over time and the nomenclature differs by language and geography.

    “But PPP is an arrangement between government and the private sector, where each side contributes its inherent strengths and advantages to deliver public services and infrastructure more quickly and cost effectively.”

    The government is accountable for essential services to the public, regulation and policy oversight and the private sector designs, constructs, operates and maintains public infrastructure on behalf of the government, he added.

    The board also updated the progress of its projects highlighting the importance of Public Private Partnership in Nepal.

    It has received a good response on call for proposals for Nepal Investment Year 2013 and is in the process of developing dossiers for each project, said chief executive of the board Radhesh Pant, on the occasion.

    “Project Negotiation Agreement was signed with SN Power for Tamakoshi-3 Project last week,” he informed, adding that a Project Negotiation Agreement is a contractual arrangement that provides the developer security and tenure over project while the government guarantees that it will not negotiate with a third party about the project for the term of the agreement, while the parties negotiate a Project Development Agreement. “IBN Project Development Agreement Negotiation team has now been finalised along with necessary technical, legal and commercial advisors.”

    Project Development Agreement template is in the process of being tailored to individual projects and negotiations with developers of four export-oriented hydropower producers started on April 15, according to him. “The board has received application from Dangote Cement PLC expressing their interest in establishing a cement company in Nepal.”

    The Investment Board was set up in November 2011 as a one-window solution for foreign investors and developers investing in hydro projects above 500MW and other infrastructure projects above Rs 10 billion to fast track projects and cut through bureaucratic obstacles and delays.

    Source : The Himalayan Times