KATHMANDU, March 29 ,
Finance Minister Ram Sharan Mahat has said that investment without efficiency do not yield results. Speaking at a function organized by Samana Banking Prize Trust in the capital on Saturday Mahat said the cost of projects has gone up due lack of efficiency.
“The cost of Chameliya Hydropower Project has gone much beyond the original estimate. Though it costs only around Rs 150 million per megawatt, the cost of Chamelia project has reached Rs 500 million per megawatt,” Mahat said, adding “The cost of this project has gone up due to lack of efficiency.” Frequent labor strikes, lack of adequate infrastructures and red tape have further aggravated the situation as they eventually delay projects. Delays increase the cost of projects, he said.
Stressing the need for priority sector development act, he said, “Increase in the cost of projects ultimately hits consumers,” he said.
Mahat has repeatedly been advocating for second-phase economic reforms. “To reduce the cost of doing business, we need adequate economic reforms,” he further said, “Private sector efficiency rests on the cost-effectiveness of doing business.”
Mahat stressed that Nepal should promote investment-friendly climate to attract foreign investment. Improved security, prompt decision making, policy stability and construction of physical infrastructures are key to investment.
“New possibilities and opportunities have opened up in the hydropower sector,” he said. European Investment Bank (EIB) has made investment commitment of USD 225 million for four hydropower projects, namely– Tanahu Hydropower Project, expansion of Marsyangdi corridor, Kaligandaki corridor and Trishuli corridor. Similarly, International Finance Cooperation (IFC) has made investment commitment of USD 6 billion in the energy sector, he said.
Mahat also said that the Nepali banking sector is also ready to fund development projects. “The banking sector has more than Rs 70 billion for investment,” he said. Mahat also stressed on the consolidation of banks and financial institutions and said that government will encourage mergers. He suggested BFIs to extend their services in the rural areas.
Nepal has recorded a very low growth for the past decade and is ranked the poorest in South Asia. “Nepal needs to achieve a high growth rate at least for coming 10 years to be ranked as a developed country,” Mahat said at the function.