With the signing of the Upper Karnali PDA, the Investment Board has proved that it can deliver
On fourth and fifth of March, without the fanfare of self-idolising long speeches and the formalities of functions that frustrate people, something serious happened at the Hyatt Hotel. The local team of JW Thompson, a marketing communications brand, put up a good show and there was Tim Sebastian of Hard Talk fame grilling people in his signature style. Sebastian asked simple questions in a tough manner to all the ministers and decision makers present. The two-day event, organised by the Nepal Business Forum and entitled ‘Nepal Hydropower—Potential to Reality’, drew all the people who mattered to the room. The World Bank and other multilaterals and bilaterals put in efforts behind the event, as everyone realised that this was perhaps a rare chance to let hydropower development take off in Nepal.
During discussions on the sidelines with key people, the focus was on three things. First, a Project Development Agreement (PDA) to be signed with one of the developers, most likely for the Upper Karnali project. Second, the signing of the Power Trade Agreement (PTA) between Nepal and India to facilitate the sale of electricity in common markets. Finally, to allow multilaterals like the International Finance Corporation (IFC) to be able to raise funds in the local markets to finance projects, leveraging their global expertise but keeping the dreaded exchange risk out of the picture.
Keep it low-key
It is heartening to see that the fundamentals for all three have been started. The PDA and PTA have been signed and not only the IFC, but the Asian Development Bank (ADB) is also keen to mop up funds from the local market. Perhaps, one of the key events during the last eight months has been the visit of Indian Prime Minister Narendra Modi and the impetus he provided to the process of putting the PTA and PDA in place.
The biggest lesson Nepal learnt is that we can keep processes moving without fanfare and that low-key events can deliver best results. We have had numerous events that were organised by so many organisations, which, apart from being able to spend the budget for the event, were not able to go too far. The lesson from the Nepal Business Forum event was that it is important to keep the event low-key, have people who matter in the room, and identify two to three things to deliver. We also need to recognise the efforts of Finance Minister Ram Sharan Mahat, his team, and the team at the Investment Board, all of whom kept the process going.
Let the Board stay
One of the things we hear often in the offices of some ministers and politicians is that the Investment Board has to be disbanded. Politicians are always uncomfortable with institutions that function professionally and where people are recruited based on their talent and experience, rather than the party membership card they carry in their pockets or whom they are related to. Such institutions also make graft difficult and political parties from across the spectrum are upset when they cannot raise funds for big projects. With the signing of the Upper Karnali PDA, the Investment Board has demonstrated that given the mandate, it can deliver. It is now time to ensure the institutional sustainability of the Board by providing it with the budget it needs to function for a longer period of time, rather than knocking on the door of one donor or another every quarter. The Investment Board should be empowered to work on future projects, be they airports, expressways, or energy. If political leaders really want Nepal’s economic development to accelerate through infrastructure projects, they should stay away from projects and leave the work to the Investment Board. Since 1950, personal objectives and the vested interests of people close to power, be they royal courtiers or political power brokers, have rendered infrastructure development difficult. This has to change.
No impediments, please
The dreams of the Nepali private sector are limited and many-a-time do not go beyond becoming the president of trade or fraternity organisations. This is dangerous, as they do not see their roles when multi-million dollar projects are underway. When Bhote Koshi and Khimti took off, there was tremendous amount of jealousy within folks from the private sector. It needs to be recalled that the Bhote Koshi power project was initially designed as a joint initiative of hoteliers and that the Soaltee Hotel became the default partner for US partners when many other hotel partners could not come up with their due equity. When many traders did not see their roles, they harped on with the unnecessary discourse of the Nepal Electricity Authority’s losing money on these projects.
We have yet to see Nepali private sector rising to the occasion to run big infrastructure businesses and if someone else, especially multinationals, make money, they always cry foul. We have private sector leaders in hydropower who have minted money on international projects but discourage international investment in local hydro-energy development.
Major breakthroughs have been made. We have a government in India that is more interested in bilateral economic cooperation rather than politics and we have people in key multilateral agencies who want things to happen in Nepal. It is rare for Nepal to get into a position to look forward. Last time around, it was 1996 and we squandered that opportunity, courtesy of the myopia of political and business leaders. This time around, we cannot repeat the same mistake.
By : Sujeev Shakya