24-30 June 2016 #814

Nepal's development black hole

Why large energy and infrastructure projects never seem to get off the ground
Lokmani Rai

Delivering his budget speech in Parliament last month, Finance Minister Bishnu Poudel, following in his predecessors’ footsteps, reiterated: “I have envisaged a prosperous and self-reliant Nepal while charting out new fiscal policies and plans.”

Poudel allocated Rs 311.9 billion for capital expenditure, up by 27 per cent from last year, and promised to disburse enough funds for all development projects. He emphasised grandiose projects such as two new international airports, the 1,200 MW Budi Gandaki project, the Kathmandu-Tarai fast track highway, Tarai feeder roads, north-south highways and the Kathmandu-Rasuwa Gadi highway to link with China.  He also gave priority to PM KP Oli’s ambitious dream projects, such as ending load-shedding in two years and generating 10,000 MW of electricity by 2026.

But even within Poudel’s own UML there is a sense that he has overreached. Ex-Finance Minister Bharat Mohan Adhikari, a UML adviser, while noting that the budget is more development-oriented than ever before warns that it will need a strong political will to implement.

The history of large development projects in Nepal has never been one to be proud of. Two decades after the Mahakali Treaty, work on the 6,720 MW Pancheswor Dam has yet to start. The deadline for the East-West Midhill Highway — which was to be completed in 2014 — has been extended by another decade. The Melamchi Project is 20 years behind schedule.  

There are already signs that Oli’s mega projects will also suffer the same fate. His goal of generating 10,000 MW in 10 years is already a non-starter, with only six of the 99 procedures completed thus far. Early this month, a parliamentary committee instructed the ministries concerned to revise this workplan and set a new achievable target. But even the revision of the procedure is in limbo.

Subarna Das Shrestha, former President of the Independent Power Producers’ Association Nepal, blames a lethargic administration for the failures: “There is bureaucratic apathy because the officials are neither rewarded for good performance, nor punished for delays.”

He says the civil service is influenced by politicis and will not make any decisions without a nod from the patrons. On their part, politicians have their own vested interests, which are governed by personal or partisan benefits.

For example, Maoist MP Top Bahadur Rayamajhi was one of the most vocal critics of US dollar-denominated Power Purchase Agreements (PPAs). Shortly after becoming Energy Minister early this year, however, he allowed the NEA to accept PPAs in dollar terms. This caused a setback for several hydropower projects — including the 216 MW Upper Trisuli 1 — of nearly two years.

The delay in passing the bill to amend the Electricity Regulatory Commission Act is another example of how politicians and bureaucrats seem to be in no hurry at all. The current legislation gives too much power to the NEA’s Board of Directors, which is dominated by the Energy Minister and Energy Secretary. Drafted in 2008, the bill proposes to curtail the power of the Board, hence the Minister and Secretary have both constantly put the bill on hold, demanding more time for review.

The Commission for the Investigation of Abuse of Authority (CIAA) is also responsible for development projects being stalled. In September 2015, the CIAA issued a press statement asking then-PM Sushil Koirala to sack Energy Minister Radha Gyawali for misusing her power to select a contractor to construct the Solu Corridor transmission line. In March, Gyawali got a clean chit from the Supreme Court, and the CIAA simply deleted its statement about her from its Facebook page.

The Parliamentary Committee on Agriculture and Hydropower has recently begun monitoring progress to make the relevant agencies, authorities, companies and contractors accountable. Its President Gagan Thapa says: “We need a system to penalise those who delay projects, and we must amend laws that obstruct progress.” 

Read also:

Mustering up energy to face the future, Om Astha Rai

Back to the dark age, Om Astha Rai

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