31 March - 6 April 2017 #852

Broken promises

Two years after the earthquake only about half the money pledged to Nepal by donors has actually been received  
Om Astha Rai

Shreejana Shrestha
FALLING BETWEEN CRACKS: Many families like this one in Nuwakot are still fixing the paperwork for their rebuilding grants even as Nepal waits for donors to make good on their pledges.

On the first anniversary of the earthquake this time last year, most media coverage played the same angle: slow reconstruction, delayed relief and the $4 billion pledged by donors squandered. On the second anniversary of the disaster, it will be the same old story.

To be sure, donors did pledge more than $4.1 billion for Nepal’s reconstruction at a conference in Kathmandu in June 2015, exactly two months after the earthquake. But the net pledge, excluding commitments for non-reconstruction work, was just $3.43 billion. 

Two years later, only $2.73 billion has actually been received by Nepal. Moreover, much of that has been spent by donors to fund their own projects, and hasn’t gone to the government. Some donors have not sent a single dollar of the amount they pledged, yet some of them are blaming the government for slow response.

“There is a general perception that we have billions of dollars in our account and we haven’t spent it because of our inefficiency,” says Govind Raj Pokharel, CEO of the National Reconstruction Authority (NRA). “The reality is that we face a huge funding crisis, and much of the reconstruction grant is not being spent through our channel at all.”

The Post Disaster Recovery Framework prepared by the NRA estimated that Nepal requires $9.38 billion for rebuilding. It was readjusted after the government decided to increase the housing grant to NR 300,000 per household. So even if Nepal receives all the pledged money, there will still be a shortfall of more than $5 billion. More than half the money ($2.14 billion) pledged by donors is actually soft loans, so only $1.97 billion is being given to Nepal as a grant.

“It is not a free lunch, our children will have to pay this back,” says Bhisma Bhusal of the NRA, who coordinates with donors.

At the International Conference of Nepal’s Reconstruction, India was the biggest donor with a pledge of $1.4 billion. But its net commitment was just $1 billion, and three-fourths of that amount ($750 million) was actually a soft loan.

Nevertheless, India is releasing its entire pledged amount through Nepal’s Finance Ministry, meaning that the NRA is free to choose to spend this money on the projects it selects. India is one of the few countries that have already signed an agreement with Nepal for disbursement of its financial support.

Apart from India, only South Korea, Germany, the EU, the UK’s DfID and the IMF have signed financial agreements with Nepal for all their pledged amounts. Others like Norway, Bangladesh, Pakistan, the Netherlands, Sweden, Finland and Turkey have not released a single cent of their pledged amounts for post-earthquake reconstruction.

But Norway says it announced funding without pledging new money. “Norway made a re-prioritisation within its existing development budget and in the interest of time, decided to use already established partner organisations to channel the funds (about $30 million),” said the Norwegian Embassy’s Elin Linnested. “To instead establish a new contract agreement with the government would have taken a very long time."

China was the second largest donor with a pledge of $767 million and the entire amount was a grant. However, unlike India, China has chosen its own projects like repairing of the earthquake-damaged Arniko Highway, the Syabru-Rasuwagadi road and rebuilding the Nautaley (nine-storey) temple in Kathmandu.

China will simply inform the NRA when it completes these projects. Sri Lanka too chose itself to rebuild the Rato Machindranath temple in Bungmati. Huge portions of the pledges made by the US, Australia, Switzerland and others will also never get to the NRA: they will all be spent on the countries’ own earthquake projects.  

Pokharel is now lobbying with political leaders to create a National Reconstruction Fund so the remaining pledge money is deposited at the NRA, and can be disbursed through a single agency. This is because government agencies are working at cross-purposes on relief, delaying disbursement.

Pokharel is also planning another conference to prod donors to release their pledged amounts urgently, and expedite reconstruction work. However, as Nepal prepares to mark the second anniversary of the earthquake, international attention is waning.

Although reconstruction in developing countries usually takes years, a lot of the blame for slow rebuilding must go to political interference in the workings of the NRA (see box). Pokharel was sacked when the UML took over the government in August 2015, and was reinstated by the NC-Maoist coalition earlier this year, resulting in two wasted years.


Spending power

The National Reconstruction Authority (NRA) was set up to fast-track post-earthquake recovery. Govind Raj Pokharel (pictured) was appointed its first CEO by the NC government in 2015, but was replaced by Sushil Gyewali when the UML took over in October 2015. But when Pokharel was reinstated as CEO in January, the NRA was no longer the autonomous agency that he helped create.

“This is not the NRA we envisaged when we prepared the Post Disaster Needs Assessment report,” Pokharel told Nepali Times. “We wanted an autonomous agency with the authority to mobilise its own resources. This NRA has become tangled in bureaucratic red tape.”

During Gyewali’s one-year tenure, the law that governs the NRA was revised to curtail the CEO’s power by giving more discretion to the NRA Secretary and a five-member executive body. When Pokharel was reinstated he had the backing of the NC, but the four other executive members are from other parties. The tussle between them has slowed reconstruction.

For example, the Finance Ministry has already allocated a budget to retrofit the earthquake-damaged Singha Darbar. But bidding is delayed because executive members close to the UML want to demolish the Rana-era structure and rebuild it.   

“One problem is the funding shortfall, but a bigger problem is the NRA bureaucracy,” complains Pokharel. “The NRA should be an autonomous body with its own fund and spending discretion. Otherwise, it will just be another government agency.”

Read also:

25 June donor summit, Om Astha Rai

Reconstruction in ruins, Om Astha Rai and Sahina Shrestha

Epicentre of reconstruction, Tsering Dolker Gorung

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