<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111413118/637230519c7e80680e0c255ejpeg.jpg" alt="" width="1360" height="680"/><figcaption>Photo credit: PROJECT SYNDICATE</figcaption></figure>Today’s energy crisis is potentially worse than similar previous ones – particularly the 1970s oil shocks.Consumers around the world are hit by high prices, businesses worried about energy supplies, political leaders and central bankers struggling with inflation, and countries confronting balance-of-payments pressures.In the 1970s, only oil was involved, whereas this crisis encompasses natural gas, coal, and food. In addition to stoking <a href="https://www.cnbc.com/2022/06/10/consumer-price-index-may-2022.html">inflation</a>, today’s crisis is transforming a previously global market into one that is fragmented and more vulnerable to disruption, crimping economic growth. And, together with the geopolitical crisis arising from the war in Ukraine, it is further deepening the world’s great-power rivalries.This crisis did not begin with Russia’s invasion of Ukraine, but started last year when <a href="https://www.iea.org/news/surging-electricity-demand-is-putting-power-systems-under-strain-around-the-world">energy demand</a> surged as the world emerged from the Covid-19 pandemic. That is when China <a href="https://www.bloomberg.com/news/articles/2021-09-28/china-s-coal-shortage-means-higher-prices-for-the-whole-world">ran short</a> of coal and prices shot up. The global market for liquefied natural gas (LNG) then tightened, with prices <a href="https://www.mckinsey.com/industries/oil-and-gas/our-insights/petroleum-blog/reflecting-on-2021-global-lng-and-european-pipeline-flows">skyrocketing</a>, and <a href="https://oilprice.com/oil-price-charts/">oil prices</a> rose as well.Normally, with rising energy prices, a country like Russia would have increased its natural-gas sales to its main customer, Europe, above the minimum contracted volumes.Instead, it stuck to its contracts, even though it could have produced considerably more. At the time, it appeared that Russia was trying to force prices up. But, instead, the Kremlin was preparing for war.Because Europe <a href="https://www.reuters.com/business/energy/why-russia-drives-european-gas-prices-2022-01-21/">depended</a> on Russia for 35-40% of its oil and natural gas, Putin assumed that the Europeans would protest the invasion, but ultimately stand aside. Fixated on his self-appointed mission of <a href="https://edition.cnn.com/2022/06/10/europe/russia-putin-empire-restoration-endgame-intl-cmd/index.html">restoring</a> what he views as Russia’s historic empire, he did not anticipate how they would respond to an unprovoked war next door.Looking ahead, five factors could make today’s energy crisis even worse. First, Putin has opened a second front in the conflict by <a href="https://www.bloomberg.com/news/articles/2022-05-31/russia-to-cut-gas-exports-to-shell-orsted-over-rubles-dispute">cutting back</a> on the contracted volumes of natural gas that Russia supplies to Europe. The goal is to prevent Europeans from <a href="https://www.euronews.com/my-europe/2022/05/19/historic-day-as-eu-sets-mandatory-gas-storage-level-for-winter-supplies">storing enough supplies</a> for next winter, and to drive prices higher, creating economic hardship and political discord.In his <a href="http://en.kremlin.ru/events/president/news/68669">speech</a> in June at the St. Petersburg International Economic Forum, Putin made his reasoning clear: “Social and economic problems worsening in Europe” will “split their societies” and “inevitably lead to populism … and a change of the elites in the short term.”As it is, Germany is now anticipating the need for gas rationing, and Minister for Economic Affairs Robert Habeck, <a href="https://www.businessinsider.com/germany-says-energy-crisis-may-trigger-lehman-like-contagion-2022-6">warns</a> of a “Lehman-style contagion” (referring to the 2008 financial crisis) if Europe cannot manage today’s energy-induced economic disruptions.Second, a new or revived nuclear deal with Iran is <a href="https://www.reuters.com/world/french-source-pessimistic-us-iran-can-quickly-resolve-nuclear-deal-differences-2022-05-12/">unlikely</a>. Thus, sanctions on the country will not be lifted – and that means Iranian oil will not be flowing into world markets anytime soon.Third, although Saudi Arabia may step up its oil production to help stabilise oil markets after US President Joe Biden’s visit, no gusher is likely to follow, because there does not appear to be a large amount of <a href="https://www.cnbc.com/2022/06/03/oil-markets-opec-has-limited-spare-capacity-russia-is-less-relevant.html">extra oil</a> in Saudi Arabia (or in the United Arab Emirates) that can be produced on short notice.Meanwhile, many other oil-exporting countries cannot even return to their <a href="https://qz.com/2115735/opec-countries-are-producing-less-oil-than-they-said-they-would/">previous levels of production</a>, owing to a lack of investment and maintenance since the pandemic.Fourth, <a href="https://www.aa.com.tr/en/energy/oil/oil-up-despite-low-china-demand-over-covid-19-lockdowns/35208">China’s demand for oil</a> has been significantly reduced by its “zero-Covid” lockdowns, which have sharply curtailed economic activity. But if it lifts many restrictions, a big increase in oil consumption and demand will follow.Lastly, however tight the market for crude oil, there is even more tightness in the <a href="https://www.vortexa.com/insights/products/global-refining-industry-struggles-to-stem-growing-market-tightness/">refining sector</a> that produces the gasoline, diesel, and jet fuel that people actually use. This has developed into a complex, highly interconnected worldwide system. Russia was refining products that it was shipping to Europe, while Europe was sending gasoline that it did not need to the US East Coast, and so forth.In some places, the system is going all out, with US refineries already operating at about <a href="https://www.marketplace.org/2022/05/23/u-s-oil-refiners-margins-smash-records-but-few-plan-to-build-more-plants/">95% capacity</a>. But the system overall still cannot keep up with demand. Russian refineries are functioning <a href="https://www.reuters.com/business/energy/russian-oil-refiners-signal-deeper-cuts-refinery-runs-amid-overstocking-2022-03-31/">only partly</a>, depriving Europe of oil products; and not enough European gasoline is reaching North America.Chinese refineries are operating at less than <a href="https://www.bloomberg.com/news/articles/2022-06-19/massive-oil-refining-capacity-idle-in-china-even-as-prices-soar">70%</a> capacity. Some four million barrels per day of refining capacity have been <a href="https://www.reuters.com/markets/commodities/why-is-there-worldwide-oil-refining-crunch-2022-06-22/">shut down worldwide</a>, owing to the pandemic, new regulations, and challenging economics. Add in the risk of accidents, poor policy decisions, and a hurricane knocking out refineries on the US Gulf Coast, and the situation could get even worse.That said, a few countries could still boost production. Canada – the world’s <a href="https://www.aljazeera.com/news/2022/3/24/canada-to-increase-oil-gas-exports-amid-push-to-displace-russia">fourth-largest oil producer</a>, after the US, Saudi Arabia, and Russia – could provide extra barrels in collaboration with its major market, the US.And US shale oil production is back in gear and could add 800,000 to <a href="https://www.bloomberg.com/news/articles/2022-02-04/shale-seen-adding-a-million-barrels-a-day-is-back-to-booming">one million barrels</a> per day of new production this year – far more additional production than the rest of the world combined.Other factors that could mitigate the crisis include price changes and how consumers respond. In May, US gasoline <a href="https://www.bloomberg.com/news/articles/2022-05-25/us-drivers-begin-to-balk-at-record-gas-prices-stifling-demand">demand</a> was 7% less than in May 2019, before the pandemic. Some of that, however, may be the result of more people working from home.An economic slowdown could also dampen prices. S&amp;P’s latest global <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/bafed008810e4de0814abc612ca32706">purchasing managers’ index</a> points to a weakening of economic growth, with US manufacturing activity “slipping into a decline … to a degree only exceeded twice” – at the height of the pandemic lockdown and during the 2008 financial crisis.Likewise, European growth has <a href="https://www.reuters.com/markets/europe/euro-zone-business-growth-slowed-sharply-june-pmi-2022-07-05/">slowed</a> sharply to a 16-month low. Such slowdowns could reduce demand and lower energy prices. But, of course, they also will strain the Western alliance.The next six months will be critical, testing whether Europe can maneuver its way through the coming winter. In what Habeck <a href="https://news.sky.com/story/bitter-but-necessary-germany-turns-to-coal-to-replace-russian-gas-12636775">called</a> a “bitter” but “necessary” decision, Europe will need to burn more coal.In the difficult months ahead, there will need to be more informed collaboration between government and industry that manages the energy flows on which modern economies depend.© <a href="https://www.project-syndicate.org/">Project Syndicate</a>Daniel Yergin, Vice Chairman of S&amp;P Global, is the author of <a href="https://www.penguin.co.uk/books/320756/the-new-map-by-yergin-daniel/9780141994635">The New Map: Energy, Climate, and the Clash of Nations</a> (Penguin, 2021) and <a href="https://www.simonandschuster.com/books/The-Prize/Daniel-Yergin/9781439110126">The Prize: The Epic Quest for Oil, Money, and Power</a>, for which he won the Pulitzer Prize.Read more: <a href="https://www.nepalitimes.com/banner/fueling-nepals-economic-crisis/">Fueling Nepal’s economic crisis</a>, Sonia Awale

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5 reasons the energy crisis could deepen

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111413114/63722ef39c7e80680e0c24edjpeg.jpg" alt="" width="1280" height="852"/><figcaption>Photo: NEPALI TIMES ARCHIVE</figcaption></figure>Prime Minister Sher Bahadur Deuba was forced to sack Janardan Sharma this week, but only after his finance minister became a political liability because of sinking neck-deep in scandals.Instead of trying to resolve Nepal’s growing economic crisis, Sharma inducted yes-men with no finance background into the ministry, and ousted the Rastra Bank governor for blocking a money-laundering scam. He then involved an unauthorised ‘expert’ at a late-night budget drafting meeting to change tax rates, and later alleged deleted CCTV footage implicating him.Much of the credit for exposing Janardan Sharma goes to Nepal’s mainstream media which investigated his wrongdoings, as well as exposing corporate houses including the Chaudhary Group, Shanker Group, Saurabh Group and Jagadamba that stood to benefit directly from Sharma’s tax rebates.Deuba coddled his finance minister till the end despite growing criticism from within his Nepali Congress, as well as pressure from Sharma’s Maoist Centre party. All this meant that the prime minister and his finance minister took their eyes off the ball as Nepal’s economy started going into free-fall.This week Sri Lanka declared it did not have cash to import any more fuel, and officially declared bankruptcy. Nepal’s officials have said the country is not in the same debt trap, but there are many indications that the crisis is deepening.The clearest yet was Nepal Oil Corporation (NOC) asking the government this week to implement 10 austerity measures to reduce petroleum consumption, including by reimposing the two-day weekend, odd-even traffic rule, quota at filling stations, discouraging vehicle use, car pooling, and a ban on import of petrol and diesel vehicles.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111413114/63722ef69c7e80680e0c24eejpeg.jpg" alt="" width="800" height="565"></figure>Illustration: RABINDRALast week, the government reduced the tax on petroleum imports to reduce petroleum prices, but the NOC warned of “dire consequences” because it was running out of money.“Reducing gas prices by reducing taxes was absolutely of no use in the long run. They could have instead used tax money to promote and invest in sustainable measures,” says climate negotiator Manjeet Dhakal.He adds: “By reducing the tax the government is essentially abusing democracy by claiming to reduce the burden to the people in the guise of improving its chances in elections.”It is because of such short-sightedness that Nepal’s economy was in trouble long before Covid and Ukraine. The banking sector had a liquidity crisis because it had over-extended loans to real estate speculators. Stagnant overseas remittance, falling exports and a jump in imports had led to a growing trade deficit, and depleted foreign exchange reserves.However, some experts still believe that Nepal’s macroeconomic picture is sound, a healthy monsoon so far could mean a good rice harvest, and the INR-NPR peg cushions Nepal from the worst impact of the global crisis.They also say the fuel crisis provides Nepal with the perfect opportunity to accelerate the shift away from fossil fuels in transport, industry and households. Nepal needs to wean itself off petroleum not just to reduce its per capita carbon footprint, but to cut consumption of fossil fuels which now make up 20% of the total import bill.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111413114/63722ef89c7e80680e0c24efjpeg.jpg" alt="" width="1150" height="1488"></figure>In the last nine months, Nepal spent Rs218 billion importing petroleum products, which is 82% higher compared to the same period last year. This is nearly 20% of the country’s total imports, and is worth nearly double the income from all exports.Switching to electric public transport and battery vehicles to reduce the petroleum import bill by just 10% would save the county at least Rs21 billion a year.However, from July-December 2021, Bagmati Province alone saw the registration of 81,227 new vehicles, 75,573 of which were motorcycles and scooters. If they had been electric two-wheelers, fuel costs would have been reduced.“At this rate, we maybe fast approaching the fate of Sri Lanka and the only way ahead is maximising the use of domestically generated electricity primarily in the transport sector,” says Bhushan Tuladhar, board member of Sajha Yatayat which is starting electric buses in Kathmandu starting this week.“We have policies in place, but crucial details are missing such as how to incentivise electric buses, dedicated charging stations and coordinated management of public transport,” Tuladhar adds.Electric mass transit has long been identified as a cost-effective solution, and the government needs to facilitate loans for electric buses which are about five times more expensive than diesel ones, or subsidise them so that the private sector can invest in them.Industry experts are reworking Nepal’s Nationally Determined Contribution target submitted to the UNFCCC (Framework Convention on Climate Change) in 2021 with a particular focus on electric public transport.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111413114/63722efb9c7e80680e0c24f0jpeg.jpg" alt="" width="3214" height="2143"></figure>Photo: AMIT MACHAMASI/NEPALI TIMESThey have proposed an increase in sales of electric public transport to 60% by 2030, reduction in custom and excise duties for electric buses, grants and soft loans to procure them, and ensuring at least three provinces operate electric public transport by 2025.The other low-hanging fruit is a shift from LPG to electricity in households and restaurants, but transmission lines and distribution need to be upgraded so the grid can handle the load.In the Tarai, electric rickshaws are becoming popular, and municipal biodegradable garbage and crop residue can all be turned into compost to reduce imports of chemical fertiliser.All of this will also help Nepal meet its global climate targets set at Glasgow during the COP26 last year to achieve net-zero by 2040, and 45% forest cover by 2030.Nepal therefore needs to do its bit to reduce its petroleum imports to save both the economy and ecology. But that needs political will, which is sorely lacking during this election year.Says Bhushan Tuladhar: “If we don’t act even now, it will be too late. We need to work on energy, economy and environment simultaneously by involving both the government and the private sector.”Read more: <a href="https://www.nepalitimes.com/latest/sky-high-fuel-price-hits-nepals-tourism-airlines/">Sky high fuel price hits Nepal’s tourism</a>, airlines, Nepali Times

Sonia Awale

Fueling Nepal’s economic crisis

The monsoon has got bad press because Nepal’s tourism operators actively told visitors to avoid <a href="https://nepalitimes.com/opinion/managing-the-monsoon?%2F">the rainy season</a>. It is time to change that. The reason can be found right here in the vast alpine meadows of Central Nepal where this time of year you can walk on velvet grass of pastures abloom with delicate pink, red and yellow flowers as the mist rolls up the valley. There is no sound except the hum of bumble bees. &nbsp;&nbsp; There are dozens of places across high Nepal called Chaurikharka, which means yak pasture. But this particular Chaurikharka in Rukum East located at an altitude of 4,000m stands out for its serene beauty, rustic charm and bucolic setting. There is just the occasional chime of <a href="https://nepalitimes.com/here-now/when-yaks-go-so-does-culture">yak bells</a> in the distance, and the sharp whistle of herders corralling sheep. &nbsp;&nbsp; The grass shoots are so fragile that one hesitates to step on them, the rounded ridges appear and quickly vanish in waves of mist. With the<a href="https://nepalitimes.com/here-now/before-the-next-monsoon"> arrival of monsoon</a>, these meadows are a soothing shade of green dotted with millions of <a href="https://nepalitimes.com/review/the-anatomy-of-a-flower?%2F=">multi-coloured flowers</a>. Until very recently, it took a week or so to hike up to places like Chaurikharka, but with the expansion of the road network even to these far-flung mountains in the lap of Dhaulagiri, they are much more accessible. It is just a three-hour uphill from the Mid-Hill Highway on the border between Baglung and Rukum East.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16.jpg" data-media-id="editor_4" data-image-id="20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Purists would say that such easy access devalues the sanctity of these remote high meadows, but it also means more people will be moved to treasure the experience, appreciate <a href="https://nepalitimes.com/banner/natures-fragile-gift-to-nepal">the value of nature </a>so they can take steps to protect it.&nbsp; To be sure, the <a href="https://nepalitimes.com/here-now/deadly-monsoon-in-nepal-turns-deadlier">monsoon season can be challenging for road travel</a>. The roads are rough even at the best of times, and in the monsoon they become muddy and treacherous, often blocked by<a href="https://nepalitimes.com/news/monsoon-deluge-in-nepal"> landslides</a>. But that could be precisely the kind of adventure that the more intrepid visitors crave. Improved road connectivity has already made Chaurikharka and places like Badimallika &nbsp;and other sacred lakes in the mountains of western Nepal popular with domestic tourists. What is driving this traffic is the urge to go to exotic new places and share videos and selfies on social media. Several of Nepal’s travel vloggers have visited Chaurikharka and popularised the place, enticing followers on TikTok or YouTube to retrace their footsteps. But even as they become more popular, these fragile and once-remote places should be protected from over-tourism.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446.jpg" data-media-id="editor_8" data-image-id="20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446" data-rendition-name="original" width="1083" height="699" loading="lazy" alt="Visit Nepal in the monsoon NT"> </figure>  <h2>INCREASING FOOTFALL</h2> Chaurikharka is located in Bhume Rural Municipality of East Rukum, near the scenic valley of Dhorpatan in Baglung district. Even in the <a href="https://nepalitimes.com/banner/monsoon-culture">middle of the monsoon</a>, there is a steady stream of Nepali hikers trooping to these high pastures – especially during festival days like Saune Sankranti which this year was on 17 July and actually marks the auspicious beginning of the monsoon here. “This year the rains have not been as heavy and there have been some clear mornings when we could see everything from Dhaulagiri to Machapuchre,” says Khageswar Bhandari, who trekked up here from the road. “The flowers, the greenery and the snowy mountain views make this an incredibly unique place.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9.jpg" data-media-id="editor_10" data-image-id="20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9" data-rendition-name="original" width="2048" height="1152" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Chaurikharka is worthwhile to get to in any season, but it has a different charm during the monsoon. Word has spread and because it is now easy to get to from Baglung or even Pokhara, people have been flocking here.&nbsp; “Holidays and Saturdays see the largest crowds, with up to 500 visitors every day,” says ward chair Mankaji Pun of Bhume.&nbsp; There was a time not too long ago when local herders brought sheep, goats, cows, buffaloes, horses, and mules to graze here during the monsoon. Although there are still livestock around, animals have been replaced by visitors taking selfies. Read also: <a href="https://nepalitimes.com/here-now/the-monsoon-and-nature-s-arithmetic">The monsoon, and nature’s arithmetic</a>, Tom Robertson Ward Chair Pun says infrastructure development is his main priority. A foot trail to Chaurikharka was built last year by the Tourism Division Office in Kohalpur, but access via the Raniwas-Koipa road section still remains challenging.&nbsp; “If we get more budget, we can improve the road and facilities to make Chaurikharka the main tourist attraction of this region,” says Bhume Municipality Chair Hom Prakash Shrestha. “After that, we hope to promote Chaurikharka as a top tourist spot.”&nbsp; Economic activity is also picking up with the arrival of visitors, but there seems to be a need to manage the makeshift sheds made of corrugated sheets that spoil the beauty of the place. Tea shops and lodges are also available but facilities are basic. Kuldeep Neupane took a three-day trip from Ghorahi in Dang to visit Chaurikharka recently, and says: “This is an ideal trip to make a quick getaway and let nature recharge your mind and body. And it is much more fun with a tent, to watch the sunrise over the Himalaya or the mist blowing in.”

Visit Nepal in the monsoon

Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

Nepal’s bubble economy

The final investigation report on the crash of a Saurya Airlines jet on 24 July 2024 at Kathmandu airport has revealed flaws in the carrier’s technical operation procedures, poor monitoring by the Civil Aviation Authority of Nepal (CAAN) and gaps in the airport’s emergency response. Eighteen people including a child were killed, and only the captain survived as the plane plunged seconds after takeoff, crashing within the airport perimeter. This was the latest in a series of aircraft accidents in previous years, and further tarnished Nepal’s already poor aviation safety record and contributed to the country being retained in the EU’s air safety list. &nbsp;&nbsp;&nbsp; The circumstances in the Saurya crash were different from the Yeti Airlines crash in Pokhara in January 2022 that killed all 72 on board, and two Tara Air crashes in February 2016 and May 2022 on approach to Jomsom that together claimed 45 lives. However, all four tragedies were a result of negligence of carriers and crew, failure to follow procedures, regulatory slackness, and overconfidence. The Saurya crash, especially, was a glaring example of how an ailing airline broke its own rules to allow passengers, including non-employees, a joy ride to Pokhara on a maintenance ferry flight. CRASH REPORT The Final Investigation Report prepared by the Aircraft Accident Investigation Commission and released on the first anniversary of the crash last week carried a long list of rules that were ignored or broken, and of regulatory failure. The first mistake was to cram spares, tools and inflammable chemicals needed for the aircraft’s C-Check in Pokhara into the cargo hold flouting its own ground handling procedures.&nbsp; There was no check-in of passengers, some of whom were not even employees – even though regulations say only flight and maintenance crew should be on board a maintenance positioning flight. Many brought their own luggage into the plane and stored it unsecured in the cabin. There was no flight attendant to give a safety briefing to passengers. The load and trim charts given to the flight crew were rough estimates, and the total takeoff weight of the plane was 18,300kg plus or minus 200 kg. That would still have been all right, but there was a glaring mistake in the speedchart Saurya pilots were using to calculate the minimum takeoff speed (known as VR), and it had been wrong ever since the 21-year-old aircraft entered service with the airline in 2017. FAULTY DATA&nbsp; The Commission probed Flight Data Recorder inputs from previous takeoffs of the Canadian-built CRJ200-LR in 2023-2024 and found that the undetected error in the speedchart had caused the plane to pitch up at an abnormal rotation rate at least 18 times on previous takeoffs.&nbsp; Any rotation rate more than 3°/sec is regarded as unusual. But on at least two occasions, this aircraft with tail number 9N-AME had rotation rates of 5.8°/sec and 5.5°/sec, the second one was when the pilot who survived was flying in March 2024.&nbsp; On this particular day, the plane’s rotation rate was 6.5°/sec, causing it to go into a deep stall soon after takeoff, the Commission report said. Essentially, the plane was not flying fast enough down the runway to take off safely.&nbsp; It is not yet clear whether excess weight, unsecured luggage, wrong centre of gravity were also factors, but relying on a faulty speedchart for the given takeoff weight, the captain flying pulled back on the yoke before the plane had reached takeoff speed and at a pitch angle that was too steep. The investigation report says the plane then went into a deep stall and started banking right with the stick shaking. At this point, the flight officer on the right hand seat is heard on the cockpit voice recorder saying: “Whoa, whoa, whoa. Sir, Sir, Sir…” It then banked left before the pilot flying turned the plane sharply to the right again in an evasive action to avoid the parking aprons of the international and domestic terminals. Had he not done so, there would have been a disaster of a much greater magnitude at Kathmandu airport that day. The plane scraped the runway with its right wingtip, collided with a container having helicopter spare parts, and plunged into a gully east of the runway, exploding in a fireball. The investigation also noted that the impact forces seemed to be survivable for some occupants. The fire trucks took unnecessarily long to reach the site even though it was inside the airport perimeter. The absence of an ICAO-standard runway strip, inadequate rescue drills, lack of training, and a blocked emergency service gate leading to the crash site were cited as other factors. &nbsp;&nbsp; <h2>Timestamp of a Disaster</h2>  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725.jpg" data-media-id="editor_0" data-image-id="20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725" data-rendition-name="original" width="778" height="826" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:10:34 - The Saurya Airlines CRJ200 on the takeoff roll from runway 02. It had a takeoff weight of about 18,300kg, but the pilot’s speedcard had a previously undetected mistake about the minimum takeoff speed. 11:10:55 -The plane with tail number 9N-AME goes into deep stall soon after takeoff because it does not have enough speed to lift its weight. The plane also has an abnormally steep nose-up attitude.&nbsp; 11:11:03 - Without enough speed to generate lift, the plane banks right, then left and right again in CCTV photos taken from the domestic apron (below). If it had not banked right, it could have hit the aprons and terminal buildings. Seen parked is Saurya’s other CRJ200 with tail number 9N-ANM.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd.jpg" data-media-id="editor_1" data-image-id="20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd" data-rendition-name="original" width="770" height="555" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:11:08 - The plane scrapes the runway with its right wingtip, and falls into the gully. The captain is thrown off the left side of the cockpit and survives. 11:11:15: Plane explodes in a fireball inside the airport perimeter. Firefighters take time to reach the site because of lack of access road and a blocked gate. Read the full investigation report <a href="https://www.tourism.gov.np/files/9N-AME%20AIC%20Final%20Report.pdf">here</a>.

Flouting rules caused Saurya tragedy

American artist Peter Makela was in Nepal in 2022 on a Fulbright scholarship when he experienced the Matya festival in Patan in which devotees made the rounds of the city’s shrines.&nbsp;
He joined the procession, walking through 2,600 stupa and 140 bahal of the town. That immersion left a lasting impression.
As part of Gallery Mcube’s international residency program in Patan, he put his inspiration to canvas in the exhibition Yala Yatra: Walking, Working, Worshipping. The exhibition also coincides with this month’s Matya festival.&nbsp;
Makela has visited Nepal often in the past 11 years but he mostly stayed in and spent his time around Boudha. “This time I stayed in Patan, put the sites I wanted to visit on my map, and off I went,” he tells us. “Each of my artwork is inspired by the stupas and shrines in Patan that I visited.”
The stupa and Ganesh are recurring motifs in his watercolours, and the elephant gods are located in chaityas — reflecting the interplay and blending of the Hindu and Buddhist faiths in Kathmandu Valley.&nbsp;
The stupas and Ganesh are painted in vivid red, yellow, blue and green against abstract backgrounds meant to represent the sky.
“I use the sky as a backdrop because the sky has no border,” says Makela. “The four colours represent the four elements, the different Buddha families and also lights bouncing off of a rainbow.”
The use of just four colours for all the artwork stands out, and combined with the absence of heavy canvases, frames or stands render Makela’s art striking in its simplicity.&nbsp;
The Ganesh is always holding something and the art also portrays the elephant god’s sacred vehicle, the mouse.
While his vibrant stupas and Ganesh reflect the tangibility of Patan’s tradition and heritage, it is as if the backdrops with their shades of grey and red and yellow capture the soul of the city’s shrines.
“If you look closely, there is a sense of form and formlessness at the same time,” he says.&nbsp;
Makela walked 108 kora around the shrines during his exploration of the town, and in the process developed a spiritual connection with Patan’s heritage and traditions.&nbsp;
The exhibition connects with visitors on a deeper, more spiritual, level as well. And with it, they feel a sense of pride as well as the need to urgently preserve Patan’s heritage for future generations.
“Peter’s inclination and approach towards Nepali art and culture is fascinating, and it reflects in his work,” says Mcube curator Manish Lal Shrestha, whose international artist residency program promotes Nepal’s cultural heritage. &nbsp;&nbsp;
Yala Yatra: Walking, Working, Worshipping
1-5 August&nbsp;
10AM-7PM
Gallery Mcube, Patan

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