Much like in his <a href="https://archive.nepalitimes.com/article/Nepali-Times-Buzz/the-rana-reign-a-recap-of-history,3751">previous book Singha Durbar</a>, Sagar SJB Rana relives the political and physical landmarks along Nepal’s tumultuous road to democracy spanning 70 years in his sequel, Kingdom Lost. &nbsp; Chandra Shumsher Rana’s former palace at Singha Darbar was a symbol of the feudocracy of <a href="https://www.nepalitimes.com/here-now/inside-story-of-nepal-s-rana-dynasty">Nepal’s ruling clan</a> into which Sagar Rana was born. Even after 1951, Singha Darbar continued be the epicenter of power: from the brief experiment with democracy in 1959, three decades of Panchayat, the Maoist conflict, the federal republic right to the present.&nbsp; In <a href="https://www.amazon.com/KINGDOM-LOST-NEPALS-DEMOCRACY-1951-2008-ebook/dp/B0BZ8PBK6K">Kingdom Lost: Nepal’s Tryst with Democracy 1951-2008</a>, Rana chronicles the second act after his clan left the stage. He dives right in with a description of the euphoria on the streets as Nepalis tasted freedom for the very first time in February 1951.&nbsp; But a Rana-NC Cabinet with ailing Mohan Shumsher as prime minister and B P Koirala as home minister was a fraught coalition. King Tribhuvan and Crown Prince Mahendra across town at Narayanhiti Palace were getting impatient.&nbsp; Kingdom Lost is set in other historical landmarks that we pass every day in Kathmandu. <a href="https://archive.nepalitimes.com/article/business/small-is-beautiful-boutique-hotels,3647">Baber Mahal</a>, the art and craft hub which was once the home of Bharat Shumsher (Sagar’s brother) who led the Gorkha Dal before its merger with the Nepali Congress (NC). Or Lalita Niwas, <a href="https://nepalitimes.com/here-now/crime-and-or-punishment-in-nepal">today synonymous with corruption in high places</a>, which was nationalised by King Mahendra after 1960 because it belonged to another liberal Rana, Subarna Shumsher.&nbsp; Another political landmark is Sundarijal Jail where BP spent nearly a decade in his two-room lock-up, played badminton in a lawn within tall walls topped with an electrified fence. Here, BP wrote 11 of his 12 books, as well as a diary in English when he returned to Nepal from exile in 1977, which <a href="https://archive.nepalitimes.com/news.php?id=6932">this paper serialised</a> every fortnight from 2001-2003.&nbsp; Today, just as <a href="https://www.nepalitimes.com/banner/nepal-museums-reopen-after-8-months">Naryanhiti is a museum to the Shahs</a>, Sundarijal is a B P Museum. The rooms are as they were with the bed in which he died in Chabahil, low wicker chairs from his time in exile in Banaras. This detention centre for political prisoners after 1960 was once surrounded by forest and farms, but is today over-run by an expanding metropolis.&nbsp; The museum also houses the Royal Nepal Airlines DHC-6 Twin Otter 9N-ABB which was <a href="https://en.wikipedia.org/wiki/1973_Nepal_plane_hijack">hijacked on a flight from Biratnagar to Kathmandu</a> in 1973 by NC cadre to loot INR 30 million for the anti-Panchayat struggle. The plane carried passengers for another 41 years till it was damaged in a crash in 2014, was patched up and brought here as a dusty memorial to the heist.&nbsp; The BP Museum, Lalita Niwas, Baber Mahal, Singha Darbar all come alive while reading Kingdom Lost. They are like historical milestones to Sagar Rana’s chapters on BP’s brief 18 month stint as prime minister, <a href="https://www.nepalitimes.com/news/putsch-ek">Mahendra’s coup</a>, the Panchayat years, constitutional monarchy after 1990, the conflict, royal massacre of 2001, and the first Constituent Assembly. Two players stand out in the book: <a href="https://www.nepalitimes.com/banner/america-nepal-and-the-royal-coup">BP Koirala and King Mahendra</a>. The latter has been vilified for the coup and the Panchayat autocracy. But Mahendra also steered Nepal in a risky geopolitical tight rope between two giant neighbours not friendly to each other, and the Cold War.&nbsp; <div class="embed-block"><iframe src='https://cdn.knightlab.com/libs/timeline3/latest/embed/index.html?source=17xDdRdRNNP3eFwLaUxm7NfpXZ99fLo8HkhDBmkVjDSI&font=Default&lang=en&initial_zoom=2&height=650' width='100%' height='650' webkitallowfullscreen mozallowfullscreen allowfullscreen frameborder='0'></iframe></div> Mahendra deposed BP, saying “Nepal is not big enough for the two of us”, but the king and prime minister were not unlike each other in terms of their nationalism and statesmanship. While turning the pages of the first half of Kingdom Lost, the reader is forced to ponder: How would Nepal have fared if the two were on the same side?&nbsp; Sagar Rana’s book is replete with examples of how little Nepal’s politics has changed in the last 70 years. It has always revolved around a few men: the Ranas, the Shahs, the Koiralas, the alpha males of the three main parties, the Army, the Maoists.&nbsp; And off stage, there is always India. As early as 1951, BP described India’s first ambassador CPN Singh as believing that he was “greater than the king”, and when Jawaharlal Nehru in 1960 quizzed BP about why Nepal was establishing diplomatic relations with Israel, he replied ‘we are a sovereign nation, we can be friends with anyone we want’. No wonder New Delhi did not mind when Mahendra staged the 1960 coup.&nbsp; The NC also launched a three-year armed struggle against Panchayat in the early 1960s from India and it nearly compromised Mahendra’s position before China attacked India and started the Sino-Indian War. India pressured Subarna Shumsher to discontinue border raids and Mahendra was able to regain control of the situation. India’s role in the ultimate downfall of monarchy in 2008 and mainstreaming of the Maoists in 2006 bear all the hallmarks of the same modus operandi in 1951. Many insiders still believe that if Gyanendra had played his cards rights to reassure Delhi, he would not have been ousted. In its dealings with the Maoists, India was playing both sides. Sagar Rana also gives us a blow-by-blow of the triangular tension between the political parties, the Palace and the Army. And even within the Palace there was liberal King Birendra who had to stave off hardliners. His account of the <a href="https://archive.nepalitimes.com/news.php?id=18246">massacre of royals on 1 June 2001</a> rightly concludes that Crown Prince Dipendra originally intended to only kill his father so he could become king himself, marry whom he wanted, and set the country right. The <a href="https://www.nepalitimes.com/banner/all-is-fair-in-war-and-peace">Maoist conflict</a> also brought out the dual role India played in allowing sanctuary to leaders, including Nepal’s current prime minister. And the tug-o-war between Delhi Darbar and Naryanhiti Darbar for influence over the Maoist leadership. The underlying message in Kingdom Lost is that there were puppeteers in control, and ultimately it was the Nepali people who were caught in the crossfire.&nbsp; The dislike of India’s Congress for Nepal’s royals stemmed ostensibly from Sonia Gandhi being refused entry into Pashupati in 1984 for not being a Hindu. Later, the Congress-Left government in Delhi engineered Nepal turning into a secular republic – despite its earlier ‘twin pillar’ policy.&nbsp; But since 2014 the <a href="https://www.nepalitimes.com/news/red-to-saffron">Hindu-right BJP is pushing to turn the clock back and restore Nepal as a Hindu state</a>, although maybe not the monarchy. It seems as if every time there is a change of government in India, we in Nepal have to also change our system.&nbsp; But the People’s Movement of 2006 is also a testament to politics in Nepal sometimes having its own dynamics that even India cannot control. On the morning of 21 April 2006, King Gyanendra under pressure from India agreed to hand over executive powers to a PM recommended by the agitating parties. But by then the street demonstrations in Kathmandu had already overtaken India’s roadmap, <a href="http://archive.nepalitimes.com/issue/295">forcing Gyanendra to restore Parliament</a>.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2023071213070_47685990669845e7b37a0e49ecac5aa84856ff990a4f0a600c0af7f6f9d0ca3e.jpg" data-media-id="editor_15" data-image-id="2023071213070_47685990669845e7b37a0e49ecac5aa84856ff990a4f0a600c0af7f6f9d0ca3e" data-rendition-name="original" width="674" height="404" loading="lazy" alt="Kingdom Lost book review"> </figure>  In the last segments of Kingdom Lost, the reader is swept by feelings of déjà vu. Everything that is happening today in Nepali politics seems to have all happened before. The powerful but now defunct Nepal Communist Party post-2018 <a href="https://www.nepalitimes.com/news/nepal-ruling-party-on-verge-of-split">fell victim to the power struggle</a> between K P Oli-Pushpa Kamal Dahal when Oli refused to keep his end of the bargain to rotate the premiership. <a href="https://archive.nepalitimes.com/news.php?id=16912">Girija Prasad Koirala</a> and Surya Bahadur Thapa had a similar gentlemen’s agreement in 1998 to take turns being PM, but Girija played foul.&nbsp; The late 1990s was also rife with coalitions between parties of diametrically opposing ideologies, just like the jumbo coalition we have now. One wonders what BP would have made of the <a href="https://www.nepalitimes.com/here-now/the-end-of-ideology-in-nepal">Nepali Congress and its alliance with the Maoists</a>. What would have been his take on the 2015 Constitution? Despite being a staunch NC member himself, Rana leaves it to us to make our own conclusions. Nepal’s history is punctuated by long political struggles, fleeting moments of euphoria at freedom regained, then of chances squandered by greed and ambition of those in charge. Kingdom Lost records those milestones: 1951, 1959, 1990, 2006, 2015 … While pulling back from cliff edge in one political crisis after another, <a href="https://nepalitimes.com/editorial/institutionalised-inequality">pre-existing structural problems</a> of poverty, exclusion and inequality have not been fixed. Kingdom Lost is a stark reminder that the very politicians who once fought for democracy are undermining it today.&nbsp; Sagar Rana’s two books are must-reads for younger Nepalis to better understand the context behind contemporary Nepali politics since, as Rana quotes Robert A Heinlein, ‘a generation that ignores history has no past and no future’. <div class="embed-block"><iframe width="560" height="315" src="https://www.youtube.com/embed/-0masX9G7ok" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe></div> Kingdom Lost stops in 2008, and much water has flown down the Bagmati since then. Sagar Rana should add a third book chronicling Nepal’s rocky transition to peace and federalism, the <a href="https://www.nepalitimes.com/opinion/comment/nepal-s-transitional-justice-and-the-west-s-recalibration">stalled transitional justice mechanism</a>, the <a href="https://www.nepalitimes.com/news/nepal-s-contentious-constitution-day">new Constitution</a> and the <a href="https://www.nepalitimes.com/editorial/rise-of-the-independents">rise of alternative politicians</a>. That would make a fine trilogy to set the records straight. School textbooks ignore Nepal’s political history, do not even mention the Maoist conflict, or are filled with one-dimensional hollow symbols of nationalism. The Ranas used to be portrayed as bad in the curriculum, now Mahendra and the Shahs are villains. It needed a member of the Rana clan to have a dispassionate, yet staunchly democratic, take on Nepali history.&nbsp; Sagar Rana is the great-grandson of Prime Minister <a href="https://www.nepalitimes.com/editorial/1923-2023-whsle7yp">Chandra Shumsher</a>, grandson of hardline general Baber Shumsher, son of educationist Mrigendra Shumsher and <a href="https://www.nepalitimes.com/here-now/a-brothers-tribute-to-bharat-shumsher">brother of Bharat Shumsher</a>. This lineage gives the author intimate knowledge of the often behind-the-scenes struggles in the corridors of power. This book is a tribute to those who fought for the freedoms that we take for granted in Nepal today, even when countries in the neighbourhood <a href="https://www.nepalitimes.com/news/nepal-should-be-open-for-south-asia">turn authoritarian and intolerant</a>. The Nepal they envisioned is the one we can still be.&nbsp;

Sonia Awale

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Kingdom lost, republic gained

With Saturday's deadline on Malaysia’s announcement of new criteria for selecting private recruiting agencies for migrant workers having lapsed, Nepal and Bangladesh have rejected the conditions.
The Malaysian move three weeks ago came in the aftermath of deadly GenZ riots in September, when Nepal’s interim government does not have designated heads in the Foreign Ministry and the Labour Ministry.
Interim Prime Minister Sushila Karki instructed the Labour Ministry to examine the implications of the standards and recommend appropriate steps to address them, but it has said it cannot send Nepali workers to Malaysia based on those criteria.
“In line with Nepal’s foreign employment policy and regulations, we are currently unable to accept or implement the proposed criteria,” says Pitambar Ghimire, spokesperson at the Ministry of Labor, Employment and Social Security in Kathmandu.
In response to the government’s request for their opinion on the Malaysian stipulation, the Nepal Association of Foreign Employment Agencies (NAFEA) has also flatly rejected the criteria, saying it could create a harmful syndicate and restrict fair competition, violate Nepal’s Constitution and laws, and increase recruitment fees that workers must pay.
On 25 October, the Malaysian Ministry of Foreign Affairs sent letters to the governments of Nepal, Bangladesh, Burma, Pakistan and India with 10 criteria meant to ‘rationalise the number of licensed private recruitment agencies permitted to facilitate recruitment and placement of workers to Malaysia’.
The proposed criteria include: at least five years of operating experience, deployment of 3,000 workers in the past three years of operation, experience sending workers to at least three countries, valid licenses and good conduct certificates, five employer testimonials, operating their own training and accommodation centres, and even a requirement for the staffing agency to have a 10,000 sq m office maintained for three years.
“We have communicated our views to the Ministry of Foreign Affairs, and have proposed discussing various labour related matters with our Malaysian counterparts diplomatically through bilateral dialogue and negotiations including renewal of the Nepal-Malaysia labour agreement,” Pitamber Ghimire said.
NAFEA has urged the government to prevent this measure from moving forward using diplomatic channels, and has held &nbsp;several gatherings and press conferences opposing the proposal since the Malaysian letter was received three weeks ago.
“We have taken commitment letters from members that they will not be engaged in activities related to the syndicate,” said Sujit Shrestha of NAFEA. “And if they break the commitment, they will face consequences including the revocation of their NAFEA membership. These letters also send a strong message to the government that this is irrevocably and collectively rejected by the industry.”
Bangladesh has also not accepted the proposal despite the 15 November deadline to send a list of recruiters that meet the criteria. That in itself would have been an impossible task to complete to begin with even if the government had accepted the proposal.&nbsp;
According to media reports, Bangladesh has sent a letter to the Malaysian government requesting that three of the proposed criteria be relaxed. This includes flexibility regarding the requirements for a 10,000 sq ft office, a dedicated training center, and the condition of having deployed 3,000 workers in the last five years. Despite the official request to Malaysian authorities, the Bangladeshi Government has also been collecting applications from recruiters who meet Malaysia’s proposed criteria, raising confusions about the contradictory stance.&nbsp;
Just like NAFEA, the recruitment association in Bangladesh, the Bangladesh Association of International Recruiting Agencies (BAIRA) has also outright rejected the proposal including in a letter to the Bangladeshi government, calling the criteria ‘unprecedented and exclusionary, unreasonable, discriminatory and syndicate-driven &nbsp;that would effectively disqualify 99% of legitimate agencies from participation’.&nbsp;
Now that the ball is back in Malaysia’s court and the proposal has not gained much support from two of the major origin countries, it will be interesting to see how they respond.

Nepal, Bangladesh reject Malaysian conditions

The very first frame in The Lama’s Son starts with a vision of Shangrila and the quest of a mythical utopia in the Himalaya when the rest of the world is crumbling away. It is also the personal search of filmmaker Kesang Tseten, but what he finds there are adherents of the Bon Po faith clinging to the last remnants of a culture as it erodes away like the sandstone cliffs of Mustang. “It was while editing the documentary that the story became distilled: how does what we see in the high Himalaya relate to the notion of the Shangrila idyll that especially the West ascribed to them,” asked Tseten during a recent trip to Kathmandu from Berne where he now lives. He continued: “Often and perhaps rightly criticised as an orientalist construct, I wondered if there was any basis at all to the Shangrila notion, and I hung the film on that idea.”&nbsp; Tseten takes us to the vast vistas of Mustang and Dolpo, a landscape of his Tibetan ancestors. This is as much an intimate documentation of families on Nepal’s Himalayan rimland torn between remoteness and globalness as it is about Tseten’s own quest for rootedness.&nbsp; We start from Lubra, a 3,000m village in Mustang the 15 households of which follow the Bon faith. Lama Tsultrim is from a 900-year-old lineage of the animist faith and an exponent of the tradition that is slowly being subsumed first by Buddhism and now modernism. For Tseten, the material is familiar, and not at all exotic as it is for non-Nepalis and indeed for many urban Nepalis. Bon, founded in Tibet, predates Buddhism, but over time, the two religions have come to resemble each other.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251113111156_ecf8148fbaa17b93c81ddfa3ed244bed266e3ef6af0cd5e6ca7b64c181b97d45.jpg" data-media-id="editor_0" data-image-id="20251113111156_ecf8148fbaa17b93c81ddfa3ed244bed266e3ef6af0cd5e6ca7b64c181b97d45" data-rendition-name="original" width="1920" height="1080" loading="lazy" alt="The periphery cannot hold NT"> </figure>  ‘Both believe in karma, rebirth, and that humans can become enlightened. Nature and spirits are predominant in Bon, and rituals are what keep them benign and alight,’ says Tseten, who rarely narrates in his documentaries. “This is not really a personal film as such, but it has a point of view,” Tseten said. “I decided to have a voice-over on this one and cast my presence in the film.”&nbsp; Lubra's Lama Tsultrim is called upon to perform rituals from Kagbeni and other villages, but there is no one to continue the tradition after him, which is passed from father to son. Lama Tsultrim’s son (hence the title of the film) is a sushi chef in New York and has been gone for 20 years. “The Lama is like a setting sun, his son should come back and take over his father’s responsibilities,” says a local youngster chatting with friends. “If he dies tomorrow, where do we go? We can’t just light butter lamps ourselves to the gods.” It is not only the Lama’s son who has left. The village is nearly empty, and more are planning to leave. One of them is Chimi, a teacher who will be joining her fiancé who is an Uber driver in New York. Her brother is already in Hong Kong. In Lo Manthang a local is back home for a three-month vacation after being in New York for 12 years. A shopkeeper was in Japan for several years, and has returned. “Everything has changed, our language, our tsampa, our religion. We used to work and live together, now the children live separately,” says a middle-aged woman. “There are roads now, and vehicles stop right outside our house, but what’s the point? No one stays home.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251113111156_47b4c4984fa33e42791b16dba1f078aaa7f9d8bd51ca3bfd5415b436c3a0bf2c.jpg" data-media-id="editor_1" data-image-id="20251113111156_47b4c4984fa33e42791b16dba1f078aaa7f9d8bd51ca3bfd5415b436c3a0bf2c" data-rendition-name="original" width="1920" height="1080" loading="lazy" alt="The periphery cannot hold NT"> </figure>  Like most of Tseten’s films, The Lama’s Son is an honest documentation of a place and people whose lifestyle, culture and heritage cling precariously to the past. In Dri village we come across local women filling their buckets with water. Tseten asks them why the village is so empty: “Where is everyone?” The women reply that they are “here, there and everywhere”. Then it is their turn to ask Tseten about where he lives and what he is doing in their village. Migration is a recurring theme in Tseten’s documentaries from We Corner People, In Search of the Riyal, or Saving Dolma. His previous film Diversity Plaza documented the lives of Nepali and Tibetan emigrants in Jackson Heights in the borough of Queens in New York.&nbsp; Diversity Plaza was shown at DOC NYC in 2023, and The Lama’s Son will be one of only two Asian films shown next week at one of the biggest documentary film festivals in the world.&nbsp; “The Lama’s Son is not loud, not attention grabbing but intimate, so I was surprised they chose a quiet film for a big, flashy event,” Tseten told us. In Lama’s Son, we also see how climate breakdown is impacting Nepal’s trans-Himalayan regions. Lama Tsultrim shows us the aftermath of a recent glacial flood that swept away houses and fields. The debris-covered farms are as hard as cement.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251113111156_c82126a3c2dc4577b99beb9bef20aafa16f532a3f41e59caea17c93914c59fff.jpg" data-media-id="editor_2" data-image-id="20251113111156_c82126a3c2dc4577b99beb9bef20aafa16f532a3f41e59caea17c93914c59fff" data-rendition-name="original" width="1920" height="1080" loading="lazy" alt="The periphery cannot hold NT"> </figure>  The nearby village of Dhey at 3,900m is a high and dry cold desert. Farmers get one crop in a year, but the springs have gone dry and there is no snow in winter. So they are relocating to New Dhey, closer to the road. We follow Kesang Tseten to Samling in Dolpo, which at 4,200m is another Bon village. Locals are preparing for the Walchu festival in which Lama Sherrab carries out elaborate rituals to appease spirits that can turn malevolent. But unlike Lama Tsultrim in Lubra, Lama Sherrab has a community of lamas to help him, including two sons, one of whom will eventually take on his role. We move on to the adjacent village of Bicher and listen in as locals talk about how despite being dirt poor, they thrive in scarcity and are resilient. “We wear sheepskin, eat stew and yak meat, and drink wine. But we are very poor, we have nothing. Look at how dirty our clothes are. We may be dirty, but we have few illnesses,” says one. But even here in Upper Dolpo, a week’s walk from the nearest road, things are changing. There are mobile phones, readymade clothes and instant noodles.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251113111156_d1472165cfa9ffa6edbf72de59167e8cbddcc2bf4a7928f7830e099966259a78.jpg" data-media-id="editor_3" data-image-id="20251113111156_d1472165cfa9ffa6edbf72de59167e8cbddcc2bf4a7928f7830e099966259a78" data-rendition-name="original" width="1920" height="1080" loading="lazy" alt="The periphery cannot hold NT"> </figure>  At the Walchu ritual, Tseten watches men and women with hand-woven blankets and down jackets sing and dance after the main ceremony. He narrates: “Bon is sustained by a way of life that fosters a fine but fragile balance between nature and people, where humans come before gods. This is what lies at the heart of Shangrila if there is such a thing.” The film then takes us half-way around the world to a Bon centre in New York, but (spoiler alert) the eponymous Lama’s son never appears. He did not want to be filmed, but it makes for a more powerful portrayal of the life of emigrants forever trapped between two worlds. “Bon villages may be in danger, but the Bon has spread widely across the world,” narrates Tseten, a director who likes to call his storytelling ethnographic, and avoids coming to an apt conclusion. Lama Sherrab’s words after the Walchu ritual is a perfect segue:&nbsp; “Whether you say om mani padme hum (in Buddhism) or matri mi yu (in Bon) they are the same. When you go up, it’s the same heavenly realm. If you go down, it’s still the lord of death who awaits. There isn’t a separate heaven and hell for Buddhists and Bon, it has to be the same for both.” &nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025111312110_82817ef48840bb6baa1732d5b0b90c90ead2f9bd9eb0c289940fa61d8058de8d.jpg" data-media-id="editor_4" data-image-id="2025111312110_82817ef48840bb6baa1732d5b0b90c90ead2f9bd9eb0c289940fa61d8058de8d" data-rendition-name="original" width="7087" height="10004" loading="lazy" alt="The Lama's Son NT"> </figure>  The Lama’s Son by Kesang Tseten, 2025 Shunyata Films To be screened at DOC NYC 16 November at 2:05PM local time, Online: 17-30 November Details <a href="https://www.docnyc.net/film/the-lamas-son/">here</a>.

The periphery cannot hold

Nepal’s September protests and regime change created two major unexpected costs that Prime Minister Sushila Karki’s interim government is scrambling to deal with: reconstruction of destroyed government buildings, and holding elections on 5 March.
The buck stops at the desk of economist and former bureaucrat Minister of Finance Rameshore Khanal about where and how to spend limited resources.
“Rameshore-ji is a fresh face and the right person for the role. He is capable and interested, and he knows the system,” says Kalpana Khanal of the Policy Research Institute (PRI).
But Minister Khanal has to grapple not just with the immediate budgeting needs for elections and reconstruction, but also initiate longer term measures to restore investor confidence badly dented by arson and vandalism of 9 September, and mend the economy.
Immediately after taking office, he had set up a three-member task force to cut programs and free up budget to meet immediate expenses.
“We have to hold elections and we have to reconstruct. Both need money, and they are equal priorities for us,” said Ministry of Finance spokesperson Tanka Prasad Pandey. “It is important to find these funds internally, and not look to aid from abroad.”
But Minister Khanal flew into heavy flak last week for his decision to restore investor confidence by giving a strategic capital gains tax break to Nepal’s only foreign private equity fund.
The Mauritius-based Dolma Impact Fund has invested venture capital into Nepal’s hydropower, construction and biotech sectors as well as solar farms and hospitals. It said in a statement that its capital gains are only taxable in Mauritius as per its double-taxation avoidance agreement with Nepal, which predates and overrides the Income Tax Act of 2002 subsequent to the Treaty Act 1990.
“When you have investors from all over the world, you have to choose a domicile and Mauritius is probably the most popular for development finance institutions due to strong governance, AML, and treaties with developing countries like Nepal,” Tim Dolma Investment told Nepali Times on the phone from London.
He added: “Last June we applied for the government to uphold its treaty with Mauritius which under all country laws including Nepal treaty act supersedes any disagreement with domestic laws. But there were delays. It was when the new government decided to uphold the treaty that the whole hoo-hah started.”
Leaks to the media possibly by bureaucrats fearful of being hauled over the coals by the CIAA has set financial circles abuzz for the past week. The Internal Revenue Office refused to grant the exemption, citing the 2002 Act.
Prime Minister Sushila Karki asked Chief Secretary Eaknarayan Aryal for clarification, and learnt that the Cabinet’s decision was not official since it was not recorded in the minutes.
“We were raising a fund that could have brought $1 billion in for energy and we had to stop it due to the reputational damage to Nepal by not upholding an international treaty,” said Gocher.
Gocher added: “Under Nepal’s Treaty Act, if there is ever disagreement between an international treaty and domestic law, then international treaty takes precedence so it is crystal clear and the way international treaties are dealt with all over the world.”
Some experts worry that gifting the fund such perks can set a dangerous precedent and a loss in tax revenue. Professor and economist Pushkar Bajracharya says: “The most important thing is to have a consistent policy about tax cuts and not do it piece-by-piece. Besides, the evidence just isn’t strong that tax cuts lead to higher investment, or more jobs.”
Others hark back to the capital gains dispute of the sale of Ncell ownership, which went to the Supreme Court and all the way to the international tribunal in The Hague.
Khanal has said privately that he is responding to the damage to Nepal’s investment climate from the dramatic visuals beamed worldwide of an international hotel chain and government buildings set ablaze in September. Western embassies are also said to be lobbying to allow Dolma tax exemption and smooth profit repatriation.
There are tradeoffs. Private equity funds like Dolma could funnel foreign funds more efficiently towards successful Nepali companies than the government, which is slowed down by many layers of bureaucracy. The downstream multiplier effect of such investments would outweigh taxes to the government since much of it is misused and wasted.
For example, the government is not taxing income in FY 25/26 generated by the US-funded $697 million Millennium Challenge Corporation (MCC) projects to build transmission lines and upgrade highways.
Strategic tax exemptions do provide incentives to investors, to make sure these projects are carried out effectively, which in turn helps Nepal’s development which has been affected by corruption and mismanagement.
The main demand of the GenZ protests that led to the downfall of the government coalition two months ago was to control corruption and make government more efficient so there is investment and job creation. The interim government seems to be responding to that sentiment.
The Dolma issue has distracted from the larger and longer-term need to reform the country’s financial systems and streamline public expenditure. How to reduce corruption and spur development is going to be the main agenda for elections, and the criteria by which voters will select candidates and parties.
TASKED FORCE
Shortly after Rameshore Khanal was appointed he set up a three member task force made up of the heads of Budget and Program, Foreign Aid, and Revenue Management Divisions. The team sent through the budget culling items DOGE-style — projects deemed ‘inadequately prepared,’ ‘fragmented,’ or ‘included through political pressure.’
Khanal hoped to save up to Rs100 billion by cutting all projects less than Rs30 million. However, such a slash and burn method would hurt rural and remote area projects for health and education more, and much bigger corruption-ridden infrastructure projects would be unscathed.&nbsp;
Says Bajracharya, “There are thousands, maybe hundreds of thousands of low-return programs in the budget that are there because of political or personal influence. But the criteria for cutting them needs to be properly defined. Doing it arbitrarily is unacceptable.”&nbsp;
Kalpana Khanal of the Policy Research Institute was involved in the taskforce, and explains: “The decision to mobilise internal funds is a pragmatic move to fund elections and reconstruction.”
However, she also singles out the massively-funded Ministry of Physical Infrastructure and Transport as being particularly problematic: “Time and cost overruns are historically the norm, and many are ‘vote bank’ projects that are politically motivated rather than done for return on investment.”
For example, politicians use their influence to build roads to their home districts to secure popularity even if the funds would have been better spent elsewhere.
“Another problem is the amount of funds that are transferred randomly for things that outside the budget,” continues Khanal.
Bajracharya adds, “While reconstruction and elections are big financial commitments, Nepal could easily find the funds. Cancelling low impact programs is a good move by the ministry of finance, and another option could have been to raise customs or taxes by a few percent. The main problem is that a huge amount of funds are lost to corruption.”
Kalpana Khanal and Dilli Raj Khanal co-authored a technical report last year titled Improving Public Expenditure System in Nepal: Critical Areas of Reform which did a forensic examination of such wasteful projects.
The conclusion: recommendation to have stricter accountability measures in place to check the actual use of funds and merit-based appointments in the National Planning Commission, Ministry of Finance, and the CIAA.
The technocrats in Prime Minister Karki’s cabinet resonate with the latter point. Nepal is so entrenched in the ‘afno manche’ culture of nepotism and connections that it has become the norm.
The report also refers to the well-known off-budget ‘re-allocations’ of big outlays during the seventh and first months of the fiscal year that undermine in-built check and balance. Almost a quarter of the budget is spent in the last month, which results in low quality and low impact work.
The authors call for reward and punishment systems to prevent these practices. The CIAA could also be supercharged to build transparency into the digital Line Ministry Budget Information System, instead of being an agency for political vendetta.

Nepal needs to use its money better

At the opening plenary of COP30, which stands for the convolutedly named 30th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), in Belém on Tuesday, Nepal brought up the threats to the Himalayan watershed. Nepal’s delegate Rajendra Prasad Mishra, Secretary at the Ministry of Foreign Affairs, also spoke on behalf of Bhutan and Bangladesh after the three countries formally called for tripling grant-based adaptation financing from 2015 levels to at least $120 billion per year by 2030, and to ensure a more simplified, scaled-up access to finance their National Determined Contributions (NDCs) to reduce emissions and adapt to climate impacts. “Bhutan has already graduated from Least Developed Country (LDC) status, while Bangladesh and Nepal are in the process of graduation,” said Mishra. “Graduation reflects development progress, but does not reduce our climate vulnerability nor the scale of support required to safeguard development gains.” The Loss &amp; Damage Fund is also finally coming into effect, so countries can now apply for $5-20 million to make up for damage from climate impact. But claiming damage and linking disasters to climate breakdown has not been an easy process. “When a 200MW hydropower plant is destroyed by a glacial flood, it is a big loss for Nepal’s GDP. Every megawatt costs us $20 million to build,” says energy entrepreneur Kushal Gurung. “Our lobbying should be top-notch, and hydropower can make a good case for us.” Belém marks the tenth anniversary of the Paris Agreement that brought the world together to pledge to keep global average temperature to ‘well below’ 2°C above pre-industrial levels and limit it to 1.5°C.&nbsp; COP has also returned to Brazil after 30 years of the Rio Conference in 1995. Since then there have been numerous summits, which have been criticised for being just hot air and being hosted by fossil-fuel exporting countries like UAE and Uzbekistan. Belém was selected because it is a gateway to the Amazon, but Brazil has now also become a major oil producer after new offshore finds. A recent report shows that compared to 2019, the world is set to reduce its emissions by 12% in 2035 if countries are to implement their Nationally Determined Contributions even though the figure needs to go up to 40% to meet temperature targets. There has been progress. Before the Paris Agreement the world was on a path for 4°C increase during this century, and this has now come down to 2.5°C because of the clean energy transition. But a lot more needs to be done to meet the Paris 1.5°C target. “This progress is proof that multilateralism is working, it is delivering,” Manjeet Dhakal of the Climate Analytics South Asia told us from Belém. “Having said that, it is simply not enough. Emissions need to go down much further, and a lot of it is tied to developed countries providing climate finance to do so.” Many developing countries have adopted ‘conditional NDCs’ which means their emission reduction targets cannot be met without international climate finance. In its third NDC, Nepal set a target of a 17.1% reduction in net greenhouse gas emissions and 26.8% by 2035. But achieving that has a price tag of &nbsp;$73.74 billion, with much of it from international climate finance. UNDERFINANCED However, the climate for climate finance is getting worse. The United States has exited from the Paris Agreement for the second time under President Trump, and there are cutbacks in foreign aid by European funders. Even so, the EU has committed to reducing its emissions by 90% in the next 15 years, 85% of which will be domestic emission cuts. The silver lining in all this is that the leadership in climate action is increasingly being taken by Nepal’s neighbours China and India with both investing heavily in renewable energy. China is the world leader in solar panels, wind turbines and electric vehicles, and Nepal has already taken strategic advantage of this.&nbsp; With expensive hydropower plants increasingly at risk from glacial lake outburst floods, experts say Nepal must diversify its energy mix and invest in solar power which has 10 times more potential than hydropower at 432 gigawatts with over 300 days of sunshine a year. Solar farms can also power pump storage, which are cheaper and quicker to build.&nbsp; China has drastically reduced the cost of photovoltaic cells, making such schemes more feasible. Nepal just needs to ease up its restrictive domestic energy policies, boost investment and resist geopolitical pressure on electricity generation. “First, we need to increase the cap on solar energy from 10% to 30%, and next, the bidding process should be made easier, or just have the first past the post system like that for hydropower,” says Kushal Gurung. The disadvantage of solar power is that it generates only daytime energy, but this can be solved with grid-scale battery storage or pump storage. But first, the government needs to fix the rate for solar purchase so that entrepreneurs are incentivised. “This is not happening because our government officials and engineers are comfortable dealing with hydropower, and are not just updated about the latest advances,” says Gurung. “As a result, we have no clear policies when it comes to solar.” Hydropower has become one of the biggest industries in Nepal with an installed capacity of over 3,400MW and the government’s target is to produce 28,500MW in the next ten years. But the recent climate disasters have made it clear that relying only on hydropower alone is too risky. The Nepal-Tibet glacial flood in July destroyed and damaged four hydropower plants and substations along the Bhote Kosi, and last September’s floods slashed the country’s total generation by half. Nepal now needs to build on the widespread adoption of battery-powered vehicles by extending it to electric public transport and for household appliances like stoves, rice cookers and refrigerators. Not only would this reduce Nepal’s per capita carbon footprint, but it would also reduce the country’s annual Rs300 billion petroleum import bill. At global platforms like UNFCCC, it is easy even for individual developed countries to get lost without an alliance. Now that Nepal is graduating from LDC status, it needs to have strong partners with a common goal to move forward in international negotiations. Says Kushal Gurung: “We won’t have privilege that came with LDC status anymore, which means climate finance will be even more limited. But there are a few things we can urgently do on our own like regulating the carbon credit market.”&nbsp; This article is brought to you by <a href="https://nepalitimes.com/" target="_blank">Nepali Times</a>, in collaboration with <a href="https://inpsjapan.com/en/" target="_blank">INPS Japan</a> and <a href="https://sgi-peace.org/" target="_blank">Soka Gakkai International</a>, in consultative status with UN ECOSOC.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251118101116_30c3782f9c09219bf1c249b51483a3cfb7a53a06d117d2aebd23ca7080d12758.jpg" data-media-id="editor_3" data-image-id="20251118101116_30c3782f9c09219bf1c249b51483a3cfb7a53a06d117d2aebd23ca7080d12758" data-rendition-name="original" width="680" height="103" loading="lazy" alt="Nepali Times SDG"> </figure>

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