NepaliBiz.com

Monday, September 03, 2007

Roundup of Economic & Business News (Jul 4 - Aug 31)

Massive hike in hydro license fee this week

Massive hike in hydro license fee this week
eKantipur.com
BY BIKASH SANGRAULA

The cabinet will effect massive increments in survey license fees as well as annual survey license renewal fees for hydropower projects by amending the fee appendix of the Electricity Regulation 1993 this week, according to sources at Ministry of Water Resources.

The survey license fee is being increased from the existing range of Rs 125 to Rs 750, to the range of Rs 50,000 to Rs 2 million, according to ministry sources.

The amendment, expected in a couple of days, will slap a survey license fee of Rs 50,000 for projects ranging from 1 megawatt (MW) to 5 MW, Rs 10,000 per MW for projects ranging from 5 MW to 100 MW, Rs 1 million for projects ranging from 100 MW to 500 MW and Rs 2 million for projects above 500 MW in size.

An equal amount of renewal fee will have to be paid by the licensee every year during renewal of the survey license. If work progress is achieved according to the work schedule committed to at the time of acquiring the license, there can be a maximum of four renewals. There is no provision of renewal after five years as the ministry officials consider this more than enough time to complete a project survey.

The government is making such provisions to ensure that survey license holders achieve work progress according to their commitment.

As of June 15 this year, the government had issued 141 project survey licenses to prospective developers for projects ranging from 1 megawatt (MW) to 400 MWs, according to figures provided by the Department of Electricity Development.

Combined, these projects have a total capacity to generate over 4,000 MWs of electricity.

However, actual survey progress has been seen in very few of these projects.

The existing lax licensing provisions were made at a time when there was little private sector interest in developing hydropower projects in the country.

Today, the interest is immense, to the extent that prospective developers are ready even to bid for projects, as has been the case for the 402 MW Arun III and 300 MW Upper Karnali.

Under the new provisions, the one time generation license fee for projects of the size 1 MW to 5 MW will be Rs 100,000. Similarly, the fee for projects of size 5 MW to 100 MW will be Rs 500,000, fee for projects of size 100 MW to 500 MW will be Rs 1 million, fee for projects of size 500 MW to 1000 MW will be Rs 2.5 million, while fee for projects above 1,000 MW in size will be Rs 5 million. The previous fee ranged from Rs 3000 to less than a hundred thousand rupees.

Generation license is issued for a one-time period of 35 years for projects planned to sell power in the country, and 30 years for projects planned for export.

11 hrs daily power cuts in offing

11 hrs daily power cuts in offing
eKantipur.com, 23-Aug-2007
BY BIKASH SANGRAULA

The country will face up to 11 hours of daily power cuts in the coming dry season (November-April), according to Nepal Electricity Authority (NEA). The power cuts will be inevitable owing to a peak time power deficit of as much as 354 megawatts (MW).

"The worst power cuts of 11 hours per day will happen in February-March 2008," said Sher Singh Bhat, chief of NEA's Load Dispatching Center (LDC). LDC is NEA's central body responsible for managing the country's power demand and supply and forecasting, preparing and enforcing power cut schedules.

Owing to heavy power cuts, every industry in Birgunj will have to be closed for two to three days a week. The current demand in Birgunj alone is 125 MW, Bhat said.

The longest power cuts the country faced in the last dry season was seven hours daily. Between then and now, the country's energy demand and capacity demand have risen by 8.5 and 8.8 percent respectively, according to Bhat. However, there hasn't been any noteworthy addition of power stations in the national grid.

Addressing the country's business community in the capital on Thursday, Bhat said the peak electricity demand expected in the upcoming dry season is 714 megawatts, while the total energy availability then, including import from India, free power from Tanakpur, and operation of the country's thermal plants, will be just 360 megawatts.

"In the unlikely scenario that we import additional 50 megawatts from India under trading mode from November this year, apart from the 50 megawatt import under power exchange agreement and seventy million units from Tanakpur, the power cuts can go down to nine hours daily," Bhat said.

Forecasts for the coming years are not good either. Even if the 70 MW Middle Marsyangdi comes into operation in August 2008, there will still be up to 10 hours daily power cuts in the dry season of 2008/09, up to 13 hours daily in 2009/10, up to 14 hours daily in 2010/2011, and up to 17 hours daily in 2011/12.

Even in the event Nepal builds high-voltage transmission corridors with India by mid-2009, as targeted by NEA, to import additional power, the scenario does not look good. "If we want affordable electricity, we will have to purchase power from India's long-term market for which we will have to sign a 25-year take or pay agreements. If we want to buy from short-term markets, the effective cost after wheeling charge and trading margin will come to around Rs 12 per unit," Bhat said.

NEA currently charges an average tariff of Rs 6.50 to domestic consumers.

"The only solution is to develop our own projects," he said.

NEA has plans to start operation of 60 MW Upper Trishuli 3A, 27 MW Rahughat, and 14 MW Kulekhani III by 2010, and 45 MW Upper Trishuli 3B, 30 MW Chamelia, and 309 MW Upper Tamakoshi by 2012. Of these, only Kulekhani III and Chamelia are under construction.

Govt prepares to ask India for 2nd transit point

Govt prepares to ask India for 2nd transit point
eKantipur.com, 22-Aug-2007
BY MILAN MANI SHARMA

The government has initiated exercises for securing Mumbai, India's commercial capital, as Nepal's second transit point.

The exercises were started after India agreed in principle, but sought rationale, for allowing Nepal to use the Jawaharlal Nehru port in Mumbai for third country trade.

In the first among a series of exercises, the government has assigned the UN Trade Related Capacity Building Project to conduct a detailed study to ascertain the volume of export traffic, economic benefits and possible modalities for cargo movement, said Purushottam Ojha, acting secretary of the Ministry of Industry, Commerce and Supplies.

Talking to the Post, Javed Ashraff, economic counselor at the Indian Embassy in Kathmandu, said that India has already agreed to let Nepal to use Mumbai as Nepal's second transit point.

“We have sought a projection of cargo volume and other details from the Nepal government,” said he. Formal negotiations over the issue will begin once two sides exchange views on the proposal to be submitted by Nepal.

As of date, Nepal uses Kolkata as the only transit point to link its trade with third countries.

Nepal had first requested India to provide it with the second transit in 1995. A formal request to it was placed only in September 2004, when the then Prime Minister Sher Bahadur Deuba made an official trip to New Delhi.

According to officials, Nepal pushed for transit facility at JN port due mainly to its geographic location and efficiency.

An assessment done in 1995 had estimated that the use of JN port could reduce the transit/transportation cost of west-bound cargo by up to 40 percent and freight cost by US$ 200 per container compared to shipment from Kolkata.

However, the assessment had not calculated how it would impact cost of inland cargo movement. The distance of JN port from Birgunj is about 1,500 kilometers, whereas Birgunj is 700 km away from Kolkata.

Freight forwarders said that overall cost of doing trade with US and Europe would be cheaper from JN port than from Kolkata.

They mainly cited four reasons for it: i) cost of freight from JN port will be 40 percent cheaper than Kolkata, ii) days of shipment from JN port will go down by about 20 days, iii) cargo segregation for different destinations can be done in Mumbai, and iv) private sector-operated JN port is much more efficient than the trust-managed Kolkata port.

“If arrangements are made for ferrying cargoes on train from Birgunj, costs of transportation up to Mumbai will also not be that high,” said Namgyal Lama, president of Nepal Freight Forwarders Association.

Importers such as Akhil Chapagain said that real economic benefits can be ascertained only when costs are compared from Birgunj to destination ports. He cautioned that benefit would also depend on the modality of transit and cargo operations.

Poultry product prices skyrocket

Poultry product prices skyrocket
eKantipur.com, 22-Aug-2007
BY PRABHAKAR GHIMIRE & DIPENDRA BADUWAL

Ban in import of parent chicks from countries suspected of bird-flu and their dwindling number in the country has triggered a shortage of chicken and eggs, sparking a fresh price hike in poultry products.

Poultry entrepreneurs have even warned that the prices would further shoot up soon, culminating to a record high with supplies showing no sign of improvement.

Fearing possible transmission of the fatal avian influenza, the government put a stop in the import of parent chicks from India, Bangladesh, USA, Denmark and of late from Germany.

"We were importing chicks from Australia but it could not be continued due to inconvenience in flight schedules. The chicks are vulnerable if undelivered within a given time," said Dr Til Chandra Bhattarai, managing director of Pancharatna Poultry Group, one of the largest poultry farms in the country.

"For last couple of months, we have been seeing a gradual decline in the number of parent chicks," Bhattarai, who is also the immediate past president of Nepal Poultry Entrepreneurs Forum (NPEF) told the Post and added that the market is seeing a 12-percent deficit in supplies.

According to him, the stock of parent population of broiler chicken stands at only 280,000, down from around 400,000 that is necessary to fulfill the current demand.

Likewise, the population of the egg laying chicken is also running low. "We need at least 40,000 chicks in the farms but right now there are only around 32,000," Bhattarai said, adding that the situation is going to further worsen as import of chicks has come to a standstill. And, the possibility of immediately importing chicks is almost nil.

"We are preparing to import chicks from Sri Lanka as bird-flu has not been detected there and flight schedule from there to Nepal is also convenient. But it will take time."

According to poultry entrepreneurs, improvement in tourism and other sectors that are major consumers of poultry products after the end of the decade long insurgency pushed up the demand.

The price of eggs went from Rs 105 per crate (30 eggs) to Rs 120 where as the price of broiler chicken has gone up to Rs 135 per kg from Rs 115. Bhattarai warned that the price of chicken could go up by 20 percent within a month.

Production of eggs shrunk from around 540 million pieces per year to 450 million pieces last year. Last year, 45.8 million kg of broiler chicken were consumed, down from the normal 66 million kg.

Tender to be invited for 396 MWs

Tender to be invited for 396 MWs
PR, 19-Aug-2007

Nepal Electricity Authority (NEA) will invite tenders for three projects totaling 396 MWs in the ongoing fiscal year, NEA's Managing Director Arjun Kumar Karki said on Sunday.

"Power generation projects need to swiftly move ahead to address the existing power crisis. In this context, NEA has already started construction of the 30 megawatt Chameliagadh and the 14 megawatt Kulekhani third projects. In the ongoing fiscal year, we will invite tenders for the 27 megawatt Rahughat, the 60 megawatt Upper Trishuli 3 A and the 309 megawatt Upper Tamakoshi," said Karki, at a function organized to mark NEA's 22nd anniversary.

Construction of Upper Trishuli 3 A will begin in the ongoing fiscal year with loan assistance from China, while the government of India has committed loan assistance for Rahughat, he added.

Presenting his report, Karki said NEA's net loss for fiscal year 2006/07 stood at 329.6 million, a 74 percent decrease from the preceding fiscal year. Increase in revenue, devaluation of dollar, and decrease by the government of interest it charges on loan to NEA from 10.25 pc to 8 percent were factors that contributed to cost saving, Karki said.

Real estate downslide ends

Real estate downslide ends
eKantipur.com, 18-Aug-2007
by Milan Mani Sharma

The downslide in the real estate business seems to have halted, and there are even signs it is gradually picking up again.

Realty business plummeted by about 15 percent during the fiscal year 2005/06 but land prices have gone up in a range of 5 to 10 percent in some parts of the Valley over the year, according to real estate dealers.

The annual report of the Nepal Real Estate Dealers Association shows that prices of land along the Araniko Highway up to Bhaktapur and in the city areas have risen in a range of Rs 10,000 to Rs 25,000 per ana. In the outskirts, the prices have not gone up, but they have not gone down either.

"The present rise is a natural rate of growth," said Raju Niraula, proprietor of Om Sai Property Dealer. He attributed the growth to the political instability, tarai unrest, continued insecurity in rural areas and rising remittance inflow. In the meantime, the real estate cycle also may have begun to turn upwards.

However, Rup Narayan Bhattarai, chief of the Land Revenue Office (LRO), Chabahil, doesn't buy the argument that real state has begun to turn upwards. He argues that the nominal rise in prices of land in the Valley is due to big property dealers' resistance to plummeting prices. "Property dealers, who hold a fair chunk of land and largely determine the movement of prices, have withstood the downward pressure on land for the time being."

He argues that the low volume of real estate transactions does not justify claims that the real estate downslide has stopped. Figures at some of the land revenue offices tend to support this argument.

Officials at the five LROs in the Valley said that the volume of transactions at present is far less than that recorded in 2005/06.

In fiscal year 2006/07, land registrations went down to 81,740 from 95,900 in 2005/06. It also dragged the revenue collection figure down by 2.5 percent to Rs 1.56 billion in 2006/07.

Except for the Dillibazar LRO, none of the LROs in the Valley met the annual revenue target, which was fixed at about 10 percent over the huge growth recorded the previous fiscal year.

"Transactions were down, inquiries had plummeted, lending institutions were wary and were putting pressure on dealers, and most importantly, interest dues were mounting fast. The situation was so tough, dealers would have succumbed had the initial euphoria lasted for another quarter," said Niraula.

What supports the "worst-is-gone" theory in the real estate sector then? "On year to year comparison last fiscal year was far worse than 2005/06, but things have now improved slightly compared to last year," said Narayan Suwal, accountant at LRO, Bhaktapur.

The real estate dealers also argue that the ongoing unrest in the Tarai, continuing political instability, and rising remittance flow have put a break on the downhill slide, if not reversed the trend gradually.

Dealers said that some 5 percent of new transactions recorded at present have been by people of hill origin but currently residing in the tarai.

Collateral for financial institutions and individual lenders and also the partition of land among siblings make up another 40 percent of present transactions, according to Janaki Ram Sharma, chief of LRO, Kalanki.

Parliament passes NRN bill

Parliament passes NRN bill
Nepalnews.com, 13-Aug-2007

The Legislature Parliament has passed the much awaited Non Resident Nepali (NRN) bill on Monday.

The bill defined NRN as those Nepalis living in foreign land for more than two years, either holding Nepali citizenship or foreign citizenship. Earlier, the draft bill had proposed the period of 182 days. However, Nepalis living in SAARC member countries are not entitled to be categorized as NRN.

The new bill has paved way for registration of the organisation in Nepal, which had been one of the major demands of the NRN Association.

The bill has provisioned for issuance of NRN identity cards to those entitled. The card is valid till the expiry of the visa the person holds, not exceeding 10 years, for Nepali nationals living abroad, while Nepalis having foreign citizenship will have to renew the card every two years.

A person would continue to be a NRN even if he stays in Nepal or owns a business here.

Any company in which a NRN has more than 50 percent share can invest in projects or sectors that the government opens for foreign investment.

Presenting the bill at the house, Foreign Minister Sahana Pradhan said the NRN bill has been brought to encourage the Nepali Diaspora for development of the country.

NRN Association had demanded that the bill be passed before its third convention scheduled for October 15-17 in Kathmandu.

Morang-Sunsari corridor to become SEZ

Morang-Sunsari corridor to become SEZ
eKantipur.com, 11-Aug-2007

The government is preparing to declare Morang-Sunsari industrial corridor as a special economic zone (SEZ) and extend facilities to industries accordingly, said Finance Minister Dr Ram Sharan Mahat.

"The government has already moved ahead in this regard. Entrepreneurs can remain assured that the announcement on it will come soon," said he.

The Finance Minister (FM) made the commitment to a delegation of industrialists from Morang, who met him on Friday demanding that the government recognize the Morang-Sunsari corridor as the industrial area and extend facilities to promote it.

Mahesh Jaju, an entrepreneur who was also in the delegation, told the Post that the FM also informed the delegation that Prime Minister Girija Prasad Koirala has already directed him to expedite the process toward granting facilities to the industries in the corridor.

"The government will soon declare the corridor as an SEZ," said Jaju.

Once declared, industries in the corridor will enjoy income tax holiday for 5 years, exemption on customs duty, VAT and excise duty on the import of raw materials and special discount on rental charge, according to entrepreneurs.

Most importantly, the announcement will prevent workers from disturbing the manufacturing process although they will be allowed to organize under various trade unions.

President of Nepali Congress Morang district, Amrit Aryal, had also submitted a memorandum to the PM last week, when he was in the home town, seeking recognition of the corridor as a special economic zone.

Entrepreneurs had also warned the government of shutting down the industries if it ignored the establishment of an SEZ in the area.

Immediately after receiving the memorandum, the PM had directed the finance minister to work for announcing the corridor as an SEZ and providing facilities to investors accordingly.

New airlines flock to Nepal as tourism booms

New airlines flock to Nepal as tourism booms
eKantipur.com, 11-Aug-2007
By Krishna Regmi

Nepal is fast turning into a hot destination for international airlines while the national flag carrier is reeling under lack of aircraft. Three foreign airlines are on the verge of beginning operations, while five more already operating in Nepal are planning to increase frequency.

Orient Thai Airlines, a Thailand based airline, is preparing to fly between Kathmandu with Bangkok from August 19.

Etihad Airlines, the national airline of the United Arab Emirates, and Silk Air, a subsidiary of Singapore Airlines have already announced commencement of flights to Kathmandu from October.

"We have received an application from Orient Thai asking schedule approval for thrice-a-week flights on the Kathmandu-Bangkok route from August 19," said an official at the Civil Aviation Authority of Nepal (CAAN). The airline will soon get the green signal.

With 140-seater Airbus 320 aircraft, Silk Air is scheduled to operate thrice-a-week flights on the Kathmandu-Singapore route. Etihad will operate four-days-a-week flights on the Kathmandu-Abu Dhabi sector.

Etihad will use Airbus A330-200 configured to carry 262 passengers, with 22 business and 240 economy class seats.

Thai Airlines, Qatar Airways, China Southern, Air Arabia, and Korean Air are planning to increase flight frequency to Nepal.

With robust growth in tourist arrivals to Nepal and more Nepalis traveling abroad, foreign airlines are jockeying to tap this market.

Tourist arrivals grew by a staggering 35.6 percent to 193,211 in the first seven months this year. Nepalis working abroad are also on a steady rise, with around 200,000 leaving for foreign employment last year alone. A decade ago only around 3,000 Nepalis left for jobs abroad.

Thai Airways plans to add three flights a week and is awaiting the green signal from the Nepali authorities. Qatar Airways has been requesting the government to allow it to run seven extra flights per week between Doha and Kathmandu. Korean Air also has requested the CAAN to let it to operate an additional flight. Air Arabia, which runs four flights a week on the Sharjah-Kathmandu sector, is seeking a green signal to operate four additional flights.

China Southern is also mulling a flight increment on the Guangzhou-Kathmandu route. "We are going to use bigger aircraft, Boeing-757 from September end, instead of current 128-seater aircraft. Then, we will take a decision whether to add a flight or two, depending on the response," said Deepak Bhatt, chairman of Gorkha Travels, general sales agent of the airline in Nepal.

Sri Lankan Airlines has also shown interest to fly to Nepal since the last year but the Nepal government is yet to respond.

Operation of new airlines and increment in frequency of flights have come as good news for the tourism industry at a time when all airlines flying to Nepal are packed, causing a number of tourists to cancel their travel plans.

Over the year, four airlines-- Bangladesh, Air Arabia, Korean Air, and China Southern-- began flights to Nepal.

Water resources strategy falls short of targets

Water resources strategy falls short of targets
eKantipur.com, 8-Aug-2007
BY THIRA L BHUSAL

The government has failed to meet all the targets set by itself in the Water Resources Strategy, in the sectors of hydropower development, water supply, sanitation, and irrigation, among others. Either the targets are under-achieved or no work has been done to meet them.

While launching its short, mid and long-term Water Resources Strategy in 2002, the government had set several targets. In its five-year (short-term) strategy, the government aimed to generate 820 MW hydropower to meet projected demand, including 72 MW for export by 2007. The country produces maximum 560 MW from hydropower plants as of today.

Likewise, it had targeted to have the private sector contribute 75 percent of the total investment in hydropower sector by 2007. However, Nepal Electricity Authority (NEA), in its Corporate Plan, says, "extremely limited investment capability of the country continues to remain one of the major impediments in the development of the power sector.

"The current private sector investment trend in the the power sector is not encouraging," NEA says in the document. "The continuing investment of the private sector in only small capacity plants in the 1-5 MW range, does not provide any substantial relief in meeting the growing needs of the country's power system," it says.

Water Supply and Sanitation

The government target was to provide access to water supply to 85 percent and safe sanitation to 60 percent of the population by 2007. Likewise, 85 percent would be aware of good hygiene practices by this year, as per the plan.

However, only 77 percent of the people had access to water supply, while 37 percent of the urban population and only 20 percent of rural people used improved toilets by the end of the last fiscal year, according to the concept paper of a three-year Interim Plan prepared recently by the National Planning Commission.

Irrigation

The strategy envisioned increasing round-the-year irrigation to 60 percent of irrigated land. However, officials at the Department of Irrigation informed that only 42 percent of irrigable land has year-round irrigation facility so far.

Why the failure?

When asked about failure in achieving almost all of the targets, Shital Babu Regmee, Executive Director of the Water and Energy Commission Secretariat (WECS), under the Ministry of Water Resources stated lack of political commitment as a major hindrance, apart from the decade-long insurgency in the country.

The targets are not ambitious, according to him. "Just completing a single major hydro project would be enough to achieve it (hydropower target)," Regmee said. As long as political leadership cannot come up with a concrete policy about exploiting water resources, the government cannot achieve such targets, he added. "The leadership should dare to take bold decisions and be able to convince the public," he said.

The first hydroelectric project in Nepal established at Pharping in 1911 generated 500 Kw. Nearly 100 years later, we now generate 560 MW electricity in total. "Where will we reach at this pace?" asked a senior divisional engineer at WECS.

Names of bank defaulters

Chilime to cap price for next 4.5 yrs

Chilime to cap price for next 4.5 yrs
eKantipur.com, 28-Jul-2007
BY BIKASH SANGRAULA

The 20 megawatt Chilime Hydroelectric Project, which went from fame to infamy for first being an indigenous and cheapest power producer in the country and later the most expensive power vendor to Nepal Electricity Authority (NEA), will put a cap on its existing selling price for the next four-and-a-half years.

"A board meeting of Chilime Hydropower Company is taking a decision to this effect Sunday," said Gokarna Prasad Sharma, board member of the company, whose 51 percent shares are owned by NEA, and 25 percent by NEA employees. The remaining 24 percent shares are being issued to the public by the end of this fiscal year.

Chilime has an agreement to raise the price of electricity it sells to NEA by eight percent annually, the highest raise NEA has agreed to its suppliers.

"The project came into operation four-and-a-half-years later than scheduled, but the power price was adjusted even for that period," said Sharma. "The project has, therefore, decided not to raise power price for the next four-and-half years in view of the raise that was made even during the delay period," Sharma explained.

Owing to the eight percent annual increment, Chilime currently sells electricity to NEA at Rs 6.17 per unit, which is the highest price NEA pays to any supplier. NEA's average retail price is Rs 6.5 per unit. In 1995, NEA signed a Power Purchase Agreement (PPA) with Chilime at Rs 3 per unit, which was to be applicable from 1999, the original scheduled deadline for the project's commissioning. However, the project came into operation only in the later part of 2003, and by that time, the price had already shot up to nearly Rs 4.

According to Sharma, there have already been increments eight times in the price of power the project sells to NEA, including the period of delay.

"The maximum number of times the increments can be made, according to the existing agreement, is twelve, after which the price will remain constant" he said.

Chilime was built entirely through indigenous labour and capital, with the production cost at just Rs 2.19 per unit, the cheapest in the country, due to which the country's entire power sector and the media praised it, until the price arrangements came to light in recent months.

In the fiscal year 2006/07, NEA registered a net loss of Rs 2.4 billion, of which it lost Rs 1.75 billion in transactions with Chilime, the 36-megawatt Bhotekoshi and the 60-megawatt Khimti projects, with which NEA has "take or pay" agreements.

On the other hand, the three producers pocketed a total profit of Rs 1.4 billion in the same fiscal year, of which Chilime netted Rs 380 million.

Chilime project, located in Rasuwa district, is connected to the national power grid through a 38-km 66kV transmission line of the Trishuli-Devighat sub-station.

MoAC unveils commercial agriculture policy

MoAC unveils commercial agriculture policy
eKantipur.com, 25-Jul-2007

The Ministry of Agriculture and Co-operatives (MoAC) on Wednesday unveiled a policy focusing on commercialization of agriculture sector for the fiscal year 2007/08.

Under the policy, MoAC has planned for a long-term lease of government-owned barren land to landless people for the purpose of commercial and co-operative farming.

The MoAC is also launching parwar (pointed gourd) farming in eleven districts, potato farming in 20 districts along with the programs targeted to uplift under-privileged groups in the terai.

“We have put commercialization of agriculture in top priority while formulating current fiscal year's policy,” said Dr Hari Dahal, spokesperson at MoAC, talking to the Post on Wednesday. "We are also continuing One Village One Product (OVOP) program this year for the commercialization of fruits and fish varieties like trout. The ministry has allocated Rs 30 million this year for OVOP program.

The government is also encouraging commercial farming of herbs, cooperative animal husbandry in 22 districts inhabited by backward people including the emancipated Kamaiyas, along with off-season vegetable farming inside green house to generate income among underprivileged classes, states the policy paper of MoAC.

The policy also has incorporated programs of lending goats in additional 38 districts to provide opportunity to poor farmers in goat rearing, and operating fisheries through women's groups along the highway in Kailali and Kanchanpur districts.

The ministry has also framed a policy to expand tea cultivation in other districts of the eastern region under the program of intensifying high-valued crops and off-season agricultural produce while programs will be initiated to extend coffee cultivation in additional districts of western hilly region.

Under the policy, the ministry has allocated Rs 37.9 million to provide subsidy in chemical fertilizers and seeds in 26 districts whereas the limit of subsidized loan has been hiked to Rs 15,000 from existing Rs 10,000.

To promote export of organic agricultural produces, government has laid a provision to issue internationally recognized certified demand paper.

Much to the relief of sugarcane producing farmers, government is forming Sugarcane and Sugar Board with the representation of farmers and sugar mill representatives and to conduct research to increase productivity.

In a bid to replace mounting imports, the MoAC is initiating the policy of expanding onion farming in additional 2,400 hectares of land in Saptari, Siraha, Sarlahi, Bara, Dhanusha and Rupandehi districts.

Nepal, South Korea sign labour pact

Nepal, South Korea sign labour pact
Nepalnews.com, 23-Jul-2007

Nepal and South Korea signed a memorandum of understanding for Employment Permit System (EPS) in Seoul on Monday, opening up the prospects of more job opportunities for Nepalis in Korea.

Nepali Labour Minister Ramesh Lekhak and Korean Minister Lee Sang-Soo signed the MoU amid a ceremony, a statement issued by the Nepalese embassy in Seoul said.

According to the new provision, the Nepal government would make all necessary arrangements such as providing training on Korean language and proper selection procedure before sending workers to Korea.

The expenditure that Nepali workers need to make prior to flying to Korea for job would be determined on consensus, the agreement reads.

Speaking on the occasion, Korean minister Soo said the agreement would help strengthen the bilateral relation between the two countries.

Minister Lekhak also expressed Nepal government's commitments to effectively implement the understanding.

As per this agreement, Nepal will send around 5,000 Nepali workers to Korea every year.

Similar agreement was signed recently with United Arab Emirates

Tourist arrivals up by 9.6 pc

Tourist arrivals up by 9.6 pc
eKantipur.com, 5-Jul-2007

Tourist arrivals rose by a modest 9.6 percent in June, signaling a cooling down in robust growth, caused by the fall in the number of Indian visitors.

The rise is far too below the average growth of 37.5 percent in the first six months of the year 2007.

A total of 23, 502 tourists visited the country during the period, up from 21,444 tourists in the same month last year.

The tourism industry reported a robust growth from the European market. The number of European tourists increased by a staggering 39 percent.

The country registered whopping rises of 137 percent, 47.3 percent, and 82.2 percent in tourist arrivals from Sweden, Britain and Denmark. Some 756 Swedish, 11,536 British and 1,011 Danish tourists came to the country.

Likewise, the number of German tourists went up by 52.2 percent to 6,877. The tourism industry recoded a rise of 46.7 percent rise in arrivals from France. A total of 6,296 French tourists visited the country.

However, India, the main market of Nepali tourism industry, showed a very poor scenario. The number of tourists from India, which made up around 50 percent of tourists visiting the country, fell by 12.8 percent to 12,379.

On the slowdown in overall tourists arrivals, the NTB said frequent strikes, street protest and demonstration, hurdles in vehicle movement in the country, mainly in the terai region are some of the factors contributing indirectly to retard the healthy growth of tourism.

The NTB, in a statement, blamed the decline for air-accessibility. Moreover, the surge in air ticket cost in flying between India and Nepal is also one of the greatest reasons for the fall in the arrival figures from India, it said.

NEPSE crosses 600 mark

NEPSE crosses 600 mark
Nepalnews.com, 7-Jul-2007

The Nepal Stock Exchange (Nepse) index made history in its 13-year-long existence when it crossed the 600 mark for the first time on Tuesday. Trade analysts attributed the rise to a continuous rise in share prices caused by the remarkable confidence shown by investors in stock trading.

The Nepse opened at 598.52 points Tuesday morning and ended at over 602 points, with shares of commercial banks and hydropower companies gaining.

According to the Himalayan Times, of the 40 leading scrips traded Tuesday, more than 90 percent of them gained in a range of Rs 1 to Rs 75 per share and only five companies were the losers among them.

The Nepse index has been soaring high for the last six weeks with investors making largely speculative buying amid rumors of persistent growth in share prices.

The Himalayan Times reported that the market has been overheated on speculation that the “financial institutions would soon announce positive annual financial results, as the book for this fiscal year is being closed in a week or so”.

“A rush of gullible and new investors is taking stock trading to a new high these days,” senior official at Nepse told the daily. He, however, warned that the current growth is “not justifiable in accordance with the country’s economic performance and actual financial health of the listed companies”

Terming the current Nepse as a ‘rumour-driven market’, the official also warned that the market could crash any day, if the existing speculation-dominated trend continued

Signs of revival in handicraft export

Signs of revival in handicraft export
eKantipur.com, 4-Jul-2007

As a dim indication of revival of handicraft exports, the declining trend of handicraft exports has slowed down in the past two months, reveals the statistics of Federation of Handicraft Associations of Nepal (FHAN).

According to the figures, cumulative handicraft exports during the 10th and 11th months of the fiscal year went down by 1.8 percent, whereas its exports had gone down by 4.65 percent till the ninth month.

Total exports during the first 11 months remained lower than that recorded during the same period last year.

FHAN's figure shows handicraft items worth Rs 2.43 billion were exported during the period, while the same was Rs 2.54 billion in same period last fiscal year.

The slump in the export of pashmina products, metal craft and handmade paper, which together make 41 percent of all handicraft exports from Nepal, is largely attributed for the fall.

Things still look bad for pashmina products, which make up nearly 19 percent of the total handicraft exports.

A total of Rs 448.62 million worth of pashmina products were exported in the 11 months of this fiscal year. It is a drop of 19.04 percent compared to the export recorded during the same period last year. The country had exported pashmina worth of over Rs 5.6 billion six years ago.

FHAN officials said pashmina export suffered mostly from tough competition exerted by similar Chinese and Indian products. Nepali entrepreneurs' inability to adapt to the new market trends, develop new products and failure to maintain a standard of quality contributed to the loss of market.

The industry had also received a setback recently when Japan stopped exports from five companies and started verifying them for authenticity. Apart from Japan, other countries like Italy and Spain have also called pashmina entrepreneurs to define the products.

Export of metal craft also declined by about 10 percent to Rs 349.12 million during the period. Export of handmade paper products also slid by 5.96 percent to Rs 218.29 million.

The export of woolen goods plummeted by 27.36 percent during the period.

According to FHAN, Rs 571.48 million worth of woolen goods and felt products were exported in the first 11 months of the 2005/06 fiscal year while in the same period this year Rs 415.13 million worth of woolen goods and Rs 185.92 million worth of felt products were exported bringing the combined export to Rs 601.07 million.

Cotton goods, allo goods, other textile products, silver jewelry, leather goods, incense, thanka art, ceramics products, bone and horn products, plastic items and stone craft saw improvement in export this year.

These products brought in foreign currency equal to Rs 567.78 million in the first 11 months of this year, compared to Rs 517.08 million in the same period last year.

Wednesday, July 04, 2007

Roundup of Economic & Business News (Jun 24 - Jul 3)

June 24
‘My dream is to make Prisma a global player’-Ranjit Acharya (ekantipur.com)
NB Bank join hands with Western Union, Laxmi Bank issues Visa cards (ekantipur.com)
Interim plan aims to achieve 5.50 % economic growth rate, reduce poverty (nepalnews.com)

June 25
Parties for free energy from West Seti (ekantipur.com)
Truckers halt services in Mechi, Koshi (ekantipur.com)
Court bars NRB move against Pun (ekantipur.com)
KIST Merchant and Finance opens branch (ekantipur.com)
Revenue collection shoots up (ekantipur.com)
Oil crisis deepens (ekantipur.com)
Terai life hit hard by routine bandhs (nepalnews.com)

June 26
Job hopes in Karnali still unmet, Govt’s 1 family, 1 job program (ekantipur.com)
Overseas jobs see some rise (ekantipur.com)
‘Ensure smooth oil supply’ (ekantipur.com)
Clear policy sought to protect domestic industry (ekantipur.com)
Supply hit as truckers go on strike in eastern region (nepalnews.com)

June 27
Demands on budget threaten financial stability: Mahat (ekantipur.com)
35% demand met by domestic drugs (ekantipur.com)
Earnings of overseas workers dwindle (ekantipur.com)
Insurance policy for doctors (ekantipur.com)
Malika, SCT sign ATM deal (ekantipur.com)
‘Lot needs to be done to ameliorate RBB, NBL’ (ekantipur.com)
WorldLink expands its foothold (ekantipur.com)
Seven percent growth in foreign employment (nepalnews.com)
Consumption of antibiotics down by 8pc (nepalnews.com)

June 28
Work at Mid-Marsyangdi halts indefinitely (ekantipur.com)
Stock trading halted (ekantipur.com)
No action on CIAA's fiat over NMA (ekantipur.com)
Maoists call off indefinite bandh in Siraha (nepalnews.com)

June 29
NRB governor suspended, CIAA files case in Rs 24.54m scam (ekantipur.com)
Monsoon tourists relish ropain (ekantipur.com)
DDC, private dairies hike milk price (ekantipur.com)
Transport strike extends westward (ekantipur.com)
BIMSTEC members still divided (ekantipur.com)
Planned urbanization for better future: Minister Yami (Nepalbiznews.com)

June 30
Businesses hit hard by transport strike (ekantipur.com)
Coffee production rises by 40 pc (ekantipur.com)
Permanent Account Number (PAN) registration growing fast (ekantipur.com)
Emission reduction purchase agreement (ERPA) signed to provide energy (ekantipur.com)
CIAA action against governor adversely affects financial reforms, says FM (nepalnews.com)

July 1
India building 126MW hydro near border, Border residents fear submersion (ekantipur.com)
400 Nepali workers starnded in Oman (ekantipur.com)
Nearly 18,000 children doing mechanical work (ekantipur.com)
Fuel to petrol pumps stalled (ekantipur.com)
Three finance companies to merge (ekantipur.com)
Lawmakers want revolutionary policy in agriculture (Nepalbiznews.com)
NAC celebrates its 49th anniversary (nepalnews.com)

July 2
Dagmara hydel only being studied: India (ekantipur.com)
Transport strike over (ekantipur.com)
Petrol supply dwindles further, Private pumps receive no fuel (ekantipur.com)
Microsoft, Unlimited ink partnership pact (ekantipur.com)
Domestic airlines packed, passengers stranded (ekantipur.com)
Reform local tax system:Businessmen (ekantipur.com)
Manandhar appointed acting NRB governor (Nepalbiznews.com)
Govt extends Rs 1.70b loan to NOC (Nepalbiznews.com)

July 3
Nepal signs labor pact with UAE (ekantipur.com)
NEPSE crosses 600-mark (ekantipur.com)
‘Operate Dhaka-Ktm bus service’-Hasan Mansur (ekantipur.com)
144 KL of petrol pumped out in Valley (ekantipur.com)
Consumer inflation eases (ekantipur.com)
Governor Bhattarai summoned, Pradhan freed on bail (Nepalbiznews.com)
No ‘on-arrival’ visas for seven countries (nepalnews.com)

Nepal signs labor pact with UAE

Nepal signs labor pact with UAE
eKantipur.com, 3-Jul-07
By PRABHAKAR GHIMIRE

Nepal on Tuesday signed a labor pact with the Gulf state, United Arab Emirates, to ensure the safety and rights of Nepali workers.

Dr Ali Bin Abdulla Al Kaabi, UAE Minister of Labor, and Ramesh Lekhak, Nepal's Minister of State for Labor and Transport Management, inked the agreement.

This is the first bilateral labor agreement Nepal has signed with another country.

The agreement, which comes into effective immediately, makes both governments accountable for safeguarding the rights of Nepali laborers, and provides for salary standards and compulsory health insurance for Nepali laborers.

"The agreement also provides Nepali laborers working in the UAE the legal status to fight for their rights" said Minister of State Lekhak after inking the deal, adding, "Nepali workers will get all the benefits and legal rights enjoyed by other foreign workers."

The UAE has shown readiness to import more Nepali workers, and with the establishment of a favorable working environment, the number of workers leaving for that country will definitely go up in the days to come.

Talking to the Post, Acting Secretary at the Ministry of Labor and Transport Management (MoLTM), Umesh Mainali, said the agreement also has a provision for setting up a bilateral mechanism to exchange visits and review the status of Nepali workers every six months.

"Both governments will maintain and exchange data on Nepali laborers working in the UAE on a regular basis to identify their status." Mainali said.

Speaking on the occasion, UAE Labor Minister Al Kaabi said the agreement will target protection of workers' rights.

"The agreement also seeks to prevent improper practices by private manpower agencies which tend to exploit the workers by demanding exaggerated fees, providing false information about their working conditions in the host country." Al Kaabi said, adding, "The pact confirms the importance of supply and recruitment of Nepali labor force in accordance with the laws and regulation in force in both countries."

Al Kaabi also expressed concern about ill practices by manpower agencies that mislead employers in the UAE regarding workers' qualifications, experience and documents.

He hailed the contribution made by Nepali workers in the economic development of the UAE. The continued economic boom in the UAE will provide further employment opportunities in construction, tourism and the manufacturing sector in the coming days, said Al Kaabi.

Foreign employment agencies have also hailed the agreement as historic for the benefit of Nepali workers in the UAE.

"It is a great achievement for Nepal to ensure the safety and benefit of Nepali workers in the UAE", Hansa Raj Wagle, General Secretary of the Nepal Association of Foreign Employment Agencies (NAFEA) told the Post. He predicted that the agreement could push up the number of Nepali workers heading for the UAE by more than 30 percent this year.

Nepal has proposed bilateral labor pacts with half a dozen other countries.

Though Nepal had signed a memorandum of understanding (MoU) with Qatar, the second most popular destination for Nepali labor, it is now dysfunctional since both the governments failed to ratify it within six months after signing the MoU.

During the first 11 months, 20,512 Nepali job seekers left for the UAE and more than 120,000 are currently working in this Gulf state.

UAE to establish labor office in Kathmandu

In a move to eliminate bad practices in laborer dealing, United Arab Emirates (UAE) is establishing a special labor office in Kathmandu soon said the UAE minister.

“Receiver and sender companies are cheating huge amounts of money from poor laborers through false promises and misleading documents in the absence of a proper mechanism,” he said at a function on Tuesday adding, “To eliminate such bad practices we are soon opening special office in Kathmandu to oversee labor issues.”

The office will be equipped with direct electronic networking to verify the misleading documents, he said.

“We don't want the agreement to remain only in writing, we want action.” he added.

He was speaking at a function organized by Nepal Association of Foreign Employer Agencies.

Coffee production rises by 40 pc

Coffee production rises by 40 pc
eKantipur.com, 30-Jun-07

As farmers aggressively pursue commercial cultivation of coffee, Nepal recorded a whopping 40 percent rise in organic coffee production compared to last year, said officials.

Raghupati Chaudhary, acting chief of National Tea and Coffee Development Board (NTCDB), western regional office, said that coffee production this year has soared to 391 tons from 278 tons of last year.

Moreover, of the total production, Nepal exported 91.50 tons of coffee to countries such as Japan, USA, UK and South Korea, among others, this year.

“The export fetched the producers and marketers a total of Rs 5.6 million,” said Chaudhary, adding that Nepal had exported a mere Rs 2.45 million worth of coffee five years ago.

Coffee is produced in 40 districts in Nepal. Among them, eleven districts of western region alone produced 163 tons of coffee this year, shows the data of NTCDB.

Palpa, Gulmi, Arghakhanchi, Syangja, Kaski, Parbat, Tanahun, Baglung, Lamjung, Gorkha and Myagdi are the western districts where commercial coffee cultivation is practiced. A total of 12,393 farmers in eleven districts of the region are actively involved in coffee farming.

Farmers into coffee production, meanwhile, urged the government to extend technical cooperation, subsidy on seed and pesticide along with market development activities.

“The government should bring in coffee policy on time so as to support the farmers and facilitate exporters,” said Mona Bhattarai, a coffee farmer, adding that scores of farmers could easily earn their livelihood easily from coffee production if the government supported it.

However, she stated farmers presently are not getting even bio-medicines on time to control diseases.

DDC, private dairies hike milk price

DDC, private dairies hike milk price
eKantipur.com, 29-Jun-07

Dairy Development Corporation (DDC), a major state-owned dairy supplier and private dairy operators have increased milk price to Rs 29 per liter for the lean season (mid-February to mid-August) across the country effective from Saturday, a concerned official said.

They also decided to fix the milk price at Rs 28 per liter for flush season -during mid-August to mid February. National Dairy Development Board (NDDB), an apex policymaking body of the dairy sector, had recommended milk price last month at Rs 28 per liter for flush season and Rs 29 for lean season from existing Rs 26 per liter. But DDC had defied the recommendation and had increased the milk price at one rupee less per liter than what was recommended.

“We decided to increase the price of milk by Rs 2 or Rs 3 per liter depending on the seasons” said Ram Kumar Khadka, president of Nepal Dairy Association (NDA), an umbrella organization of private dairy operators. He ruled out the possibility of increasing the price of milk products soon as their prices was increased just a couple of months back. Private dairies reached the decision to hike milk price at a gathering held in Kathmandu on Friday.

A meeting of board of directors of DDC has also decided to increase the price to Rs 29 per liter from Rs 28. Likewise, the price of whole milk has been set at Rs 32 per liter for flush season and Rs 33 for lean season.

In the earlier decision, DDC had increased only Rs 2 per liter from existing Rs 26 per liter for all seasons effective from June 15th for Kathmandu Valley, while keeping the price unchanged outside the Valley.

The new adjustment was made in response to the government's decision and increased purchase price of milk, said Raghav Kishore Bhattarai, acting deputy general manager of DDC.

A government initiated meeting of stakeholders including high-ranking government officials held on June 21st at Ministry of Agriculture and Cooperatives (MoAC) had decided to maintain price uniformity and had asked DDC to rollback its previous decision to increase the price that was one rupee less per liter than the recommendation.

While private dairies also kept the milk price unchanged at Rs 26 per liter as a protest against DDC's decision, they exerted pressure on the government to intervene in the market. DDC, private dairies hike milk price