WB suggest to mobilise private sector to close infra gap

Kathmandu, Sept. 12

For Nepal, it is the right time to mobilise private sector solutions to close the infrastructure gap on the path to achieving the country’s growth aspirations, says the World Bank Group’s 'Nepal Infrastructure Sector Assessment report' launched on Thursday on the sidelines of the Nepal Infrastructure Summit, 2019.

The report assesses the energy, transport and urban infrastructure sectors together with cross-cutting issues and recommends interventions that combine short-term and longer-term structural and policy changes with tailored project implementation approaches to unlock private sector financing and cooperation with the public sector.

“For real benefits to accrue to Nepal’s citizens, the quality and sustainability of infrastructure services needs to improve with substantial and efficient investment,” stated Jingdong Hua, World Bank Vice President and Treasurer. “Unlocking private sector investment is key to sustainable infrastructure development to promote growth and equity and providing access to services, jobs and markets.”

Nepal’s investment needs average 10-15 per cent of the Gross Domestic Product (GDP) annually over the next decade as the country aspires to graduate from the status of the least developed country by 2022 and towards middle-income country by 2030.

Nepal has historically relied on a mix of public and private financing in the electricity sector and a two to four-fold increase in investment is needed to meet the country’s projected electricity demand, said the WB.

Likewise, public and private resources are key to developing the country’s transport infrastructure and address the issues of chronic underinvestment and improvements in connectivity and safety.

According to the multilateral donor, Nepal is also among the fastest growing urban populations and while local governments under the federal setup are primarily responsible for public service delivery, the urban sector faces a paradoxical case of insufficient capital expenditure to meet demand on one hand and low capital spending on the other.

“The country’s transition to federalism presents a unique opportunity to define roles, establish clarity, and build a renewed, strong partnership between the public and private sector,” stated Idah Z. Pswarayi-Riddihough, World Bank Country Director for Nepal, Sri Lanka and Maldives. “In our aim to maximise finance for development, a strong focus is required in the areas of governance and capacity and regulatory frameworks together with a lens on gender and social inclusion and social and environmental management.”

While public investment is integral, particularly in sub-sectors that require large investment, the report recommends creating a conducive environment for private sector participation through sector-level groundwork, sustainable project structures, systematic and strategic public investment management and project selection, and investment-friendly policies and regulations.

“Given the huge funding gap and about 30 million population eager to see speedy improvements in their quality of life, public-private partnerships (PPP) can be a useful tool for Nepal to leverage expertise and efficiency of the private sector while raising capital to meet the development needs of the country,” said Wendy Werner, IFC Country Manager for Nepal, Bhutan and Bangladesh. 

“IFC can bring to bear its global expertise in structuring PPP deals in addition to working with the domestic and foreign private sector to increase investments in Nepal.”

 Published in The Rising Nepal daily on 13 September 2019.