Disbursement, contract award poor, says ADB

Kathmandu, Feb. 17

The Asian Development Bank (ADB) has said that both the disbursement and contract award for development projects in Nepal remained poor in 2019.

“While we achieved great achievement of exceeding the disbursement over $300 million, the disbursement ratio did not improved, and, in fact, decreased due to the new loan commitments added to the portfolio in 2019,” said ADB Country Director for Nepal Mukhtor Khamudkhanov in the Country Portfolio Review Meeting jointly organised by ADB and the Ministry of Finance in the Capital on Monday.

He said that in terms of disbursement ratio, Nepal’s portfolio was lagging behind most other countries in South Asia.

While disbursement has picked up pace, challenges remain and the overall performance of ADB operations in Nepal could be much better, he expressed concerns over the poor project performance.

“The disbursement needs to substantially increase to be close to $400 million per year for ADB to consider further increasing or even maintaining ADB’s commitment level,” he said.

At the moment, 61 per cent of the total portfolio – $2.9 billion - remains undisbursed, which was very high.

The multilateral donor has disbursed US$323.7 million for development projects in Nepal in 2019.

It is the record disbursement with 76.5 per cent against the annual target of $423.2 million, said the multilateral donor. Likewise, of the $381 million awards, only $256 could be awarded last year, said Rudi Van Dael, Unit of Portfolio Management of the ADB Nepal Resident Mission.

However, ADB’s support to Nepal in the infrastructure sector has increased in the recent years with larger but fewer projects.

Difficult terrain and remoteness of project sites, addressing safeguard issues, and the country’s ongoing transition to federalism that takes time have also posed challenges to the effective implementation of development programmes, said Khamudkhanov.

According to him, strengthening the teamwork, ensuring sufficient human resources, inter-agency coordination, timely reporting and continuous capacity enhancement are needed to address the poor project performance.

Secretary at the MoF Sishir Kumar Dhungana said that since the results were significantly lower, the ADB and the government needed to reassess their own targets.

He said that there was a need to accelerate the progress and the high level project coordination mechanisms and the MoF and Prime Minister’s Office could help in it.

“The shortage of human resource was created due to the readjustment of the civil servants in federal structure. The government is committed to filling the gap of qualified human resource,” said Dhungana.

He also said that the development projects were suffering from the weaker capacity of contractors and consultants.

The ADB portfolio in Nepal has reached $2.9 billion by 2019 with urban and water sector receiving the highest share of $900 million or 31 per cent. Energy covers 19 per cent, transport 23 per cent, education 16 per cent and agriculture and natural resource 8 per cent.

The best ADB-supported projects were awarded on the occasion.

The Third Small Towns Water Supply and Sanitation Sector Project and Community Managed Irrigated Agriculture Sector (Additional Financing) won the outstanding project management team awards.

The Urban Water Supply and Sanitation Sector Project was awarded the best team for procurement management prize.

The SASEC Power System Expansion Project received the best team award in the categories of environmental and social safeguard monitoring; the Third Small Towns Water Supply and Sanitation Sector Project won the gender equality and social inclusion award; and the SASEC Road Connectivity Project bagged the financial management and disbursement accolade.

Published in The Rising Nepal daily 18 February 2020.