Project bank expected to address development downsides

Kathmandu, Feb. 27

About 19 airports in Nepal are out of operation. Some are constructed in the interest of powerful leaders with an intention of swaying public support. People prefer road travel to air journey due to uncertainty in the latter because of difficult terrain and weather conditions.

Babai Irrigation Project is running in 34^th year of implementation while Melamchi Water Supply Project is under construction for about two decades and just recently moving towards completion. West Seti Hydropower Project has not taken off since its inception about 23 years ago while Budhi Gandaki Hydropower Project is yet to complete land acquisition in about a decade.

This lackluster development scenario is expected to change with the implementation of National Project Bank (NPB) created at the National Planning Commission (NPC).

Creation of this mammoth project database has set criteria for any project to be listed in the project bank as well as in the budget programmes to ensure better implementation and monitoring and maintain fiscal discipline.

Spokesperson of the NPC Min Bahadur Shahi said that it was an effort to reform the overall project governance which has been awful in the past few decades with a few exceptions.

"The culture to announce and launch development project in the interest of some political leaders should come to an end. No project can move ahead without feasibility study, Detailed Project Report, Environment Impact Assessment (EIA) and cost estimation," he said.

Through the NPB

The number of sick projects has increased significantly which has drawn widespread criticism from various quarters including the anti-graft body, the Commission for the Investigation of Abuse of Authority, that stated two years ago that about 1,032 development projects were facing time and cost overrun.

The NPC, Ministry of Finance and line ministries every year receive requests for inclusion of hundreds of new projects in the annual budget programme of the government. But with the implementation of the project bank, they have to get the project listed in the bank before asking for any budget for its development.

The country has limited resources to fund the development projects but is under pressure to meet the development aspiration of the people. It needs to invest about US$ 97 billion in infrastructure by 2030 to be able to become a middle-income country.

Likewise, unbalanced distribution of development to the regions like Karnali, Province 2 and mid-hills has necessitated a new approach in development and construction of public infrastructure. According to the Vice President of the NPC, Prof. Dr. Pushpa Raj Kandel, the NPB has paid enough attention in maintaining geographical balance for the fair distribution of resources.

Provincial Project Bank

To meet this goal, the NPC is mulling to set up separate project banks for the provinces and wants the local bodies to create a list of projects of their priority.

The planning body will consider factors like Human Development Index and Social Development Index as well as multidimensional poverty of respective regions while including the projects in the bank.

Shahi said that there was a need to interfere in the social development sector like education, health and social security.

"NPC will run capacity building programmes for the local bodies to enhance their knowledge and skill in identifying and selecting the projects," he said.

 

6512 projects

The project bank has 6,512 projects of which 5,347 are ongoing and 1,165 are future programmes.

About 284 projects have already been appraised by the government.

Total cost of all the projects is Rs. 7,714.14 billion – about double of the size of Nepal's economy in 2020. About Rs. 620.8 billion is estimated to be allocated for the development of ongoing projects in the next fiscal year's budget.

According to the NPC, of the total projects included in the bank, 3,893 related to physical infrastructure, 1,507 urban development, 443 energy and water resources, 353 water supply and 85 home affairs.

Top five priority areas include infrastructure, social, governance, agriculture and economic development with 4,584; 196; 147; 129 and 118 projects respectively.

 

Benefits of the NPB

According to 'NPB guidelines for identification, appraisal, selection and prioritisation of projects', the bank is expected to  increase the practice of evidence-based planning which will help in completing the projects within the stipulated  time,  allocated budget and with set quality indicators.

It will provide readily and thoroughly analysed projects of diverse sectors for execution which will help in effective management and optimal utilisation of the available resources.

Likewise, the bank will help in the integration of projects for development effectiveness and facilitate their monitoring and evaluation.

 

Project approval process

Approval process of any project begins with the acceptance of Project Concept Note prepared by a competent authority. Second step is the creation of feasibility study and its approval while complex projects need a DPR as well.

After the approval of the feasibility study or DPR, projects are selected and prioritised in the NPB. Funding is released only after completing a phase in the approval process. After getting the approval from the NPB, the project is included in the Medium Term Expenditure Framework and funding arrangement is made in coordination with the Finance Ministry.

"In case of ongoing projects, if it is not progressing according to the implementation plan or if the project priorities have changed, the approval process and protocol should allow the approving authority to adjust or terminate the project," reads the document. However, such termination should be for better utilisation of scarce resources.

Published in The Rising Nepal daily on 28 February 2021.