NIS 2022 identifies bottlenecks preventing infrastructure development in Nepal

Kathmandu, Sept. 9

The Nepal Infrastructure Summit (NIS) 2022 has identified cost and time overrun, poor implementation of the public-private-partnership (PPP) model, and lack of financing as the key bottlenecks for infrastructure development in Nepal.

The fourth edition of the two-day conference concluded that the country should strengthen the bottom-up approach to development where prioritisation would be devolved from a centralised system to provincial and local level.

Likewise, it suggested exploring PPP projects and encourage them with adequate risk allocation, participatory decision-making, PPP communication and transparency.

"Climate resilience (risk assessment / risk insurance) should be made integral to all projects. Green infrastructure development should be incentivised," said Nidish Nair, Executive Director and Leader of Climate Resilience and Cities of the PwC India, while summarising the outcome of the event.

The largest event in the country in infrastructure sector demanded that infrastructure financing be embedded as a way of business in institutions for good governance and projects be vetted, processes be transparent, and outputs be subject to public scrutiny.

"Funding modes other than debt financing such as joint-ventures, Foreign Direct Investment (FDI), equity should be explored, including blended finance, hedging and viability gap funding," said Nair.

Similarly, the mechanisms for risk transfer at local levels to safeguard external investors should be developed by creating enabling ecosystem to attract private investors and FDI, increasing ease of operating within Nepal and easing of repatriation.

However, on a positive note, the NIS 2022 concluded that Nepal has potential to quadruple its trade volume provided the South Asia and other regions are interconnected with developed infrastructures. Therefore, Nepal needs to focus on development of economic corridors, multimodal transport, tourism, agriculture and water sectors.

Likewise, energy trade and tourism could be a sector of immense potential for future while regional platforms like the SAARC and BIMSTEC could be used for greater regional connectivity.

Speaking at the closing plenary of the NIS 2022, Minister for Communication and Information Technology Gyanendra Bahadur Karki said that the government aware aware that without a close collaboration with the private sector, the country could not achieve the development goals.

According to him, while infrastructure is the instrument for overall development of the country and it should be of high quality, a lot of effort is needed to put into the process to achieve it.

Lawmaker and President Emeritus of CNI, Binod Kumar Chaudhary, said that funding was still a huge issue in the case of infrastructure development in Nepal. Likewise, ability to deliver project on time was also a critical issue.

He maintained that if there was anything that could be a quick-fix the growing trade deficit with India and dwindling balance of payment, it’s the energy trade which would continue to grow in the years to come.

Chaudhary suggested that large international construction companies should be brought to Nepal so that the capacity and quality of the local contractors and development projects could be enhanced.

Similarly, Minister of State for the Prime Minister's Office Umesh Shrestha stated that Nepal's capacity to spend development budget was questionable.

"There is a need to implement further reforms in the existing legal regime to attract investment in infrastructure," he said.

According to him, the country needs to increase the number of industrial parks. Currently eight are in the phase of development. There is also a need to focus on a couple of sectors for the development and growth like Bangladesh's focus on garment and pharmaceuticals.

President of CNI, Vishnu Prasad Agrawal, said that the seminar has extensively discussed the infrastructure that the country needs and the possible way of managing investment for the development of critical infrastructure.

The government should formulate favourable policies and there should be an honest implementation of those policies, he said.

The summit has sought to reinforce the idea that in the path to economic recovery, the best bet is investments in infrastructure with focus on green infrastructure and financing, maintained the organisers.

Published in The Rising Nepal daily on 10 September 2022.