Govt to promote private investment in infrastructure

KATHMANDU, May 31:

The government is trying to attract private investment in the infrastructure sector through the budget for the new fiscal year.

"Both the private and public investment is necessary to overcome the infrastructure gaps," Baikunth Aryal, chief of Budget Division under Ministry of Finance told Republica, adding "Private sector will get more facility to invest especially in the hydropower sector, which will be announced through the fiscal policy."

Attracting investment, raising productivity and creating more employment opportunities are the underlined theme of the upcoming budget, which targets to raise growth rate. Nepal has been failing to achieve 7 percent growth rate since after 1974.

“To achieve high growth rate we´ve to attract more investment in infrastructure," Aryal added. “The reform agenda going to be initiated through the upcoming budget will address all the constraints to growth, which are caused by lack of reform in past."

Provisions have already been made for the private investment in infrastructure, especially in the wake of the failure of the renowned BOOT (build-own-operate-transfer) model to attract substantive private investment.

"We have been doing homework to pave the way to materialize private sector involvement in infrastructure development," Aryal said. “The government has to ensure protection for the private investment - drawing lesson from what we´ve experienced in the past."

Minister for Finance Dr Ram Sharan Mahat has been guided with the principal to attract private investment with an aim to unlock all the blockages in the system, according to his close aides.

He is for initiating sweeping reforms in the administration, legislatives and regulatory fronts, which Dr Mahat has been announcing repeatedly on the public forums.

"Economic growth will increase at rapid pace after unlocking all the constraints," said Lal Shankar Ghimire joint secretary at the National Planning Commission (NPC).

The private sector has also been seeking effective implementation of the BOOT model and few of the infrastructure projects, like electricity transmission lines, cable car, toll roads have already been proposed under the BOOT.

The secretary at the Ministry of Physical Infrastructure and Transport (MoPIT) has informed that few private parties are negotiating for the cable car and toll road projects and the government is positive to sign agreement with them.

"The private sector is able to invest in infrastructure projects," said Pashupati Murarka senior vice-president of the Federation of Nepalese Chambers of commerce and Industry (FNCCI), adding "But the government should ensure protection of private investment."

Moreover, the private sector has also sought long-term economic vision and stable economic policies, which can create environment for uninterrupted implementation of development projects.

"After the political change of 2006 successive governments lasted for two years in average and this instability has been reflecting in the policies as well," said Murarka. "Long-term vision and policy stability can deliver good results."

The private sector has already expressed commitment to generate 400 MW of hydropower in the next three years.

Murarka seems hopeful about the manufacturing sector´s expansion with adequate power supply despite the fact that the contribution of manufacturing sector to the national GDP is gradually coming down.

The share of manufacturing sector to GDP was 14 percent in 2012/13. Nepal has been living with modest growth rate, and the economy is projected to grow by 5 percent plus after five years.

Source: Republica