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Many Heads Creating Hurdle in Hydropower

loadsheddingNepal achieved multiparty democracy in 1990 and a series of liberal and private sector friendly policies were formulated then after. Hydropower Development Policy, 1992 and Electricity Act, 1992 also came into effect which paved the way for foreign and domestic private sector participation in generation side. Electricity Act, 1992 made a provision whereby even the private sector could acquire licenses for undertaking survey and generation purposes.

In the beginning, survey license was very cheap to acquire; for eg., NRs. 100, 150 and 200 for 1-5 MW, 5-10 MW and 10-15 MW respectively. The bureaucrats were quick to act at this. Majority of licenses were acquired by the employees working at the Ministry of Water Resource (MoWR), Water and Energy Commission Secretariat (WECS), Department of Electricity Development (DoED) and Nepal Electricity Authority (NEA), or by their relatives. What’s more, the licenses were distributed on first-come-first-serve basis without conducting sound financial and technical analysis. The license holders did not even have to construct the project, but could sell it to developers at higher prices. Thus, began the license-holding culture. These people who held licenses cited cases of landslides, local issues and others to renew their licenses time and again, without really conducting any survey. Due to this, real investors did not get a chance to construct hydropower projects. Interested parties had to buy it from these license-holders, which increased the time and cost of projects. In order to discourage pseudo license-holding, the license acquisition fee has been reviewed three times till date.

Commission for the Investigation of Abuse of Authority (CIAA) recently directed Ministry of Energy (MoE) to revoke the licenses of 10 different hydropower projects as the promoters of these projects could not complete necessary procedures such as signing Power Purchasing Agreement (PPA), making financial closure, etc. Once the license is repealed, the entire process of development of these projects starts from the beginning i.e., acquiring survey license, conducting feasibility study, finalizing Environment Impact Assessment (EIA) and so on, which costs additional time and money. Therefore, it may not be a good step to scrap licenses of projects that have already initiated pre-construction works as this will further delay the development of hydropower projects. In case of Upper Khorang Khola Hydropower Power Project, the developers could not conduct PPA in time due to delay in decision-making process of NEA. The delay in signing PPA has further delayed managing investment from financial institutions for the project. Although the license period of Kabeli “A” has matured, it has already given Letter of Intention (LoI) to contractors, issued right shares and acquired land to construct the project. A lot of initial investments made in these projects will go in vain if the licenses are nullified and the construction of projects will be further delayed. The solution to these problem lies in initiating competitive bidding process instead of issuing survey and generation licenses for construction of hydropower projects because the nation gets more benefits as it receives free energy and equity ownership along with royalty through international bidding. For example, GMR, the company that won the bid on Upper Karnali Hydroelectric project, has promised to give 12 percent free energy and 27 percent free equity. Likewise, Satluj Jal Vidyut Nigam got permission to construct Arun III after providing 21.9 percent free energy. Additionally, the public limited company of India agreed on providing 20 units of free electricity to each house of Sankhuwasabha district, where the project is located. Furthermore, the promoter of the project has agreed on issuing shares to local people. The system of providing share to the local people helps to reduce level of inequality in society to some extent as they also get return from their investments. They can further utilize that sum of money for starting other income generating works, educating children, receiving vocational training and much more.

Developing hydropower by awarding a project through international competitive bidding is the most scientific way to solve the issues related to license regime in Nepal as it creates win-win situation for all stakeholders.

Dinesh Karki

About Dinesh Karki

Dinesh Karki is an independent researcher. He has Economics degree from Xi'an Jiaotong-Liverpool University, Suzhou, China.

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#Notmyconstitution

The constitution came…. after 8 years…apparently we had the time, and the money, and we could totally afford it…so no worries. We even survived the earthquake to live under this constitution.

But we survived to live under THIS constitution? These are six things about the constitution that really perturbs me.

1) The definition of us : “Nepal is an independent…state, oriented towards democratic socialism…”

Did we really agree to have the government take one of our two cows (that we bought from our sisters’ and brothers’ remittance) and give it to our neighbor when we voted for them to write the constitution?

Did we really agree to be forced to join a cooperative where you have to teach your neighbor how to take care of his cow (which was actually yours?)

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2) Welfare dependence: Sit back, relax, enjoy the constitution, and the country.

We have right to clean environment, employment (and thus unemployment benefit), food, healthcare, and other social securities. Everything we need is a right! You’re gonna get these things no matter what. So, Sit back, relax and enjoy the country. The omnipotent state is going to do everything for us. It does not matter if these are realistically deliverable. Where else, if not the constitution, will you dream high and set tall ideals? Afterall, उद्देश्य के लिनु उडी छुनु चन्द्र एक ….

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If you are smart, the next thing you do after reading the constitution is get hold of a good lawyer to make some good money cause there are likely to be enough opportunities to sue the government in near future. If you are lucky, you will actually get a date at the court in a couple of years and if you are super lucky and win, the government will actually pay you after losing!

3) The haziness associated with property rights: Keep your property, only as long as the state does not want it!

It does say “Every citizen shall, subject to laws, have the right to acquire, own, have professional gains, sell and otherwise utilize, or dispose of property.”

But wait….after a few lines its says : Provided that it shall not be deemed to obstruct land reform, management and regulation by the State for increasing produce and productivity of land, modernization and professionalization of agriculture, environmental protection, and for an organized settlement and urban development as provided for by sub-clause 93) and (4).

I don’t know any property owner whose property might not be interpreted to violate this law.

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4) Creating this ‘us against them’ for perpetuity : All Nepalese are equal but some are more equal than the others.

Some of us are really special to secure a special clause in the fundamental rights section. Like the Labour Unions, but not the employers huh (c’mon why put this profit hungry evil employment providers whom we don’t even need cause we now have unemployment benefits lined up). If you belong to certain caste group, great for you, you are right there on the fundamental rights section. Rest of you – better luck next constitution. Hopefully you will have become a minority by then. Divide people across those lines. Perpetuate minorities, that’s how you get elected every time.giphy

 

5) Defeating the purpose overall: Autonomy! What does that mean?

Local states are all made of Jon Snows. They know nothing! That’s what the drafters thought. Otherwise there would be something local states could do, other than waiting for the center to send them leaders, money, food, administrators, everything basically.

Jon snow

6) And the vagueness: Prepare to fight!

The duties of a citizen as mentioned in the constitution includes “Compulsorily enlist when the nation needs the service”! Somebody please tell me what would ‘when the nation needs the service’ could possibly mean. Big flood? Big earthquake? Diarrhoea epidemics, etc.?

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Welcome to the New Nepal!

Let me know if there are things in the constitution that you disagree with. Use the hashtag #notmyconstitution and share!

 

 

Note: Views are personal!

 

 

Sarita Sapkota

About Sarita Sapkota

Ms. Sapkota is the Coordinator of Communication and Development at Samriddhi Foundation and was previously engaged with the Foundation as a Research Associate for more than three years. She is a graduate of political science and also contributes articles for Samriddhi's column at The Himalayan Times' Perspectives supplement.

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Power of the People

Nepal is located in a seismically active zone and is considered the eleventh most vulnerable place on earth from earthquake disaster point of view; Nepal did not recently move to this top spot. The earthquake that severely affected at least 14 districts caused complex problems with loss of life and property. Till date, the worst hit district is Sindhupalchowk, with death toll of over 3200 and more than 90 percent of the houses completely destroyed. The rescue and relief works that are supposed to reach within 24 and 72 hours respectively could not reach within that period due to difficult topography and subsequent landslides that made the transportation of materials impossible. Nepal has no reputation of being prepared for setbacks.

The residents of Baruwa (Sindhupalchowk), Satyadevi, Serthun, Jharlang (Upper Dhading), Mairung, Jibjibe, Borle (Rasuwa) were disconnected from the capital city for more than a week, from where rescue and relief operations were initiated with the help of national and international expert teams. Nepalese security agencies, including Nepal Army, Nepal Police and Armed Police Force did a commendable work with limited resources which they have. Nepalese security forces lacked enough number of helicopters, machines that are used for drilling concrete structure, search-and-rescue robots, unmanned rotorcrafts and other equipments to conduct crucial work of rescue. Therefore, the foreign rescuers, including India, China, Israel, Japan, and Turkey came to Nepal after getting government permission to do search and rescue.

The earthquake that occurred on 25th April has not only shaken the ground, but also the governance system as it largely failed to provide basic facilities to affected people at the time of utmost need. However, the self-initiatives taken by individuals, institutions, clubs and community based organizations (CBOs) were praiseworthy. The individuals of different parts of the country have rushed towards Gorkha, Sindhupalchowk, Rasuwa, Nuwakot, Kavre, Dolakha and other severely affected districts with food, tents, blankets, medicines, clothes etc with the true spirit of volunteerism. The representatives of Non-Resident Nepalese (NRN), Non-Government Organizations, and even profit making companies reached remote places for supporting the needy people prior to the government agencies showing their presence. This delay in government initiated relief work is due to the fact that their activities have to go through lengthy bureaucratic processes.

In addition to this, various individuals have taken initiatives in cleaning activities, distribution of drinking water, clearance of rubble and even taking dead bodies out from debris of damaged houses. Many people volunteered in hospitals, health camps and wherever possible to provide medical services. College students were busy in providing psychosocial counseling and education related to awareness especially to children and women in temporary shelters. This kind of selfless activity has definitely increased our willingness to help needy people who are residing in remote locations of our country and who are in very vulnerable conditions after the loss of shelter.

Primarily, the absence of an efficient   coordination mechanism with clear lines of responsibility at different levels hampered rapid mobilization of government agencies responsible for providing emergency response. The delay in distribution has led to the relief materials sent by international communities to rot at the airport warehouse; and in humongous quantities. The relief materials, which have hardly reached Village Development Committees (VDCs), could not reach ward level because of absence of local representatives for nearly two decades. Therefore, the victims in remote locations have had to live without food, tents and medical facilities for more than a week. It is not possible to provide all emergency facilities by a VDC secretary as s/he cannot take critical decisions due to non-political nature of the work. If there were locally elected people, they would have taken greater ownership and responsibility because they have better knowledge and information of local community. Such an arrangement would have also kept the misuse of relief materials at check.

Furthermore, the lack of local bodies has also increased undue pressure on the Constituent Assembly members as they need to do the works which otherwise would have been done by locally elected people or representatives of District Development Committees (DDCs). Therefore, it is only natural that they could not give enough time in formulating effective policy for earthquake victims and effectively coordinate with security agencies responsible for rescue and relief operations. The dilemma regarding distribution of tents and collection of funds from national and international supporters for victims through only one channel occurred due to lack of knowledge about the ground level reality to the cabinet members and lack of proper coordination among all stakeholders.

This deadly disaster, which has taken the life and property of thousands of people, has united all Nepalese – who are divided on social and political issues – to serve for those who are badly affected. Nepalese people who have been residing in other countries have also helped by raising funds or directly serving in hard-hit areas. The role of self motivated people should not be undermined in the reconstruction phase as it brings back social cohesion that existed among all Nepalese for centuries.  This is the only way that helps to overcome challenges brought by the catastrophic earthquake.

(This article was published in The Himalayan Times on 24th May, 2015 and can be read in the following link http://epaper.thehimalayantimes.com/epaperpdf/24052015/24052015-md-hr-19.pdf)

Pramod Rijal

About Pramod Rijal

Pramod Rijal is a Research Associate at Samriddhi, The Prosperity Foundation. He is also a lecturer of Economics at Mega National and Unique College of Management and has contributed a number of articles in various national dailies.

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Limited Government and Maximum Governance

The development activities were carried out relatively rapidly during the three-decade Panchayat although the country was ruled under single party system. A lot of infrastructural developments took place then. The roads of Nepal, Mahendra Highway, Arniko Highway (that connects Nepal with China), Tribhuvan Highway, Kulekhani Hydropower Project (the only one storage type project in Nepal), were built during the same period. Institutions such as Nepal Electricity Authority (NEA), Nepal Telecommunication Corporation, Nepal Drinking Water Corporation, and Nepal Airline Corporation (NAC) which were very essential for providing electricity, communication, water and air services to the people were created during the direct regime of the King which lasted till 1990. The development process is similar in other countries as economic development is initiated with the involvement of government intervention.

However, the involvement of government is not a sufficient condition for bringing prosperity at every nook and corner of the country because it monopolizes resources available and, hence, looses the incentive to utilize these resources efficiently in the absence of active participation of private sectors, which is quick in decision-making and following innovative practices. This is very true in case of Nepal as well as evinced by several examples in service and production sectors.

The generation of electricity has increased after deregulating energy sector by bringing Electricity Act in 1992. Private initiatives have already contributed to adding more than 237 MW of electricity to the national grid. Currently, around 44 projects, with a total capacity of 338 MW are under different stages of construction, and 76 hydroelectric projects that can contribute 711 MW to the national grid have already concluded Power Purchasing Agreements (PPAs) with the NEA. The output of electricity is expected to increase after complete deregulation in distribution as well transmission system as it solves one of the critical constraints – the construction of transmission lines by acquiring private land – of this sector. The government has recently decided to form a Transmission Company by including all the stakeholders such as Ministry of Finance (MoF), Ministry of Forest and Soil Conservation, Ministry of Environment, Science and Technology, Ministry of Land Reforms and Management, Ministry of Information and Communications, Ministry of Defense and Ministry of Home Affairs, and general public in order to solve the problems being faced by 18 different projects (worth over 650 MW) – continuous delay in construction of transmission system being the major one.

Access to mobile as well as landline phone has also risen after involvement of Ncell, United Telecom Limited (UTL), Nepal Telecom Satellite Private Limited (Hello Nepal), and through structural change of Nepal Telecommunication Corporation by disinvesting government’s share to its staff and general public and rebranding the same company as Nepal Telecom. These are just a few examples of sectorial development that Nepalese people have observed in the recent past. The easy access on phone has helped in overall development of the country as the farmers living in remote parts of the country can access necessary information such as the price, demand, supply and stock of their product, and initiate new ventures with the support of internet facility that is available in the mobile phones.

Liberalization, followed by privatisation is needed in an economy to mobilize human resources effectively and efficiently, reduce unnecessary expenditure, and manage other available resources more wisely. Furthermore, the involvement of private sector is very helpful for avoiding additional costs associated with insurance, pension and so on. Every year, Nepalese government has to allocate a large chunk of budget for such expenditure which increases with increase in number of employees.

On top of this, it is not necessary for private sector to follow lengthy recruitment processes that requires an examinee to go through a series of exams that lasts for more than a year. They do not have to worry about being unable to fire any staff unless they are legally declared unsound. It is widely accepted fact that without the presence of vibrant private sector, there is possibility of monopolization of the resources that reduces the chance of innovation – which actually results in fewer jobs in the country.

While the private sector helps in achieving high growth trajectory by judicious use of all forms of resources in the country, the government too can aid by maintaining rule of law, providing free and fair justice, and protecting private property. Only a decade ago, nobody wanted to establish any new enterprises in the Indian State of Bihar. This was also before Nitish Kumar came into power as the Chief Minister at a time when entrepreneurs were mugged, extorted and threatened by criminals. There was no security of life and property.

Today, many domestic and foreign entrepreneurs who want to invest in Nepal are not ready to do so due to lack of security of their property and absence of proper patient rights. Therefore, the government should make every effort to create an enabling environment for doing business by formulating necessary policies that bring efficiency to the economy, incentivize investments, and promote the culture of entrepreneurship.

Pramod Rijal

About Pramod Rijal

Pramod Rijal is a Research Associate at Samriddhi, The Prosperity Foundation. He is also a lecturer of Economics at Mega National and Unique College of Management and has contributed a number of articles in various national dailies.

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Private Schools for the Poor

The Government of Nepal (GoN) allocated Rs 86.03 billion as education budget for the fiscal year 2014/15 (13.91% of the total budget.) Let’s try to put that into perspective. According to the article “SLC Results: Failure of the system,” Rs. 10,000 is spent per child per year on a public school. In the meantime, concerns over teaching and learning methodology, attendance of teachers, the school’s accountability towards the children and their parents, (all of which ultimately affect the quality of education) are being raised in the public domain.

Recent inspections performed at some public schools of Kathmandu and Lalitpur show that there are some public schools that have almost no students. Harsha Lower Secondary School located at Gagalphedi, Kathmandu has altogether 15 students and 4 teachers; 2 more teachers are being recruited on contractual basis. Chalantar Secondary School, Kathmandu and Lubhu Secondary School, Lalitpur have similar problems. Instances like these have directly increased the cost of running public schools. On the other hand, these numbers also indicate that people have been opting for private schools operating in their communities.

The academic study performed by Santwona Memorial Academy reveals that there are public schools in Nepal which operate at Rs 7000-9000 per student in a year. The same study also talks of low cost private schools which operate at just Rs. 4500-5000 per student in a year. So clearly, there are private schools that are much cheaper than government funded public schools. While there are private schools that cost as much as 20-25 thousand per year or even beyond, it does not take understanding of rocket science to realize that for these poor people, these outlier private schools are not the real alternatives anyway. Despite no financial assistance from government, the private schools operating from the fees collected from students are conveying better quality of education. In the last 3 years (2014, 2013 and 2012 respectively,) the success rate of the SLC (grade 10 examinations) for privately run schools has been 93%, 80% and 84% while it has only managed to be 28%, 30% and 33% for publicly run schools. This trend bears great significance to Nepalese parents who consider school’s SLC success rate as a proxy for the quality of education.

Now, if the government is really giving out funds to educate children, it is high time that they allow the parents to choose where they want their children to get educated as well. Thus, instead of funding schools which directly increase the cost per student, the government should go for a better alternative – the Voucher System. Giving out the voucher can be a marvelous scheme for the welfare of poor which could possibly guarantee the right to education for the poor. Such system gives freedom for educating children in the school they wish to study. People become more rational while choosing the school. They send their children to the best school as per their compatibility. Therefore, based on the findings of the research (aforementioned) and considering performance of public schools, a better quality can be ensured with lesser fees through voucher system. This is how children will acquire quality education, transforming them into literate, well-informed and capable human resources that can pull themselves out of the poverty trap.

Sushil Lamichhane

About Sushil Lamichhane

Sushil Lamichhane, a student of Economics works under Research Department at Samriddhi, The Prosperity Foundation. Mr. Lamichhane is also associated with Rotaract Club of Kathmandu Metro, a voluntary youth-led organization working for professional development of youth under RI District 3292.

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Banda and its Impacts

“Nepal Banda” is not new to Nepal. The frequency of strikes and blockades increased with the establishment of multi-party democracy in Nepal in 1990. The CPN (UML), which was the major opposition force back then, started the culture of Nepal Banda in order to express their dissatisfaction with the ruling parties. Ever since, whenever the opposition parties disagree over a certain policy, Act or treaty, it has become fashionable among the political elites to call nationwide or regional strike thereby blocking roads, closing down educational institutions, enterprises, and other economic activities. This sort of practice has often been organized for “bringing change in the government or existing regime.” Less than a decade ago, there was a nation-wide strike called the seven major political parties against the direct rule of King Gyanendra which successfully overthrew the monarchy from Nepal relatively peacefully.

The effect of strikes is most severe on those low-income groups of people who depend on their daily wages to earn a livelihood. Forceful shutdown of enterprises affects entrepreneurs and owners of all levels equally because they need to pay salary and other benefits to their workforce, in addition to having to pay rents on land and building, and interest on loans, all acquired from one financial institution or the other, whether or not there is any production at all. During Bandas, students are also deprived of their right to education in a peaceful environment. Schools and colleges fail to follow the academic calendar due to frequent protest programs. The problem becomes even worse when strikes target educational institutions by bringing issues such as banning private education, high fees in private organizations, rights of teachers, and the likes.

Health sector cannot remain untouched as people who want to receive healthcare are severely affected due to unavailibility of vehicles, which is a must for carrying sick patients. It is absolutely unfortunate that it is no more news when pregnant women, injured, disabled, old and weak people die on the way to hospital. The acts of forceful strike are as severe crimes which cannot be justified at all.

In Nepal, even the health workers, who are responsible for providing health service have been organizing strikes by closing hospital, health posts and clinics for several days in order to bring public attention to their demands. It is totally understandable if this fact comes as a surprise to a non Nepali. It speaks volumes about governance of our country – which is failing to deliver basic rights. Not a single section of a society is immune from the negative impacts of strikes.

When strikes are elongated for several days, the entire economy of a country is completely paralyzed as it shrinks almost all economic activities, from small mom-and-pop stores to stock markets. In addition to this, such disruptions discourage investors by creating uncertainty and unpredictability. Consequently, production of goods and services are reduced and eventually distance the people from job opportunities in Nepal itself. Underproduction also causes deficit balance of payment (BoP) as the country starts to depend more on foreign products and export less and less. Moreover, it hampers revenue collection which is the backbone for overall development of the nation.

Furthermore, a lot of public as well as private properties are destroyed during strikes. We have had situations where they have even cost human lives. In a nutshell, Bandas are not a civilized way of achieving any kind of demand as they hampers all activities and compel us to remain in a vicious circle of poverty.

Pramod Rijal

About Pramod Rijal

Pramod Rijal is a Research Associate at Samriddhi, The Prosperity Foundation. He is also a lecturer of Economics at Mega National and Unique College of Management and has contributed a number of articles in various national dailies.

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