HIMALAYAN NEWS SERVICE
KATHMANDU: Nepal needs three to four times of the current level of investment in infrastructure to achieve growth targets.
“Currently the country has been spending around three per cent of the total gross domestic product in infrastructure but it’s not enough,” said World Bank country manager Tahseen Sayed at a workshop on ‘Private Investment in Infrastructure: Mapping a Way Forward in Nepal’ organised by Investment Board and World Bank in Valley today.
“ADB estimated that some eight per cent investment of GDP on infrastructure is required to meet the economic growth,” senior transport specialist at the World Bank Farhad Ahmed said, adding that an addition of $1.3 billion to $2 billion per annum up to 2020 is required, whereas 25 development financing institutions contributed $226 million to infrastructure and other economic sectors in 2011. “Similarly private sector invested $35 million in infrastructure between 2005 and 2010.”
The World Bank Study has, however, revealed that weak regulatory and institutional environment, apart from inadequate institutional capacity, fiscal risk, viability gap funding and lack of bankable projects made the Public Private Partnership — that is key in developing infrastructure — difficult.
The involvement of private sector in the PPP projects has to be clarified, according to senior PPP specialist at the World Bank Sri Kumar Tadimalla. “Private sector is necessary to bring in efficiency,” he said, adding that PPP is a tool.
Development of infrastructure will create base for higher economic development, said caretaker finance minister Barshaman Pun inaugurating the workshop. “But the growth has to be sustainable,” he said, adding that there is a huge investment deficit. “Nepal needs to join hands in the sectors of hydropower, transportation and irrigation with private sector, apart from using pension fund and capital market as source of investment for infrastructure that could propel growth.”
However, the single most important macro constraint for economic growth is weak investment in infrastructure which has had a cascading impact on other vital aspects of economy like tourism, industrial development, and hydropower, said chief executive of Investment Board Radhesh Pant.
Nepal ranks 119 out of 125 countries in the world in infrastructure quality, according to the World Bank database. “The first step to fostering economic growth in Nepal should be to focus on infrastructure development with respect to a viable strategy and political and public consensus,” he said, adding the government alone cannot undertake the financial burden and risks involved.
“Like governments arou-nd the world that have learned private sector engagement is key to successfully finance, build and operate infrastructure assets, Nepal should follow suit.”