Nepal | May 26, 2019

ADB urges government to improve performance in project implementation

Himalayan News Service

Kathmandu, April 21

The Asian Development Bank (ADB) has urged the government to improve its project implementation performance citing the country has been able to utilise only a nominal amount of fund pledged by the ADB.

The country has not yet utilised 72 per cent of the pledged amount or $1.25 billion till this fiscal.

The unutilised pledged amount is around six per cent of the country’s total gross domestic product (GDP).

Similarly, the un-contracted amount is $921 million, which is 53 per cent of ADB’s portfolio in Nepal.

Of the net available funding worth $1.7 billion comprising 23 loans and 21 grants for 32 projects as of March, the sluggish expenditure of the government has adversely affected the completion of projects within the stipulated timeframe.

During the Tripartite Portfolio review meeting of ADB, today, Diwesh Sharan, deputy director general of ADB South Asia Department, underlined some systemic issues that were hindering the project implementation performance.

“Compared to other countries, Nepal’s portfolio performance has suffered due to the prolonged procurement process, weak project management capacity, and weak performance of consultants and contractors,” he said, adding, “Contract awarding and disbursement in Nepal is far lower than the ADB average of 47 per cent and 66 per cent, respectively.”

More recently, ADB has expressed commitment to increase annual lending level to $500 million per annum. But the country’s capacity to spend money is poor.

Speaking in the programme, Baikuntha Aryal, joint secretary at the Ministry of Finance, admitted that the government’s performance in project implementation is poor. “Capital expenditure in this fiscal is below 20 per cent up to now. It was further compounded this year by various constraints and external factors like the devastating earthquakes and unfavourable situation for development due to tensions at the southern border points.”

Aryal, however, expressed hope that capital expenditure would gather momentum when National Reconstruction Authority (NRA) starts working on reconstruction. The government in this fiscal has a target to achieve $400 million of contract award and about $250 million of disbursement.

ADB’s South Asia deputy director general further stressed on immediate implementation of Earthquake Emergency Assistance Project. “NRA needs to urgently approve required budgets to all implementing agencies, and establish fully functional districts project implementation units,” he said.

Earthquake Emergency Assistance Project has 11 per cent of share in total ADB portfolio, in which 91 per cent, worth $181.97 million, has not yet been disbursed. Mainly, energy sector projects, which have a larger share in total portfolio worth $547.71 million and 87 per cent of energy portfolio has not been disbursed.

Sharan was also critical regarding the progress of power sector projects and Tribhuvan International Airport upgradation project which have been delayed since long.

Also speaking in the programme, Kenichi Yokoyama, ADB country director to Nepal, highlighted some crucial steps to achieve the disbursement of $500 million per annum in medium-term through raft of reforms in project implementation.

He stressed on less number of larger-sized projects, with significant readiness of projects, systematic capacity development mechanism and rigorous monitoring mechanism for the effective and efficient implementation of the projects.

Tripartite Portfolio Review Meeting is a forum for the high-level representatives of Ministry of Finance, line ministries/agencies, and ADB to discuss critical impediments of key projects and decide on the specific solutions for immediate actions to enhance the performance of ADB-assisted projects.


A version of this article appears in print on April 22, 2016 of The Himalayan Times.

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