AIIB review team picks UIIP, seeks supporting documents from MoUD

Kathmandu, August 31

The project review team of Asian Infrastructure Investment Bank (AIIB) has picked Urban Infrastructure Improvement Project (UIIP) for possible financing and asked the Ministry of Urban Development — the executing agency of the project — to submit supporting documents.

Among the five projects proposed by the government to the China-led multilateral bank during the annual meeting of AIIB held in June, the project review team has shown interest to finance UIIP.

Under the project, the government will develop the entire required city infrastructure in the headquarters of 18 districts of the Tarai, according to Ram Chandra Dangal, joint secretary at the Ministry of Urban Development. “Drinking water, sewerage and sanitation, street lights, bus parks, fun parks, improved roads, planned settlements, educational and health institutions and other facilities will be developed under the project.”

The project will cover all the district headquarters of the Tarai except for Dang and Chitwan. The municipalities where district headquarters are located — Bhadrapur, Janakpurdham, Birgunj, Rajbiraj, Dhangadhi, Nepalgunj, Mahendranagar, Biratnagar, Jaleshwor, Gaur, Lahan, Taulihawa, Inaruwa, Malangawa, Gularia, Siddharthanagar, Kalaiya and Parasi — will benefit from the project.

The government has set a target to conclude the project, estimated to cost around $560 million, within five years.

The government had approached AIIB for loan assistance of $280 million, according to the Ministry of Finance. Negotiations for the assistance will begin after the AIIB board approves the project. The project review team will submit Nepal’s proposal after examining the worth of the project and its bankability, according to officials.

The government has allocated budget worth Rs 9.54 billion under the heading of ‘intensive urban infrastructure development project’ in this fiscal. The project will map entire required facilities in 18 district headquarters of Tarai to develop them into well-facilitated cities and lay the groundwork for pre-construction phase.

If approved from the AIIB board, UIIP will be the first project mobilised under the assistance of the recently established China-backed multilateral bank.

As the country has been moving towards rapid urbanisation, the government has designed the project to develop district headquarters of Tarai as model cities. Currently, over 42 per cent of the country’s population resides in 217


Apart from UIIP, the government has proposed two road projects. One is Pokhara-Beni-Jomsom road, which connects the Chinese border at Korala of Mustang and has also been identified as part of the strategic road network. Another project is upgradation of Samakhusi-Tokha-Chhahare road section.

The government has also proposed two energy related projects. One is 93-megawatt Sharada-Babai Hydropower Project located in Dang and Salyan districts. Another energy project, Nepal Distribution System Upgrading and Extension Project, aims to make distribution system of Nepal Electricity Authority more effective and efficient.

Canada to apply to join China-backed bank

Beijing, August 31

Canada will apply to join the China-backed Asian Infrastructure Investment Bank (AIIB), Ottawa’s finance department said today, in a coup for Beijing after Washington had tried to dissuade US allies from signing up.

“Canada is always looking for ways to create hope and opportunity for our middle class as well as for people around the world,” Finance Minister Bill Morneau said in a statement issued in Beijing.

“Membership in AIIB is an opportunity to do just that.”

The Beijing-headquartered multilateral lender, which began operations earlier this year, has been seen by some as a rival to the World Bank and the Philippines-based Asian Development Bank, which was founded in 1966.

The $100 billion AIIB counts several major European countries among its shareholders after they joined up despite objections of the United States, which remains by far the world’s largest economy and hosts both the World Bank and International Monetary Fund.

Critics feared the new bank would set much lower standards for projects and undermine principles of social, environmental and economic sustainability adhered to by the World Bank and other multilateral development finance institutions.