Nepal | August 07, 2020

NPC gearing up to establish project bank

Himalayan News Service
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Courtesy: NPC

Kathmandu, August 23

The National Planning Commission (NPC) is gearing up to set up a ‘project bank’.

The plan comes as an executive order has delegated the authority to the apex planning body of the government for assessment, pre-evaluation (appraisal) and examination of the projects and programmes and their concurrence for execution at the federal level through establishment of the project bank on the basis of various analytical approaches, including cost-benefit analysis.

The NPC will develop the primary database of the projects by including infrastructure projects that have already been investigated and documented through different line ministries and agencies and it will also collect the list of projects under various stages of preparations and their prioritisation, according to Sushil Bhatta, a member of NPC.

“We are preparing to set up a dedicated project bank unit at NPC by mid-September.”

After setting up a dedicated unit of the project bank, NPC will continuously engage in collecting the potential projects from the line ministries/agencies, parliamentarians, provincial planning commissions and local units, private sector, civil society, development partners and cooperatives.

As per preliminary discussions, the secretary of the NPC will be responsible for the screening, appraisal and prioritisation of the projects in coordination with the line ministries and the provincial planning commissions eyeing a balanced, environment-friendly, inclusive and quality and sustainability of the physical infrastructure.

The member of the NPC, who is responsible to look after physical infrastructure and transport, urban development, public private partnership and new projects, will be responsible for the overall supervision of the institutionalisation and operationalisation of the project bank.

The concept of project bank had emerged a long time back as the Ministry of Finance and NPC were facing perennial challenges of project recommendation from ministries concerned for the development projects in an ad hoc basis, which has given rise to multiple problems like allocation inefficiency and cost and time overruns of projects. These challenges have led the country towards inefficiency in development expenses due to lack of proper project preparedness.

To improve the budget allocation, the Ministry of Finance (MoF) has developed a project readiness filter and started earmarking the required budget based on the readiness of the project. Since only the project readiness filter is not a sufficient condition for allocation efficiency, the formation and executive order of the NPC has envisioned setting up a project bank at NPC and the planning body will be the final authority to provide consent to projects to earmark funds through the annual budget.

“The project bank will rigorously work out the cost benefit analysis by mobilising local and international experts,” said Bhatta. “If we rely on the cost benefit analysis of the financiers while executing the projects that are being financed on loans, the benefits are normally overestimated compared to the cost of the project, which could be deadly in the long run if the project cannot provide benefits accordingly and we will have to take on the burden of debt.”

The project bank will not necessarily engage only government agencies for the preparedness of the project. It will simultaneously invite the private sector and development partners for the feasibility study, detailed project report, and environmental impact assessment. The government agencies will facilitate in the land acquisition process, right of way clearance for physical infrastructure projects, and other hassles related to forest areas, among others.

“In a nutshell, the project bank is expected to work more effectively for project readiness through effective coordination and will expedite project execution,” as per Bhatta. “It will also identify and recommend project implementation modality in terms of financing like build, own, operate, transfer (BOOT); engineering, procurement, contract (EPC); EPC and financing (EPCF); build, own, transfer (BOT); public-private partnership; sole government financing or domestic financing, etcetera.”

A version of this article appears in print on August 24, 2018 of The Himalayan Times.

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