Kathmandu, January 27

Prime Minister KP Oli has continued to surprise officials of the Investment Board Nepal (IBN), which he chairs.

Since he became prime minister on October 11, he has held three board meetings of the IBN — a state-owned body which oversees implementation of hydro projects of 500 megawatts or more and other projects with investment of  Rs 10 billion or more.

Surprisingly, all these meetings were held since December 20.

In contrast, his predecessor, Sushil Koirala, had held only six meetings during 20 months in office.

Oli’s interest in the IBN and its activities is, no doubt, inspiring for a country which is facing a huge infrastructure gap. What’s more, Oli has shown interest in developing some very unique projects.

During Sunday’s board meeting, for instance, Oli showed interest to develop monorail project in Kathmandu Valley.

During one of the previous meetings, he had directed the IBN Office to conduct a study on possibility of generating electricity through wind power. Around two months before that meeting, he had pledged to generate at least 200 megawatts of electricity through solar plants.

Talks about harnessing solar and wind potential make a lot of sense, as these measures would help the country to diversify the energy basket. These initiatives would help the country to end power cuts, which currently stand at over 14 hours per day; tackle problems emanating from supply disruptions of petroleum products, which the country is presently facing; and ensure energy security.

But the question is how long will it take to roll out these projects? And can they address immediate needs of the country?

Challenges aplenty

Experts have already said wind velocity data of at least one year are required to ascertain the quantum of energy that windmills can generate in the country. This effectively means wait of at least one year is a must before any decision is made. And even if feasibility studies yield positive outcome, it will take another few years to implement the projects.

Implementation of solar projects, on the other hand, may be a tad easier, as some studies have already been conducted in this area.

But the government’s plan to install solar plants of 25 MW through the World Bank’s support has virtually remained stalled for more than a year due to administrative delays.

So, possibility of such setbacks in implementation of other solar projects cannot be ruled out.

This is the crux of the problem facing Nepal.

But, unfortunately, Oli has done nothing to expedite project implementation.

The reasons why

It is not that these setbacks are a result of lack of fund. It’s true the government missed revenue collection target by Rs 52.27 billion in the first half of this fiscal year. But even today it is sitting on top of around Rs 80 billion in idle funds. And if this stock of money exhausts, it has ample fiscal space to resort to borrowing.

Yet projects, from hydro and irrigation to airports and roads, have remained stalled.

Instead of simply asking the reason behind delay in project implementation, Oli, it appears, is too busy exuding awkward confidence and floating plans that sound too good to be true. This has turned him into a laughing stock.

Remember when Oli said he would install pipelines in Kathmandu to distribute cooking gas? The smell of gas that wafted from his ‘pipeline’ was so strong, it smarted his own eyes and forced him to make an appeal to take him seriously.

This shows people are no longer interested in big talks at the moment, because they are more concerned about small issues like putting food on table, commuting in a comfortable manner, and getting a cylinder of cooking gas or a few litres of petrol.

So, talks about building a monorail network or generating electricity from wind are not going to find a market at the moment — although studies on these projects should definitely be conducted.

Changed priorities

People’s priorities have changed lately because the country is passing through one of the rough phases in history, thanks to the border blockade, which has sharply reduced flow of various goods, including petroleum products, from India.

Since supplies were disrupted, people have stopped engaging in constructive or productive conversations.

At offices, tea shops and health clubs, discussions are dominated by cooking gas and petrol. It is, therefore, not surprising when people dart questions like: “Did you get cooking gas or did you get petrol?”

These petty issues are literally sapping the energy of people as well, as one has to wait for hours in serpentine queues to get a few litres of gasoline or half a cylinder of cooking gas.

All the while, black market is flourishing, which has inflated prices of almost every good. This has badly hit savings of low and lower-medium income groups, which has turned them poorer.

Possible solutions

At this juncture, Oli should be finding ways to restore confidence in households, which are anticipating swift turnaround in their fortunes.

One simple way to do this is normalise supplies, as people are tired of buying goods at inflated prices. This should not be difficult now because

situation in most of the border points, except Birgunj, has eased.

Well, if he fails to respond quickly, people’s suspicion that the government is protecting black marketers will grow even stronger.

Also, adequate employment opportunities should be generated, especially for construction workers who have lost jobs due to halt in development activities following fuel shortage.

For this, public spending has to go up.

It is important for the government to ramp up spending at this point because confidence of private investors has been shattered. This is reflected in subdued demand for bank credit despite rapid fall in lending rates.

Banks are currently extending short-term business loans at interest of as low as five per cent. This means borrowers are getting money for free in real terms, if inflation of 11.6 per cent is adjusted. But there are no takers of this free money.

No wonder, credit growth of banks and financial institutions fell by 55.95 per cent in the first five months of this fiscal year through mid-December.

Hike in government spending can also stimulate private investment, because growth in public expenditure will create jobs and demand, which will eventually prompt the private sector to raise production to cater to growing needs.

This calls for rapid implementation of post-quake reconstruction projects.

Now it has become apparent that reconstruction of around 500,000 damaged private houses cannot be initiated immediately because of delay in completion of household surveys. This, no doubt, has deepened problems of victims of earthquakes of April and May, who are forced to spend chilly nights in temporary shelters.

Immediate measures

But, in the meantime, focus should be diverted to building other infrastructure damaged by quakes. For this, National Authority for Reconstruction should hire adequate employees and rapidly roll out projects.

Also, Oli could do great justice to the country if he could rapidly implement ready-to-build hydroelectric projects, such as 1,200MW Budhigandaki, 140MW Tanahu, 42MW Upper Trishuli 3B and 40MW Rahughat, as feasibility studies of these projects have already been conducted.

So, all Oli needs to do is focus on issues that are already on the table. By pitching ambitious plans, he will only irritate the public. This can be counterproductive and cause erosion in whatever little faith people have in government.