It would be prudent to scrutinise the financial health of a foreign firm before awarding it any project worth billions of rupees
Investment Board Nepal (IBN), which is responsible for bringing in foreign direct investment (FDI) in the country in the productive sectors, has approved investments worth approximately Rs 73 billion for the construction and development of two hydropower projects. However, FDI has plummeted drastically due to the outbreak of the coronavirus pandemic since last year and other factors related to the lengthy and cumbersome legal procedures that have been largely blamed for low investments in the targeted sectors, such as energy, tourism and construction.
The 48th meeting of the IBN, chaired by Prime Minister Sher Bahadur Deuba, on Saturday decided to approve investments in the 56-MW Jumkhola Hydropower Project worth Rs 10.5 billion based in Dolakha and 900-MW Arun III Hydropower Project worth Rs 62.26 billion in Sankhuwasabha. Jumkhola Hydel Project is being developed by Sanima Mai Hydropower Limited while Arun III is being developed by Satlej Jal Vidyut Neegam (SJVN), an Indian government undertaking. Arun III Hydel Project has already made 40 per cent physical progress. The approved investment in Arun III will be utilised to build auxiliary structures of the project. Likewise, the IBN meeting also gave approval to buying or selling of shares of Samrat Cement and Upper Trishuli-1 Hydel Project.
However, the IBN meeting has rejected the time extension sought by GMR (Grandhi Mallikarjun Rao), an Indian private company, for financial closure of the 900-MW Upper Karnali Hydropower Project. GMR had applied for the third time seeking an extension to mobilise the required resources for the multi-billion rupee project. IBN officials have said the bases presented by the company for the construction of the project were not adequate. In order to settle this issue, the IBN has decided to form a seven-member high-level committee under the coordination of Vice-Chairman of the National Planning Commission. Other members of the panel include secretaries at the Finance, Energy and Law and Chief Executive Officer of the IBN. IBN officials have said there was no reasonable ground to extend the time for the financial closure based only on GMR's 'business plan'. Such a big project cannot be handed over to a company whose financial health is unclear.
GMR has not been able to mobilise financial resources even seven years after reaching the Project Development Agreement (PDA) with IBN in 2014.
The IBN has not extended the time to GMR for financial closure since 2018. Neither has it terminated the PDA. As per the agreement, GMR was supposed to finalise the financial closure within two years. Learning lessons from this incident, it would be prudent to scrutinise the financial and technical aspects of a foreign firm before awarding any mega project involving multi-million dollar investment in the energy sector. The proposed 700-MW West Seti Hydel Project was also awarded to an Australian firm long ago.
It held the generation licence for more than 16 years but failed to develop it due to lack of resources and market for its electricity. On the other hand, the IBN should also make reforms in its legal aspects should it intend to attract more FDI in the productive sector.
Climate crisis
By now, everyone has realised that climate change is no more a hoax. And with each passing year, the climate crisis will only get worse. Year after year, we are seeing the impacts of climate change everywhere, not only in the poor, developing world. The series of severe floods, droughts, forest fires, air pollution and hurricanes that cut across the world have made governments sit up and think what can be done to reverse the trend. While no one is immune to the impacts of environmental hazards, they particularly affect the well-being and future of children.
A research study "Impacts of Climate Crisis and Environmental Degradation on Children and Youth in Nepal" highlights that the climate crisis has affected children's right to survival and growth. Half of those killed or injured by climate hazards in the last five years were children and youths, the report says.
Apart from being vulnerable to malnutrition and disease, climate shocks keep children away from learning.
To cope with the crisis, the local governments must swing into action to implement child and youth-centred climate friendly policies, such as promoting climate-adaptive water and sanitation systems and resilient livelihoods.
A version of this article appears in the print on October 11, 2021, of The Himalayan Times.
