Govt, WB call truce Donors say Bank went overboard

By Akhilesh Upadhyay

KATHMANDU, Feb 9 - While the World Bank kept away today from the donor-government meet on Melamchi "to show its displeasure" over the events that led to the resignation of Mahesh Acharya as the Finance Minister, the Bank’s Nepal chief Hans Rothenbuhler met the newly appointed Finance Minister Dr Ram Sharan Mahat in an apparent bid to call a truce.

"We discussed a number of issues," said Dr Mahat, minutes after the World Bank Resident Representative had left the Finance Ministry after the one-on-one closed-door session that stretched for over one and a half hour. "The discussions revolved around the financial sector reforms and a number of other areas that involve both of us...We didn’t discuss Melamchi," he told The Kathmandu Post.

One area that was very much in Dr Mahat’s mind but one that he was particularly keen to avoid after today’s "truce" with the Bank was his displeasure over the World Bank’s public statement voicing its concern over the appointment of Dr Tilak Rawal as the Nepal Rastra Bank governor. The Bank, officials say, is not happy on the appointment of Dr Rawal, who has a sketchy record as the Executive Chairman of the Rastriya Banijya Bank and doesn’t inspire much confidence as a reform-minded official.

For his part, the new Finance Minister feels that the World Bank as a donor has gone overboard in voicing its reservation about Rawal’s appointment, Dr Mahat’s aides say, stressing this is very much an issue to be decided by the government and government alone.

The Bank was infuriated by the resignation of Finance Minister Acharya, the donor’s blue-eyed boy, who boasts of a solid track record as a pro-reform policy-maker during his first tenure in the office in 1991-94.

"Come what may, the World Bank has made it very clear to us that they will continue to support the Melamchi Drinking Water Project as long as we meet their two conditions," said Madhav Ghimire, Joint Secretary at the Finance Ministry’s Foreign Aid Section. "The management of the Nepal Water Supply Corporation should go to the private sector, and we should hike the water tariff. There is no question of them backing out if we make the pledges."

As the news of the Bank’s withdrawal from today’s Melamchi consultation kicked storm this morning, a World Bank official said it wasn’t much use sitting for the meeting without first being clear about "our own policy." "We are currently reviewing our Country Assistance Strategy and it wasn’t much use attending the meeting where we were expected to make pledges."

While a lot of people, including government officials, now agree that the Bank has every right to put conditionality as a lender, they say it violated the sanctity of the donor community when it publicly voiced its displeasure over the drama surrounding the appointment of the Rastra Bank governor.

"It is in bad taste," said a senior official with a leading bilateral agency. "We may not agree with a lot of things that Nepal does. We don’t have to. There has been a lot of mistakes in the past (on the part of the donors). Nepal needs more room for itself," he said, adding he felt generally "uncomfortable" with the "donor-driven" development. "Nepal’s programmes should be demand-driven, not donor-driven," said an official with another leading bilateral agency. Both the donors, however, said that sustainability is the key to development, indicating that Nepal should make greater efforts to ensure that the foreign-aided projects are able to sustain themselves with the domestic resources when the donors pull-out.

Five cops die in Maoist ambush

By a Post reporter

LAMJUNG, Feb 9 - Five policemen were killed and two injured in an ambush laid by the underground Maoists in Dude Danda of Shahilitar, Bhaklaikahrka VDC, six hours walk from the district headquarters on Wednesday.

According to District Police Office Lamjung, the police team led by Assistant Sub-Inspector Ram Bahadur Thapa was trapped in the ambush at 1.30 p.m today. Constables Bhakta Bahadur Dangi, Ram Prasad Lamghare, Man Prasad Gurung, Ram Chandra Dhakal including ASI Thapa died on the spot. Head Constable Padam Bahadur Ranabhat and Constable Hari Prasad Dawadi, sustained serious injuries.

The injured were flown to Kathmandu for treatment.

Earlier on Monday, the insurgents had extorted Rs 20 thousand from the people in Satbise Bazaar at around 9.30 a.m. They announced that it signified the beginning of their fourth phase programme.

Chakratirtha, Bichoure, Dudhpokhari, Pyarjung, Manjang, Archalbot, Orletar, Ishaneshwore, Jeeta, Dhamilikuwa are the villages most affected by the insurgency.

Oppn flays scheme on freeing bonded labours

By a Post Reporter

KATHMANDU, Feb 9 - The debt relief program proposed by the government to free bonded labours directly contradicts with the constitution, representatives of various opposition parties said today.

While the constitution says that any form of slavery including the bonded labour is against the law, the government is proposing to pay back the loans owed by these labourers to their ‘masters’ that have compounded over the years, if not generations.

"Instead of punishing these people who have for years exploited the bonded labours, the government is proposing to award these handful of exploiters by paying them money in the form of debt relief. This program is totally against the constitution," said Hridesh Tripathi, lawmaker from the Nepal Sadbhavana Party (NSP).

The government estimates that there are 16,305 families of bonded labour that have concentrated in Dang, Banke, Bardia, Kailali and Kanchanpur districts.

About two years ago, the government through a cabinet decision decided to set up a fund of Rs. 50 million to pay back the loans as part of the Bonded Labour Loan Relief and Upliftment Program.

"The constitution has specific provisions to protect the helpless and the backward people and prohibits any and every form of slavery," Prem Bahadur Singh, lawmaker of the main opposition CPN-UML said.

Singh alleged that the program would only benefit a handful of exploiters and the state should not financially award these people who are already violating human right and working against the constitution.

Instead, the funds should be used for more productive use like proving training in various fields, providing land and housing so these bonded labours can begin a life on their own and the government can concentrate on the upliftment of these people who have spent their lives working as bonded labour.

Navaraj Subedi of the National People’s Front said emphasis should be given towards abolishing the concept of bonded labour and programs like the one proposed by the government would be a never materialise.

Subedi said these land owners who have forced many people to work for them for generations could forge documents and make false claims. Others agreed that this program would mostly benefit the already benefitting land owners and do little to help the actual bonded labourers.

Discussion on the issues was held today by the Public Accounts Committee (PAC) of the House of Representatives, after this year’s Auditor General’s report questioned the effectiveness of the program.

Minister of State for Land Reforms Lamsal admitted that out of the thousands of such families only 764 families had been rescued by the government in the past two years since the program came into effect.

"The figure may be low but these people were not only relieved of their loans but have been provided training to begin other sources of income," the minister said.

PAC member however said that at this rate it would take at least another 50 years before the present number of bonded labours are free and the government should quit depending on donors like International Labour Organization to fund relief programs.

Members also said that priority should be given to these bonded labour while distributing land to the landless squatters by the commission formed for the task.

Auditor General Bishnu Bahadur K.C. said the government should have collected data from both the labours and the land owners the actual amount they owed before getting the Rs. 5 million figure.

"Instead of debt relief the government should bring package program for the upliftment of these people by rehabilitating them and providing them skill training," K.C. said.

Donors evasive on funding Melamchi project

By a Post Reporter

KATHMANDU, Feb 9 - Nine months have passed since the donors’ pledged their commitment in principle to the multi-million dollar Melamchi Water Supply Project (MWSP) but the controversial project is yet to take off with donors still not agreeing on certain component.

At the 4th Donors Meeting on MWSP here today, donors funding different components of the four-phased project failed to commit their share for "financial closure" as there was confusion over whether the Melamchi project was to be developed as a multi-purpose project incorporating hydropower and water supply or drinking water project only.

Instead, the meeting which was supposed to be the last for negotiations ended with decision to meet again tomorrow to discuss the diversion scheme component.

Sources say, NORAD, the Norwegian development agency, that has agreed to fund the diversion scheme comprising of 28 kilometres tunnel, is keen on developing a hydropower plant at Sundarijal. The hydropower plant is expected to generate 25 megawatt of energy.

Some have been disagreeing on this as the construction of the power plant is estimated to cost US$ 18 million. Besides, the tunnel cost will also go up as a pressurised U-tunnel will have to be constructed in the place of open channel flow tunnel if hydropower is to be generated.

However, talking to The Kathmandu Post after the programme Norwegian Charge de Affaires Ingrid Ostgrad, said NORAD’s funding does not depend on whether the hydro-power plant is approved or not. She said NORAD is in favour of whichever design leads to cheaper water supply.

Earlier, participating in the discussion, Ostgrad said "We want to know if adding hydropower in the project will ensure cheaper water supply or not," said Ostgrad. "The private investor for the hydropower component is also not identified."

Representative of SIDA, the Swedish funding agency, said they were not in a position to increase their commitment. "We are not in a position to increase (SIDA’s previously committed amount)," said the SIDA representative. "We have not yet committed ourselves to anything."

Hinting at NORAD’s reluctancy in the diversion scheme representative of the Japan Bank of International Cooperation (JIBC), earlier known as the OECF which is funding the construction of water treatment plant, said it was useless constructing the treatment plant without the tunnel. He said tunnelling work should be done on time for treatment plant and the issue of the maintenance of the tunnel should also be resolved.

Richard Vokes, Resident Representative of the Asian Development Bank (ADB) which is also coordinating the donor agencies for the project, stressed on the need for greater commitment. "There has to be a certain degree of commitment," said Vokes referring to the reluctancy among donors to commit themselves. He, however, expressed ADB’s full commitment to the project.

The US$ 400 million MWSP that is to provide 170 mld (million litre daily) water has the financial gap of US$ 17 million at present. The government has also agreed to put in its matching contribution of 20 percent of the total project cost.

The World Bank, Finnish donor agency FINNIDA, Nordic Development Fund (NDF) and OPEC, all agencies that have agreed in principle to fund the project, were conspicuous by their absence at today’s meeting.

The World Bank sent a letter to the MWSP yesterday stating that they would not be able to participate in the meeting since it is currently busy with the review of the Country Assistance Strategy.

According to Dinesh Chandra Pyakurel, Executive Director of MWSP, the project will go into construction by July 2001 if everything goes well.

Melamchi drinking water project was the battle cry for Prime Minister K P Bhattarai when he was campaigning for a parliament seat in last year’s general elections.

Enron Corp demands government mediation

By Prashant Aryal

KATHMANDU, Feb 9 - The US energy giant Enron Corp has convinced Nepali authorities to sign an agreement saying HMG would undertake and finalize within one year an agreement with India that resolves the issue of down-stream benefits accruing out of the huge Karnali-Chisapani multi-purpose project.

Highly placed government sources told The Kathmandu Post today that Enron officials were coming to Kathmandu soon to sign the agreement with officials of Ministry of Water Resources.

The agreement basically puts the ball in the government’s court as far as negotiations with India on resolving the down-stream benefit issue is concerned.

"Enron originally said that it would itself negotiate with India but now that the US giant has realized the difficulties in such negotiations, it has asked HMG to undertake such talks with India," an official familiar with the latest development said. Enron wants such talks to be concluded within a year, he said.

Only after Nepal and India agree to some framework of sharing of down-stream benefits will Enron pursue the all important power trading agreements with India, officials said.

The development comes some months after an all party meeting in the capital gave Enron the green signal to pursue an initial survey licence. The conditions were - resolving the issue of sharing down-stream benefits, ensuring basic necessities to the villages at the project site, and ensuring that the huge amounts of investments poured into the project have no negative effects on the World Bank’s development lending to Nepal.

The Karnali-Chisapani project, if developed, will have one of the world’s highest rock-fill dam, and generate 10,800 megawatts of electricity. It also has the capacity to irrigate 3.2 million hectares of land in India and an additional 191,000 hectares in Nepal. The project could cost as much as US 8 billion dollars.

An outer ring road in the offing in Kathmandu Valley

By Surendra Phuyal

KATHMANDU, Feb 9 - If every thing goes smoothly, Kathmandu Valley will have a new Ring Road hugging the foothills of the mountains that surround it.

Though the concept of an outer Ring Road in the Valley was conceived as early as 1978, officials are finally set to carry out feasibility study works of the road which, if undertaken, is expected to lighten the load of growing inner city traffic.

Officials at the National Planning Commission, Ministry of Works and Transports, and Ministry of Housing and Physical Planning are currently working out details required to develop the new Ring Road in the Valley.

Unlike in the past when development works would be pursued haphazardly, officials this time are planning to integrate other development works - such as drinking water pipelines, electricity and telecommunication transmission lines, and even housing plots - alongside the road area.

To that effect, a few weeks back the government formed a coordination committee comprising senior officials with the line ministries. Within two months the committee will submit its report recommending, among others, the route through which the outer Ring Road will pass.

According to SB Sangachhe, acting Member Secretary at Kathmandu Valley Town Development Committee, also a member of the coordinating committee, the 50-to-70 km road will encircle the Valley’s all three districts - Bhaktapur, Lalitpur and Kathmandu - unlike the existing Ring Road. The existing 27.3 km Ring Road built in the early 70s encircles only Kathmandu and Lalitpur.

The proposed road will touch all bases, including Balaju in the west and link areas close to Budhanilkantha, Gokarneswor, Sankhu, eastern and southern Bhaktapur and southern and western Lalitpur. The exact locations through which the route will pass, however, have not been finalized.

Officials at the Department of Roads, the authority responsible for constructing and maintaining roads, highways and bridges in the country, meanwhile, are awaiting the coordination committee report.

"Once the report is submitted, we will review that," says Keshav Prasad Pokharel, Deputy Director General Director at the department’s design section. "Then only we will proceed ahead with our detail survey works."

While announcing the annual budget for the fiscal year 1999/2000, the government had asserted that it would immediately initiate works towards constructing the outer Ring Road. In practice, however, it earmarked only Rs 1 million which, officials say is "hardly" sufficient for study works, leave alone the costly venture of constructing the road after acquiring lands.

Pokharel says that the detail survey works could be initiated only by the beginning of next fiscal year (July 15).

But before the detail survey works are initiated, the government may need to acquire lands - "a tough job indeed" - in some segments of the proposed road.

Says Sangachhe: "Because the Melamchi project plans to start laying out pipelines from December (according to Melamchi’s initial proposals), it’s very important the government started the land acquisition works before that."

The government needs to acquire land along 56 km of Melamchi’s bulk distribution line in the Valley for the outer Ring Road. Officials reckon the integrated acquisition cost required to lay the water pipelines alone stood at around Rs 1.25 billion.

This way, the acquired land can be used by all concerned line agencies - Department of Roads, Melamchi project, Nepal Electricity Authority, Nepal Telecommunication Corporation, and even Department of Housing Development. "The acquisition venture will turn out to be a cheaper one as all the authorities involved will have to pay their share," Sangachhe adds.

According to Sangachhe the coordination committee members are planning to recommend the government to acquire 100-meter wide land area along the proposed road.

"This will not only make the new road area scientific and well managed from sustainable urban development point of view" he says. "But it will also help the government return its investments - made in acquiring the lands - by selling the land area developed for housing and commercial purposes later."

The biggest challenge after successful completion of the detailed survey and land acquisition works with which the government will have to confront is search for donors, say Department of Roads officials.

But Sangachhe says "Japan is interested in funding the outer Ring Road provided the government creates a favourable atmosphere." In 1993 Japan International Cooperation Agency (JICA), had even conducted an extensive study on the Valley roads, and had come up with an Urban Road Masterplan.

Experts say the construction of the outer Ring Road in the Valley will largely help Katmandu Valley disperse its growing traffic and residential areas which at the moment are mostly concentrated around the city centre.