Road sector performance bleak

By Prem Khanal

KATHMANDU, July 7 - In yet another reoccurrence of the years-old trends, most of the prioritized road projects announced in the budget for current fiscal year will remain uncompleted this year again as a result of chronic problem in implementation level.

The gloomy picture in completion of the road project comes despite reasonable and timely sanction of budget by the government in road construction and renovation, widely regarded as one of the powerful tools for fighting regional disparity, and hence containing the worsening poverty situation.

The performance of the road projects, for the current fiscal year has been, as usual, frustrating. The Department of Roads managed to complete the construction of only 150 kilometers (kms) in the first eight months of the current fiscal year, against the target of 400 kms. Concerned official says that this figure too is estimated and come down after the completion of progress evaluation of the
current year.

The current year’s targets for blacktop, graveled and earthen roads are 30, 150 and 190 kms, whereas the progress in the first eight months was just 55, 50 and 45 kms respectively.

Similarly, not much headway has been made in the first three years of the five-year Ninth Plan. The five year plan had aimed to extend road connection to 12 district headquarters, whereas the achievements so far is the road connection to just two of the districts, that too with seasonal ones.

Although the achievement so far is depressingly low, the release of budget for the different road projects, however, has been remained satisfactory. Concerned officials say that almost the whole of the budget allocated for the current year for road construction would be spent by the end of the current fiscal year.

The government has allocated Rs 5.52 billion for road projects throughout the kingdom. Sources at the department informed that only Rs 700 million of the total allocated funds would not be released this fiscal year, as 60 per cent of the second Agriculture Loan Program and 34 per cent of the Debt Relief Fund funded by the Asian Development Bank and the Japanese government respectively, are yet to be released.

Rajendra Prasad Pradhananga, Chief of Evaluation and Monitoring Section of the department, informed that generally around 75 per cent of the total allocated budget are spent. As per this trend, it is expected that over Rs 4.14 billion would be spent, which is higher than the actual expenditure of Rs 3.90 billion realized last year.

Minister of Finance Dr Ram Sharan Mahat speaking at an interaction program last week, had also publicly expressed deep dissatisfaction over the dismal performances seen in the road construction sector. "Despite uninterrupted timely sanction of the budget, achievement, so far, is very gloomy."

According to the concerned experts, huge spending on reconstruction, quality upgrade and maintenance of the existing roads out of the allocated budget, is the prime cause of such low achievements, particularly in extending roads to new destination. Such expenditures, which have been routine expenditure after each monsoon season due to low quality of maintenance, has particularly become unproductive. Concerned experts of the department said that around 65 per cent of the total budget is absorbed in such activities.

Sources at the department informed that the last three years’ average maintenance per kilometer expenditures of blacktop highway is Rs 44 million whereas similar upgrade expenditure for sub-highway is Rs 4.4 million. Similarly, the average per kilometer expenditure of blacktop roads build under Third Road Renovation Project funded by Asian Development Bank (ADB), is Rs 9.3 million.

Another major deep-rooted problem related with poor performances of road construction sector is political intervention. Officials of the department blame local political leaders for widely-criticized delay in implementation of the project. "They create various obstacles in smooth operation of the project by raising issues related with road construction area, compensation amount of the acquisitioned land and contractor," they say. Not only the government officials but National Planning Commission has also expressed similar views. The mid-term evaluation of Ninth Plan has clearly pointed out this problem and has urged political leaders to be serious on this particular issue.

Narayan Prasad Regmi, Officer at the department says, "despite timely release of budget, many projects have failed to achieve desired progress just because of the arise of problems in finalizing contracts and distributing compensation."

Beside this, the government, despite all its efforts, has, so far, failed to attract private sector investment in the road sector. The government has endorsed policy of "Built, Owned and Transfer" in the road sector to attract private investment.

Market confidence at low ebb, Index slumps

Post Report

KATHMANDU, July 7 – Investors’ confidence in the bearish Nepal Stock Exchange (Nepse) continued to sway at a low ebb with the Index declining yet again this week. The week saw a drop in the Nepse Index by 3.77 points, down from the Monday’s opening Index of 331.05 points to 327.28 points at the end of trading on Friday.

The latest fall in the Index follows a brief bullish tendency that prevailed in the stock market the previous week. The performance of the fledging stock market the previous week had improved after weeks of weak performance when the Nepse Index, the barometer of investors’ confidence, surged by over 4 points. However, continuing the previous trend, the market turned bearish yet again with the Index slumping more than 3 points last week.

The opening Index for the last week stood at 336.38, which later slipped by 3.69 points to touch 332.69 at the close of trading on Friday that week. The Index in the previous week had surged by 4.06 points breaking the pall over the capital market, improving from 332.81 points the previous Monday to 336.87 points at the end of trading on the previous Friday. Three weeks back, the Index had fallen by 6.75 points.

According to the weekly share information disseminated by the Nepse, the Index for commercial banks alone dipped by over 10 points from 358.77 to 348.69, against the last week’s fall from 366.87 to 361.57 points. And it’s the fall in the Index of commercial banks that drags down the overall Nepse Index. The reason is the usual overwhelming trading of shares of commercial bank. The Index for this sector in the previous week had surged by almost 7 points to settle at 366.40, up from the week’s opening Index of 359.20 points. The Index of commercial banks three weeks ago had plunged by almost 10 points.

Similarly, the indices of manufacturing and processing group, hotel group and others have also registered a fall this week. While the Index for the manufacturing and processing group fell down to touch 317.22 points, the indices of the hotel and other groups dropped from 289.05 and 186.62 to 277.46 and 172.08 points respectively.

The index for the trading group registered a marginal increment from 114.63 to 315.23 points. Surprisingly, insurance and finance group saw a quantum leap by gaining over 31 points. The Index of the group surged from 115.55 to 343.79 in the five-day trading week. The Index of finance and insurance group last week had slipped from 317.77 points to 314.32 points. The group in the previous week had also registered a marginal fall.

During this week, a total of 384,230 share units worth Rs 24.08 million were traded in a total 1020 transactions. The statistics for the last week had recorded trading 214,860 share units worth Rs 23.4 million in 933 transactions.

On the basis of the total number of transactions, Nepal Banking and Merchant Finance Ltd. with 237 transactions topped this week. However, based on the number of share units traded, Harisiddhi Bricks and Tiles Factory emerged as the largest trading house with the exchange of 341,429 units. Likewise, considering the value of transaction, the topper was Nepal Arab Bank Ltd. with trading worth Rs 5.25 million.

Last week, on the basis of the number of transactions, Nepal Housing and Merchant Company Ltd. had topped. The total number of transactions for the company was 352. Similarly, on the basis of total number of share units traded, Harisiddhi Bricks and Tile factory had topped with 176,335 share units.

Likewise, considering the total value of transaction, Bank of Kathmandu, with transactions worth Rs 8.81 million, topped the market.

On a groupwise basis, the participation of commercial banks in share trading this week stood at 75.90 per cent. The participation of the banks, which usually command a lion’s share of the total share trading, had stood at 85.51 per cent last week, while it had slipped to just 50 per cent in the previous week from the 72.55 per cent two weeks ago. Fluctuation in the share prices of commercial banks is the root cause of Nepse Index upheavals.

Similarly, the participation of manufacturing and procession group stood at 4.77 per cent, up from the last week’s share transaction of 2.46 per cent. In the like manner, hotel, insurance, finance and other groups shared 0.60, 2.58, 15.73 and 0.36 per cent respectively. The participation of these groups last week were registered 0.9, 3.28, 7.52 and 0.34 respectively as against 0.29, 0.99, 25.08 and 0.21 per cent two weeks back. The participation of the trading group stood at 0.05 per cent. No shares of the trading group had been exchanged for the past two weeks.

During the week, a total of 57 companies had listed their prices for share trading. However, shares of only 44 companies were traded. Nepse floor remained open for all five working days this week.

Companies whose shares were traded for all the five days include Nepal Arab Bank Ltd. (Rs 1480-1420), Nepal Grindlays Bank Ltd. (Rs 1975-1905), Everest Bank Ltd. (RS 670-660), Bank of Kathmandu Ltd. (Rs 805-801), Nepal Industrial and Commercial Bank Ltd. (Rs 401-400), Sagarmatha Insurance Company Ltd. (Rs 216-210) and Lumbini Finance and Leasing Company Ltd. (Rs 215-206).

Likewise, companies whose shares were traded only for four days include Nepal Bank Ltd (Rs 375-380), Himalayan Bank Ltd. (Rs 1445-1420), SBI Bank Ltd. (Rs 1460-1425), Everest Insurance Company Ltd. (Rs 450-440) and Himalayan Securities Company Ltd. (Rs 211-229).

Finally, those companies whose shares were traded for only a single day are Gorakhkali Rubber Industry (60/2280), Nepal Lever Ltd. (50/110000), Nepal Welfare Company (50/4500), Annapurna Finance Company Ltd. (10/4400) and Peoples Finance Ltd. (20/4720).