Threat of food insecurity looms large

By Sameer Ghimire

KATHMANDU, March 7 : Short supply of food grains to the far-flung districts of the country may not have been an annual occurrence lately. But if the present financial state of Nepal Food Corporation (NFC) is taken into account, there is every likelihood that food scarcity would hit the districts again.

The state-owned monopoly supplier of food grains to the food deficient districts is not in a position to procure grains as per demand due to the weak financial condition perpetuated mainly by a slashing in transportation subsidy by the government and reduction in the borrowing limit by Nepal Bank Ltd (NBL).

Officials at the NFC, talking to The Kathmandu Post, said that the corporation has adequate funds for the purchase of only 40,000 tons of food grains, against the average annual requirement of around 42,000 tons. However, the food demand this year has been estimated at around 60,000 tons, due largely to a shortfall in production.

"If the gap of 20,000 tons of food grains is not bridge through some means, there are chances that some districts will face severe food shortage," said an official. This year’s food grains production ran down due to the adverse climate that hit the food producing belt of the Terai region.

NFC’s financial problems began with a downsizing of the transportation subsidy bill. While the government last year had provided the corporation with Rs 225 million in transportation subsidy, the NFC this year will be having only Rs 185 million. "The reduced government support necessitate that additional funds are sought," said the source.

The slashing of the subsidy by the government unfortunately comes at a time when the country’s food production went down. Officials argue that if Rs 225 million was needed for the purpose of food grains transportation during a normal year, a reduced allocation of Rs 185 million would not be enough for a year when food production has gone down.

Furthermore, NFC has also been hit hard by a general rise in the transportation costs within the last one year. Officials said that the cost of transportation in the last one year has shot up by around 20-30 percent. "This has also constrained NFC’s ability to transport food grains up to a proportionate level," said the source.

NFC’s financial position has also been weakened due to the NBL’s decision to cut down on the borrowing limit from Rs 600 million to Rs 400 million in January. The bank had cited poor performance of the NFC as the reason behind the slicing down the borrowing limit.

NFC’s inability to procure enough foodstuffs has come at a time when paddy production this season suffered downfall following a long drought in western parts of the country. Though the Ministry of Agriculture has estimated that paddy production this year plummeted by 2 per cent, experts are of view that the fall could be higher.

Only recently, Nepal Rastra Bank predicted that wheat production, another major staple food, is likely to slip by around 10 to 15 per cent. Wheat cultivation was hit due to a long spell of disastrous cold wave that hit the Terai region for almost one and half months recently.

Experts are of view that if the NFC is not provided with adequate funds to meet the possible increase in food demand this year, the remote districts of the country, especially that of the western part, will face severe food shortage. "Immediate action is needed to ensure that food insecurity situation does not arise," an expert said preferring to remain unnamed.

Govt to sell shares of RJM, NFF

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KATHMANDU, March 7 : In its latest effort to distance itself from business activities, the government has initiated the process of off-loading its share from the Raghupati Jute Mills (RJM) and Nepal Foundry Factory (NFF).

An official of the privatisation cell at the Ministry of Finance informed that the latest decision is per the policy of the government to withdraw its stake from the companies. The government is planning to off-load the shares of the companies through competitive bidding.

The government has 33.62 per cent stake in Raghupati Jute Mill while it has 49 per cent in Nepal Foundry Factory. The Ministry of Finance has recently appointed Citizen Investment Trust as the issue manager of the shares of the companies and the fund is making final preparation to issue shares within a month, said the source.

The government had sold majority of its shares of both the companies some five years ago and the private parties are running the management of both the companies.

As per the provision on share off-loading procedures agreed between the government and private party that had bought government shares some five years ago, the government will transfer its stake to the party, which quotes the highest price for per unit share.

But, if the public quotes below the prices at which the government had sold to the private parties, then the private parties, which had bought the government shares will have to accept all the shares at the price it had offered then.

Arihant Multifabric, a private company engaged in jute business, had procured the shares of Raghupati Jute Mills at the cost of Rs 70 per unit share with the face value of Rs 100. Likewise, the share of Nepal Foundry Factory was also sold to a private party at Rs 92 per share with the face value of Rs 100.

Govt to use BPC money for expediting privatisation

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KATHMANDU, March 7 : The government has decided to use all money that it receives by selling the 75 per cent share of Butwal Power Company (BPC) in accelerating the process of privatization. After a series of high-level meetings, the government has recently made a decision to this effect, a source of Ministry of Finance informed The Kathmandu Post.

The source also said that the amount would be basically used in clearing the skyrocketing liabilities of the public enterprises before they are put in the privatization process. The problem of clearing huge liability of the state-owned enterprises due to lack of fund with the government has been one of the major problems in accelerating the process of privatization.

After a series of controversies running for almost three years, the government had recently signed a final agreement with Interkraft Nepal, a consortium led by Joyti Group along with a Norwegian power developer, regarding the sale of 75 per cent share of the BPC.

The Interkraft Nepal had offered Rs 950 million to purchase shares of BPC, which was one of the few profitable state-owned enterprises and it was the biggest privatization step in terms of amount in Nepal.

Of the rest, 25 per cent share which is with the government at present, 10 per cent would be floated to the public, two per cent to the employees of the BPC and the government will keep 10 per cent. The BPC has also other private partners owning three per cent share.

Regular expense six-fold higher than dev expenditure

RSS

KATHMANDU, March 7 : Out of a total of Rs 35 billion and 100 million sanctioned, only 29 billion and 100 million has been spent on the basis of cash flow in the six month review period of the current Fiscal Year.

Making public the expense components, the Finance Ministry at a press meet today said Rs 24 billion 590 million has been spent in general and Rs 4 billion and 510 million in development expenditure.

Rs 7 billion and 120 million has been spent in development expenditure including the direct payment of the current Fiscal Year amounting to Rs 2 billion and 610 million, the Ministry said.

Budget allocated in Fiscal Year 2059/060 BS was Rs 57 billion and 440 million in general and Rs 38 billion and 680 million in development.

The revenue collection was Rs 3 billion and 550 million less than the target at Rs 53 billion and 600 million and Rs 6 billion and 480 million less at 20 billion and 490 million in foreign aid.

Finance Secretary Bhanu Prasad Acharya said full guarantee of resources has been made to projects of first priority in the backdrop of implementation of the mid-term expense structures from this year in development. Expected expense in development is 78 percent, he said.

There is no possibility of budget savings in general expenditure as curtailment has been made in the allocation phase despite efforts of austerity including the economic reform programme.

Further austerity is needed and effective implementation is emphasized including in foreign aid and revenue increase. Expected objectives can be met in the later half of the Fiscal Year from the implantation of economic reform and improvement in law and order situation, a press release of the Ministry stated.

In response to a question, Finance Secretary Acharya said homework has been made to rebuild the destroyed infrastructure in the Maoist violence, and the defense spending has not crossed the allocation, he said.

The economic growth rate is satisfactory, he said, adding the loans borrowed by the government is within control and is limited to Rs 2300 million.

Life zone to be set up at Everest base camp

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KATHMANDU, March 7 : Himalayan Expeditions (HE) is setting up Oxygen Rehabilitation Camp at the Everest Base camp from April second week to the end of May with technical assistance of RD and PE Zvezda, a Moscow based oxygen refilling company.

According to information given at a press meet organised in the capital today, there would be two such rehabilitation camps at the Everest base camp, and each camp would supply oxygen equivalent to the sea level. "The mountaineers having problem of high-altitude-sickness, and oxygen deficiency would benefit from this scheme," said Bikrum Pandey, President of Himalaya Expeditions.

Meanwhile, the RD and PE Zvezda, a Moscow based Russian company producing a complete oxygen set for mountaineering, military, scientific and recreational purposes is setting up a centre in Kathmandu for distribution and refilling of oxygen cylinders.

Speaking at the press meet Alexander Gayman, the Bureau Chief of the foreign Business Relations of the company informed that the service would be available only for the mountaineers for the initial phase then would be extended for other purposes in the days to come.

"The company took the decision as Nepal has a good potential for oxygen market for mountaineers," he said, adding that the company would supply oxygen cylinders, masks, regulators and other essential equipment for mountaineers.

With the new establishment, Nepal can also be developed as a cylinder refilling centre for the South Asia along with the Chinese Autonomous Region of Tibet. Till now, Nepali mountaineers have been refilling the oxygen cylinders in the Indian cities. The cylinders refilled in India lose the air-pressure while bringing into Nepal, experts claim.

According to the current estimates, annual demand for the oxygen cylinders for expedition is 6,000 cylinders. The cost of each is US$ 400 and the cost is additional US$ 400 for masks, regulators and supporting equipment. The total turnover on oxygen sets is equivalent to Rs 390 million (US$ 5 million).

Currently each climber needs three oxygen cylinders. Each with compressed oxygen weighing four litre can last for six to seven hours during Everest expedition, says Kaji Sherpa, a five time conqueror of Mount Everest with a record fastest climb.

The company is also preparing to introduce an oxygen cylinder, which will contain enough oxygen for the climbers for entire expedition. "Once this cylinder is launched the mountaineers will get rid of carrying additional oxygen cylinders," Gayman said.

The company is established to research, design and produce air for several provisions. According to Gayman, the company is also in touch with the Ministry of Industry Commerce and Supplies to provide a gas fuel for the local transport in the capital.