NOC asks Govt for Rs 1b to settle accounts

By Milan Mani Sharma

KATHMANDU, March 10 : Nepal Oil Corporation (NOC) has asked the government to release one billion rupees immediately for settling account with the Indian Oil Corporation (IOC) for the import of the petroleum products of January.

"With the fund of the NOC falling short to clear import accounts, which must be done on March
15, the Corporation has no option but to turn to the government," said a highly placed government
official.

He also added that the Indian counterpart has also pressed the NOC to clear other past dues as
well. As the Indian fiscal year ends on March 31, the IOC wishes its account be settled by the
end of the month.

The state-owned monopolist in petroleum imports needs to pay around Rs 2 billion to the IOC and
this includes outstanding dues as well. "This amount includes Rs 1.70 billion for the petroleum
import made in January," he added. The outstanding due of the NOC including the short-payment
of the past months crosses over Rs 250 million.

A board member of the corporation, meanwhile, said that the IOC could be requested to consider
the NOC’s problem and extend the payment deadline. "But that is not the issue. The issue is how
to solve the NOC’s problem and prevent it from being plunged into a serious financial crisis," he
said.

The NOC officials argued that the government’s announcement of latest price rise in petrol and
cooking gas exhibited its ‘short-sightedness’. The NOC had urged the government to increase
kerosene and diesel prices to the level of bordering Indian cities and townships. However,
government raised prices of petrol and cooking gas without changing kerosene and diesel prices.

"The problem of the NOC was left where it was. Result: difference in procurement and sales price
kept on widening and the NOC is left with no option but to plead the government for meeting its
import cost," he said.

And the worse part is that unless price difference is closed the government might have to support
the NOC with about a billion rupees every month for the import, he noted.

According to officials, the loss of the Corporation has risen since January when petroleum prices
started soaring in the international market. They claim that the NOC is incurring a monthly loss of
about Rs 660 million due to import-sales price disparity.

"The loss has also been triggered by the widened price gap across the border as major
petro-products are smuggled out of the country and the NOC needs to import more to make up for
the artificial deficit," they said.

Currently, the prices of kerosene, diesel and petrol stand at Rs 28.80, Rs 36.40 and Rs 54.30 per
liter on the other side of the border respectively while in Nepal it is Rs 17, Rs 26.50 and Rs 52 per
liter respectively.

"Leave alone the cross border price gap in kerosene, price difference in diesel too has gone up to
about Rs 10. It is difficult to understand what sort of business the government is pushing NOC to
do," said the NOC board member.

Meanwhile, to check the massive outflow of kerosene, the NOC has contained its supply at the
level recorded in July last year in the bordering cities. But that has failed to serve its purpose.

"While the local consumers are facing the brunt of the NOC-government price war, the
cross-border smuggling of kerosene is going on unchecked," the source said, adding that diesel
smuggling could also rise.

DFID to grant Rs 1.2 b for effective execution of APP

By Sameer Ghimire

KATHMANDU, March 10 : Department for International Development (DFID) is going to provide a grant of Rs 1.2 billion (9.8 million pound) to the government for effective implementation of Agriculture Perspective Plan (APP), a mega 20- year agriculture programme that aims at alleviating poverty of the country by commercialising the agriculture sector.

For the purpose, a five-member joint team of DFID and Ministry of Agriculture (MoA) has
forwarded "Implementation Project Design" to the Ministry of Finance (MoF), which then will be
presented to the council of ministers for the final approval.

Such funding from DFID, a British donor agency, for the implementation of APP has come at a
time when the government is on the firing end for the ineffective and poor implementation of the
APP.

The APP, which came into enforcement since fiscal year 1997/98 with the technical and financial
assistance of Asian Development Bank (ADB) aims at reducing the poverty from 38 per cent to 14
per cent. Besides, the major objective of the APP includes increasing food availability per person
each year from 274 kilograms to 464 kilograms at the end of the plan.

Various agro-experts, however have criticised the government for the poor and ineffective
implementation of the APP, including Dr Shankar Sharma, Vice Chairman of National Planning
Commission (NPC).

"A new concept is a must for tracking down the APP in real and effective implementation," he
said recently at a programme.

Senior officials of the Ministry of Agriculture and Cooperatives (MoAC), however are hopeful that
the effective implementation will now surely take-off.

"The new implementation design will direct the APP towards the goal with effective action plans,"
said Ganesh Kumar KC, Joint Secretary at the MoAC.

The proposed new implementation design, which has been forwarded to finance ministry, is based
on implementing the plans through bottom-up approach. "The new approach actually will empower
District Development Committees (DDCs) to develop and approve agriculture programmes for the
districts," said KC.

Talking to The Kathmandu Post, KC, said that this bottom to top implementation approach will be
the key for the success of achieving the objectives of the APP. "This will encourage the
grassroots level to participate in the entire agriculture development programme of the country,"
added KC.

The grant is instrumental in the success as around 80 per cent of total fund will be used for the
real implementation, said Shravan Kumar Adhikari, Assistant Agriculture Economist associated
with the agriculture ministry. "Only the remaining 20 per cent will go for the policy analysis for the
agriculture development," he added.

The new effective implementation design, however, would be launched in only twenty districts of
the country, unlike the APP itself, which was launched throughout the kingdom.

Senior officials of the ministry relate the inefficient implementation of the APP to various issues.
"We were unable to effectively implement the APP as most rural parts of the country were
entrapped by escalating insurgency," said another senior official of the ministry requesting
anonymity.

Besides escalating violence, which has stopped following the cease-fire declared by the
government and the Maoist, senior officials at the ministry also attribute lack of resources to
ineffective implementation of the APP.

"During the start of the Ninth Plan, the NPC had announced to allocate Rs 23 billion for five years.
But we were given nearly half of that amount. This affected the implementation of the APP."

IT companies urge WB to slash criteria

Post Report

KATHMANDU, March 10 : Nepali Information Technology (IT) companies have expressed deep dissatisfaction over the World Bank’s (WB) intent to keep the financial qualification criteria for the participation of companies in the automation of a major bank unchanged.

The multilateral lending agency continues to take a tough stand despite repeated requests of the
Nepali IT entrepreneurs, including Computer Association of Nepal (CAN), to relax the qualification
criteria.

As per the criteria, companies vying for the automation of Nepal Bank Ltd. (NBL) would need to
have, among others, a turnover of least US$ 5 million in the last three consecutive years, a
‘mission impossible’ for Nepali companies unless allowed to work.

Furthermore, the bidding companies would need to have experience in the supply and
implementation of banking software application systems in both retail and corporate markets.

CAN in its several letters addressed to different authorities, including the World Bank, the Nepal
Rastra Bank, the Ministry of Finance and the Ministry of Science of Technology, has been
requesting to slash down the threshold for participation.

More than one Nepali product is capable of easily meeting all or most of the requirements of the
NBL and these companies have been barred from bidding in the supply, installation and
commissioning of the Banking Management Information System (BMIS) at the NBL.

The central bank had invited tenders more than a month back, which it intends to open on March
19. The WB is learnt to have opposed the idea of relaxing the qualification criteria in a pre-bidding
meet on February 26.

As per the letter forwarded by CAN, including to Kenichi Ohashi, Country Director of the World
Bank, the government has been stating publicly for years that it wants to develop the country’s
software industry.

"The tender called by Nepal Rastra Bank has shown that this is nothing more than a lip service
as it is denying Nepali companies from bidding for a tender of the NBL," the letter states.

Lochan Lal Amatya, President of CAN, says that the Association has been deeply hurt as none
of the concerned authority paid any heed to their plea to make adjustments in the bidding criteria
so that domestic IT companies could bid for tender.

The sharp apprehension of the Nepali IT industries come due mainly to the fact that the funding of
the BMIS comes in the form of loan from the World Bank, which has to be paid back by Nepali
taxpayers.

The letter mentions that since after sales support has a crucial role to play in any banking
system, Nepali companies, and not foreign ones, are best suited to provide the services in Nepal.

Since the mid-eighties, most Nepali banks, including several joint venture banks, have been using
Nepali banking software to run their business operations.

The central bank last month published ‘Invitation for Bids’ that also stated that bidders must have
completed at least two contracts involving the development, implementation and provision for
technical support for information system of similar functional and technical characteristics.

Forex reserve crosses over Rs 107 billion

Post Report

KATHMANDU, March 10 : Propelled by continual robust growth of remittance, Nepal’s foreign exchange reserve has touched over Rs 107 billion, a record high amount, at the end of February, up from a reserve of Rs 104 billion during the same period last year.

Officials at Nepal Rastra Bank (NRB), the central bank, claim that it is the increased inflow of
remittances through official channels that has helped in the growth of foreign currency reserves.
"It is also an indication that the central bank’s effort of bringing remittances through official
channels is paying off," the official said.

Currently, the central bank is providing several incentives to bring the remittance into the kingdom
through the banking system. Among such measures, the NRB provides incentives of 15 paisa
while exchanging one unit of US dollars earned as remittances if exchanged through banks.

The remittance from banks and authorised moneychangers is increasing constantly, the central
bank source said, adding that the inflow from Western Money Union has increased almost
two-fold, and the inflow from Nabil Bank and Sita Travels has also increased significantly.

"The rise in the reserve also means the growth in remittance is high enough to lessen the
negative impact on earning convertible currency brought about by tumbles in export to both India
and third country, putting a stringent pressure in the foreign currency reserve," the source added.

The statistics for foreign currency holdings shows that almost 80 per cent of the foreign currency
are reserved on convertible currencies and the remaining on non-convertible currencies. While
around 80 per cent of the convertible currencies are reserved on US dollars, the remaining on
euro, pound sterling, German mark, Japanese yen, and other foreign currencies.

According to the central bank sources, the latest figures for total foreign currency holding with the
central bank includes Rs 87 billion as convertible currency reserves and the remaining Rs 20
billion as non-convertible currency reserves. The similar figures last year were Rs 78 billion and
Rs 26 billion respectively.

As against the past trends, when the total reserve used to rise with an increase in both
convertible and non-convertible currency reserves, this year’s growth in foreign currency reserves
is attributed to a rise in the reserves of convertible currency and a decline in non-convertible
currency.

The fall in non-convertible currency – Indian rupees – is mainly due to the plunge in the volume of
exports during the past one year. The NRB statistics shows that the exports to India plummeted
by almost 31 per cent during the first five months of the current fiscal year.

On the other hand, increased remittance inflow and devaluation of Nepali currency against the US
dollars in the past one year has pushed up the reserves of convertible currency. Despite the
decrease in exports to the third countries, the remittance has been enough to off set deficit, the
NRB source says.

The convertible currency is deposited in the American Central Bank and the non-convertible
currency in the Reserve Bank of India. The interest earning on the reserves is one of the main
sources of the central bank’s annual income.

Crown Prince opens Western Industrial Trade Fair 2003

By Kulchandra Neupane

POKHARA, March 10 : His Royal Highness Crown Prince Paras Bir Bikram Shah Dev inaugurated the Western Industrial Trade Fair 2003 here today.

After opening the fair, the Crown Prince observed the stalls with keen interest. Her Royal
Highness Crown Princess Himani was also present on the occasion. Their Royal Highnesses
were welcomed by Panchakanya, a group of five girls, according to the Nepali tradition custom of
welcoming distinguished guests.

The Regional Fair, first of its kind organised in Pokhara, is being organised on to mark the Export
Year 2003.

The objective of the five-day fair is to promote the consumption and production of domestic
products. The fair has been jointly organised by the Ministry of Industry, Commerce and Supplies,
Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and Pokhara Chambers of
Commerce and Industry.

The fair is participated in by businessmen and entrepreneurs around the country. There are
altogether 242 stalls with exhibitions of wide variety of items like handicraft, information
technology, floriculture, automobiles, agriculture, tourism and others.

Major attractions of the fair are folk dances, musical bands, folk-duel song (repartee) competition
and cultural Newari food. The fair is being held at Basundhara Park in Baidam.

The organisers expect about 150 thousand visitors during the event. A total of Rs 2.5 million has
been spent for the preparations. The stall-keepers are offering up to 10 per cent discount on the
sale of various items.

Minister for Industry, Commerce and Supplies Mahesh Lal Pradhan speaking on the occasion
said that the government has been preparing to unveil programmes for promoting domestic
industries.

The government has already begun homework for the promotion of export trade for which active
participation and assistance from the private sector would be vital, he said.

"The government is also planning to wear Nepali dress daura suruwal and the use of domestic
products compulsory in government offices," informed the minister.

Acting president of FNCCI Binod Bahadur Shrestha said that a complete solution to the Maoist
violence was the prerequisite for the Nepali business and industrial sector to revive.

Minister inaugurates Nepal Pavilion in Berlin

Post Report

KATHMANDU, March 10 : Assistant Minister for Culture, Tourism and Civil Aviation Ravi Bhakta Shrestha inaugurated the Nepal Pavilion, a permat construction of typical Nepalese arts and architecture in southern Berlin amid a function on Sunday.

According to a press release, the Nepali delegation comprising representatives from 12 private
companies, government and Nepal Tourism Board (NTB) also took part in the International
Tourism Exchange (ITB) being held in Berlin, Germany from March 7 to 11.

"The ITB is the world’s largest travel trade fair where more than 10,000 exhibitors and over
100,000 trade and public visitors gather annually. It provides a platform for exhibitors to develop
contacts and explore new business avenues and multiple of destination choices for the travel
trade and the general visitors," says the NTB release.

Meanwhile, the release further states that Vinod Jnawali, Joint Secretary at the Tourism Ministry
attended the 4th meeting of Tourism Recovery Committee of the World Tourism Organisation held
at ICC Berlin, on Friday.

Bank closure leads to emergence of saving mobilisation committees

Post Report

PALPA, March 10 : The merger and pullout of several rural branches of commercial banks in the recent past has inspired the local residents to open scores of savings mobilisation associations and groups and provide the banking service in the rural areas within a small domain.

Almost three and a half dozen of such committees, all run by local housewives, are mobilising
savings from the rural areas and providing loans in small scale. The groups were established
during the past one and half years, after the closure of branches of Rastriya Banijya Bank (RBB)
and Nepal Bank Limited (NBL).

There are 43 committees, three organisations and 2 thousand small groups in the 15 Village
Development Committees (VDCs) of the district. The committees and groups are formed at the
initiation of local people and the groups mobilise savings from its members and provide loans to
them.

These financial intermediaries are providing small scale banking services. "The loan outflow is
higher in horticulture, livestock, and small trades," says Nun Kumari Khamchha, chairperson of
Chandikadevi Women Development Committees.

"More and more villagers are attracted towards the scheme and are asking for the expansion of
Women Development Committees in their community also," says Chameli Devi Shrestha, chief of
Women Development Committee-Palpa. This has been effective even in creating awareness in the
community of the uneducated people.

The easy availability of loans in these areas has also helped in commercial farming. "The locals
have been able to avoid borrowing from the local money-lenders at high interest rates," claims
Shrestha, adding that education and health facilities are also available for the locals with the
scheme.

Discussion programme held in Chitwan

Post Report

KATHMANDU, March 10 : Organisations affiliated with the British Embassy like the British Council, Department For
International Development and Nepal-Britain Chamber of Commerce and Industry (NBCCI) have
organised various programmes in Narayangarh.

A press release issued by NBCCI states that the bi-national chamber organised a discussion
programme among the local chambers and businessmen of Narayangarh, Ratnanagar and
Sauraha. President of NBCCI Rajendra Khetan said that a Chitwan Chapter of the chamber would
be opened shortly.

The programme was participated in by 50 people including Director of the British Council Barbara
Hewitt, Attaché of the British Embassy P.G. Karmacharya and Chief District Officer of Chitwan
Ratna Kaji Bajracharya among others.