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Vol.
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Business News |
October 2000 is a festival month for Nepal but the Dashain festival was unfortunately bracketed by two tragedies. Before the festivals started the Maoists shattered all the remaining sense of security from the minds of the people controlling a district headquarter for a night. And after the festivals the government hit the economy at its roots by effecting a hefty price rise in petroleum, a step sure to trigger a chain motion of price hikes in all commodities and services. But unlike in the last year, when the last revision in the petroleum prices was made in Nepal, the decision this year is being criticized not only by those who always oppose the government. Last year, in an opinion poll conducted by Business Age (Vol. 1, No. 12), the country’s business community had supported the decision to increase the petroleum price, but about this year’s decision they say that all alternatives were not explored by the government before coming to the decision.
The important developments in tourism sector in the month included the long-awaited opening up of Hyatt Regency hotel as a premier tourism product of the country, and fleet expansion by a number of domestic airlines (see below). Similarly, Dragon Air of Hong Kong announced resumption of its flights to Nepal. But bird menace at Trivhuvan International Airport created an uproar fearing that it would again lead the foreign airlines to suspend their flights. Meanwhile, the government has invited applications from airlines for license to operate international services.
During this month, the observers have also been monitoring with much interest how the bids will be this time from private sector for acquisition of Butwal Power Company, the first infrastructure company that the government has offered for privatization. As indications go so far, three bids are expected for the company as compared to only two last time. The previous bidding was cancelled after one of the bidders, Independent Power Company (an Anglo-American Power Developer) teaming with Nepali partners, withdrew its bid alleging that the government was taking sides with the other bidder-Norwegian power developer, Interkraft, which also had its Nepali partners. Both of these parties are to bid this time also, it is expected, and a third party – a joint venture between Australia’s Pacific Hydro and Nepal’s ICTC Holding – is also said to be in the fray. Previously, ICTC had teamed with Interkraft.
The deadline for the bids in BPC and for fulfillment of the demand of the hotel workers are drawing closer though there is still time – 31stOctober for BPC bids and 18th November when the hotel workers are to go on strike if their demands are not met.
One interesting turn to the security issue was given by president of Employers Council, Rajendra Khetan, who is also one of the vice-presidents of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), that the apex business association is working with the government to form an Industrial Security Force as an addition to the already existing security forces in the country – ranging from the army to private security organizations.
Where there are still some airlines operating with only one or two aircraft, some airlines are rapidly expanding their fleet size. After Shangri-La Air including a couple of new Beech 1900 C planes to its fleet, it was followed by Yeti Airlines, Cosmic Air and Buddha Air.
In operation since September 1998, Yeti Airlines already has, in Nepal’s context, a rich fleet comprising four Twin Otters. The airline plans to strengthen the fleet by including two EMB 120 aircraft, of which one has already arrived. According to a company source, the 30 seater EMB is equipped with spacious passenger cabin and has ample leg space and cabin height. And the company has claimed that its new planes are the fastest among those operating in Nepal’s domestic services. The source also reveals that while the airline owns all of its four Twin Otters, the EMB 120 craft are on lease.
| Similarly, Cosmic Air, in
addition to the already existing two Dornier aircraft, now has two SAAB 240 included to
its fleet. A third SAAB 240 is to be added by the beginning of November. According to the
company, the salient features of the Swedish made aircraft are the Ground Proximity
Warning System, Traffic Collission Avoidance System and fire resistant seat fabric and
carpet besides having low wings enabling excellent viewing and thus being suited for
mountain flights. Meanwhile, Buddha Air too has added a fifth Beech 1900-D aircraft to its fleet. |
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The fleet expansion of the airlines coincides with the upstart of the tourist season in the country. All the companies with the new planes have added the number of mountain flights. Analysts also view that these airlines could also be vying to operate international flights as the Civil Aviation Authority of Nepal (CAAN) has cancelled the Air Operating Certificate (AOC) it had granted to some airlines, and has called for fresh applications.
Apart from Necon Air – that conducts flights to a few Indian cities – none of the previous AOC holders (Nepal Transcontinental Airlines, Everest Air, Air Nepal International and Alpine Air) had attempted to fly international routes.
Kumari Bank Ltd., the latest commercial bank of the country about to start business, has reconstituted its Board of Directors with Govind Das Shrestha as the Chairman. Veteran tourism entrepreneur Shrestha is also the Chairman of Oriental Hotels Ltd. that owns Radisson Hotel Kathmandu. But the election was challenged in the court which has issued a stay order, according to reports.
Other members of Kumari Bank’s new Board of Directors are Laxman Shrestha, Santosh Kumar Lama, Bangdel Phurba Lama, Bed Prakash Upreti, Noor Pratap Rana and Amir Pratap Rana. Noor Pratap Rana was the company’s chairman earlier and he had moved the court against the election.
The bank is to be a national level bank having Rs. 500 million as paid up capital of which 30% will be issued to the public. With Kumari Bank, the number of commercial banks in the country is to reach 15. Among them Machhapuchhre Bank has recently started business in Pokhara as a regional bank.
Central Godavari Resort has now become Godavari Village Resort after the marketing franchise agreement hotel with Thailand’s Central Hotels & Resorts was terminated early July, some seven months before scheduled to expire.
This is the second instance of a Thai hotel company withdrawing from Nepali market. Earlier, Dusit Thani, another Thai hotel company had backed out of Fulbari resort.
According to company sources the agreement was terminated after it failed to get Thai government’s approval for the use of the brand ‘Central’ in the Nepali company’s property. Moreover, the Nepali company also could not increase the room number to 100 as required.
After about one and a half year’s of bickering, the major shareholders of Hotel Jungle Camp (P) Ltd. have reached a reconciliation restarting the resort hotel’s business from September 1, 2000.
| The reconciliation was reached
after Narayan Giri, the Executive Director, withdrew the charges he and the foreign
shareholders in the company were labelling on Chairman Babu Krishna Sharma and Managing
Director Prabin Kumar Sharma. Business in the hotel was disrupted following a dispute on the step of the Chairman and MD to seize the shares allotted to Sergio Carlos Fernandez, a Frenchman, on the charge that the shares were not paid for by the foreign shareholder. |
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Global Exposition & Management Services Pvt. Ltd. (GEMS) is organizing Nepal’s only automobile exhibition, the 2nd Auto Show 2000. The exhibition is to take place at Bhrikuti Mandap Exhibition Hall from November 15 to 19.
According to the organizers, the event is being held in cooperation with Nepal Automobile Dealers’ Association and is endorsed by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
The organizers say, the prime objective of the show is to provide an appropriate forum for the automobile sector to market its products. It also aims to serve as an ideal platform for the sector enabling promotion of the industry in Nepal. Besides, the show is also expected to provide Nepalis and foreign participants an opportunity to interact with each other and explore possibilities for mutual collaborations.
| The auto show will feature
different types of vehicles, accessories, electrical components and sub-assemblies,
environment friendly and safety equipment, tyres and tubes, etc.The show is expected to
attract over 75,000 visitors. The first Auto Show held in 1998, also organized by GEMS,
had 42 domestic and foreign exhibitors and attracted about 40,000 visitors. Over 35
exhibitors have already confirmed their participation in this year’s Auto Show,
according to GEMS.- Among the other important events organized by GEMS include Nepal Education and Book Fair of which the 5thshow is scheduled for May, 2001. The company also has managed CAN INFOTECH and several other events in the past. |
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