Nabil marks silver jubilee

Nabil marks silver jubilee
ekantipu, 29-Aug-09

Nabil Bank, Nepal's first private sector joint venture bank, celebrated its silver jubilee on Friday.

Since it began its operations in 1984, the bank has taken great strides in building partnerships for progress with all stakholders.

Its net worth grew to Rs.3.46 billion in 2009 from just s. 78 million in 1989 after five years of its operation. Its non-performing loans (NPL) also went down to 0.80 percent from 3.40 percent in 1989. Its NPL had however reached as high as 11.20 percent in 1999.

The bank has said that its deposits went up to Rs. 37.34 billion in 2009 from Rs. 779 million in 1989. On other hand, the shareholders also greatly benefited over the period.

Chief Executive Officer of Nabil Anil Shah said that the Nabil had become the model of stability, strength and progress in the banking sector.

The bank also declared that it would diversify in merchant banking, brokerage, insurance, frastructure and micro-lending within the next five years.

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Oh! Pancheshwar

Oh! Pancheshwar
myrepublica.com, 19-Aug-09
ADITYA MAN SHRESTHA (adityaman@hotmail.com)

Prime Minister Madhav Kumar Nepal is looking forward to push the Pancheshwar project during his visit to India but no matter how hard he tries, it is going to be a futile exercise. The project was never meant to be implemented and I am not saying this now; I said this almost a decade ago. The project still stands today where it was when it was agreed upon between India and Nepal about 13 years back.

“Pancheshwar is actually a jinxed project. When India wanted it seriously in the sixties, seventies and eighties Nepal resisted it. When Nepal wanted it in the nineties and onward India became lukewarm about it. When both these countries will be equally serious and capable of taking up this project on the ground instead only in the paper is anybody’s guess. However the best bet is that it is shelved for many decades to come” (Himalayan Times, 6/12/2001).

The pessimism was not without reasons. The basis of Pancheshwar project is the Mahakali Treaty. “But the main objective of the treaty”, I said, “was not to develop the Pancheswar project but to legitimize the Tanakpur dam. The Tanakpur dam was unilaterally built by India toward the end of eighties using a part of the Nepalese territory without Nepalese consent. The Mahakali Treaty embodied the Sarada dam, Tanakpur dam and the Pancheshwar dam. Legally speaking there is no longer any hitch between Nepal and India as far as these three dams (existing and potential) over the Mahakali River are concerned.”

The more than 80-year old Sarada dam was aging and its days were numbered. It did not matter as its function was taken over by the newly-built Tanakpur dam to irrigate about half-a-million hectares of land in northern India.

When the Mahakali River Integrated Development Treaty was signed amid great fanfare in 1996 between Nepal and India, the signatories declared that the DPR (detailed project report) would be ready within an incredibly short period of six months. Since then, about 26 six months have elapsed but it is nowhere to be seen. That is why I had described the DPR as Diligently Procrastinated Report. In a routine ritual, numerous meetings between the officials of the two countries on DPR promise that the report would be ready in yet another six months. The most we can expect from our PM’s visit is yet another pledge to complete it in the coming six months.

Pancheshwar is too big a riddle. Nepal wants this project to have a 315-meter high dam to generate 6,480 MW of power by building a storage facility capable of holding 9.72 billion cubic meters of water in the mountains. But India wants a much smaller dam. She is thinking of a 262-meter high dam with a storage facility for 5.5 billion cubic meters of water. This facility can produce only 1,750 MW of power. Whether and how this difference will be ironed out is in itself a big question that may prolong the bilateral negotiations for a long time.

Even if the two countries succeed in reconciling the height of the dam and the volume of power production from the project, the funding aspect poses a big question mark. In 1996, the Pancheshwar dam was estimated to cost about US$3 billion, which would have escalated many times now. The Treaty of Mahakali prescribed equal sharing of cost and benefits in water and power. In that sense, Nepal would have to raise half the cost. Private investment might be ready to come in on behalf of Nepal. But will India be ready to let a third-party investor join the Pancheshwar project is yet another question. India is capable of bearing the total cost of the project. In that case, India will ask for too big a share from the benefits. Will Nepal be ready to remain contented with a crumb from a project that has sold big dreams to the people of Nepal? No government would dare to do that.

Pancheshwar is full of other hassles as well. Even if the investment question is resolved, many other difficulties are bound to occur. For example, according to the Mahakali Treaty, Nepal is obliged to sell excess power of its share only to India but it is not obligatory on India to buy it. In other words, India will buy power generated by this project from Nepal at an acceptable price. The treaty does not speak anything about how the price should be determined. So, naturally India would like to set the price as low as possible and vice versa. Will the two haggling parties be able to come to an acceptable pricing? It is not just a matter between two government officials. They have to explain and satisfy the people on the fairness of the pricing.

There are several other questions relating to downstream benefits, use of excess water of Nepali ownership, contracting, consulting etc that pose difficulties in carrying out the Pancheshwar project. Nepal and India are fully aware of these problems. So, we will be discussing about it for many decades to come as we have been hearing about it for many gone by.

At the time of negotiations on Mahakali Treaty, it was claimed that Nepal would accrue a benefit of Rs 120 billion a year (US$ 2 billion) on the completion of the project. The myth was promptly exploded as none could believe that a project, which was estimated to cost US$3 billion in total would yield US$2 billion revenue annually. People in Nepal listened in awe and utter disbelief about this hidden treasure of theirs.

Water resources will be the next contentious issue in a federal Nepal

Sharing water resources
NepaliTimes, Issue #464 (7-Aug-09 to 20-Aug-09)
RATNA SANSAR SHRESTHA

Water resources will be the next contentious issue in a federal Nepal

Nepal's forests are no longer a natural resource to be tapped for development, water is.

Only 12 per cent of Nepal's 4 million hectares of arable land is irrigated, that too mostly during the rainy season. Most of the rivers are snow-fed, so if we construct reservoirs and channels networks, we can irrigate land in the hills and the Tarai all year round. Farms can have three, even four harvests, a year. There is no need for Nepal to be food-deficit.

Water resource has multi-dimensional utilisation (irrigation, drinking, transportation, tourism, industrial) and therefore it shouldn't just be understood as a source of energy. We can earn more from rafting-based tourism than generating hydroelectricity from the Bhote Kosi, for instance.

Kosi, Gandaki, Karnali including Bagmati can be used as waterways, the cheapest means of transport.

Nepali leaders often talk about the country's hydropower potential, and dream of exporting it to India. Even if hydro-electricity is generated, its most productive use would be domestic, to power industries and generate employment locally. By exporting raw power to India, we can earn some cash in the form of royalties of under three per cent, which will not help domestic economic growth.

In a federal system, there is a bigger chance that federal units will independently negotiate to export power to India. Electricity rich provinces can sell power to those who pay the most. Majority of Nepal's hydro-energy sites are in the mid-west, which generate over 300MW but only half of it is consumed in the region.

At present, the central development region generates over 250MW, of which almost all power is consumed here. But the eastern region generates only 14MW but this is the region which consumes the highest amount of power. The mid west will export to the eastern region only if it is ready to pay the amount it demands or else it will export to India for a better price.

Melamchi is in future Tamsaling province. If the Newa province wants to bring Melamchi water, it should be ready to pay the price Tamsling demands. Kathmanduites who are paying Rs 50 per month for water will have to pay a lot more as the price of water. If Newa fails to pay the price, Tamsaling is free to sell it to whichever province pays the price.

Nepal Mandala has no potential for hydro electricity. If it is declared a separate province, either people will have to live in the dark or import the power at a high price.

For energy and regulated water, we need to build reservoirs on our rivers, which will inundate the fertile valley floors. The upper riparian province will therefore be deprived of using the water, and the lower riparian will benefit. A federal Nepal will face the same issues we now currently face vis-?-vis India about river basin development. How will it be possible to irrigate Jhapa without submerging valleys in the Limbuwan province?

When two provinces compete, a third province can benefit, and these disputes can weaken the nation. Decisions on water resources should therefore not be devolved to the provincial units but be the prerogative of the centre, like foreign policy and defence.

But the proposed ethnic-based provinces will not accept this idea. Nepal has already signed the ILO Convention 169, which allows indigenous communities control over the natural resources. In other words, this convention goes against the argument that there should be central jurisdiction over water resources.

The bottom line is that a federal system will not be conducive to Nepal's national interest with regards to sharing benefits from water resources, and it will affect our development process.

Ratna Sansar Shrestha is a water resource analyst.

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NEPSE pulls out of weeklong dive

NEPSE pulls out of weeklong dive
eKantipur, 12-Aug-09

The Nepal Stock Exchange (NEPSE) Wednesday surged 26.98 points after being in the doldrums all last week. The sensitive index too soared 10.12 points. This is the first time in 2009 that the sensitive index has increased by double digits.

According to stock analysts, the secondary market bounced back after the news of Standard Chartered Bank’s proposing cash dividend of Rs 50 per share and 2:1 bonus share. Common investors are hoping other commercial banks will also give the same kind of return to them, as financial institutions have started to release their fourth quarterly reports, with show good profit.

All the sub-indices on NEPSE saw an increment on Wednesday. The banking sector pushed up the index after it grew by a huge margin of 45.57 points followed by the hydropower sector which rose 11.18 points and the development bank sector which increased 9.63 points. Likewise, the finance sector increased by 2.14 points and the insurance sector was up 1.46 points.

The share market witnessed a total turnover of Rs. 137.846 million with 180,602 shares being traded. Shares of 63 companies changed hands on NEPSE.

There were 20 commercial banks that traded on the trading floor on Wednesday. All the banks on the index today witnessed an increase. The highest gainer among the commercial banks was Standard Chartered Bank which rose by 542 points.

Similarly, among the 10 development banks whose shares were traded on NEPSE on Wednesday, seven saw an increase in their share prices while only two of them lost. Ace Development Bank was the highest gainer among development banks with a 27 point increment. Triveni Bikas Bank lost 7 points.

Likewise among the 25 finance companies on NEPSE, Nepal Aawas Bikas Beeta Co. was the highest gainer with an increase of 20 points in its share price. Lumbini Finance lost 31 points. Among the 25 finance companies, 13 of them witnessed an increase while eight went down.

The top five winners on NEPSE were Standard Chartered Bank and Nabil Bank with a 9.99 percent rise each followed by KIST Bank, Everest Bank and NIC Bank.

Similarly, the top five losers on Wednesday were Lumbini Finance which fell by 2.72 percent followed by Lord Buddha Financial Institution, Kathmandu Finance, Nepal Share Markets and Lumbini General Insurance.

Standard Chartered Bank topped the chart in terms of turnover with Rs. 22.309 million

Personality: Rohini Thapaliya (57), Padma Shree Group

IT’S QUALITY FOR HIM
Rohini Thapaliya (57), Padma Shree Group
New Business Age, June 2009

A firm believer in quality, Rohini Thapaliya, 57, started assisting his father in their family business of timber and furniture from his late teens. His father, who spent his active years as a magistrate at Bhaktapur, Patan and Kathmandu and also served as Bada Hakim of Doti and Birjung, had started a saw mill in Simara of Bara district upon his retirement in 2020 BS (some 46 years ago). They mainly exported their products to India and also supported some local development works. The business was running well while Thapaliya was enjoying his college years after completing high school from the Laboratory School at Kirtipur in 2024 BS.

But difficult times caught up on them later in the decade following the devaluation and revaluation of the Nepali and Indian currencies. The saw mill lost a fortune, which led Thapaliya to forsake his studies to join his father in the business as a helping hand. He was 18 then.

It was a tough call for teenaged Thapaliya. But, being determined to put the business together again, he went ahead slowly but steadily. He took his time to learn the nuances of the business. In between, he completed graduation in commerce from Tri-Chandra Campus but fell short of finishing his post-graduation. "Now I had to get into the business full time," he remembers. "There was no room for saying no."

Thapaliya took the initiation for upward integration of the business and employed some carpenters from Patan and Bhaktapur, which were and still are famous for indigenous woodcraft. Such was the start of Padma Furniture Factory in 2035 BS which soon became one of the most successful businesses of the time. "We scaled up our production volume to partly substitute the imported furniture in the market and to export a little bit as well," recalls Thapaliya. It was a great revival for an enterprise which had witnessed a period of acute setback. With increasing credibility and popularity, Thapaliya started getting contracts for government institutions (including Singha Durbar), five-star hotels, educational institutions and other distinguished clients. They even exported their produce to countries like Japan and Germany. "We couldn't meet the demand due to the insufficient availability of timber. We had received demand for 50,000 chairs per month from Japan. We had similar orders from Italy. But poor supply of timber ate into those business prospects," he adds.

Before the start of Padma Furniture, quality furniture had to be imported from India in large volume. No local manufacturer could come in between in terms of production volume and eminence. It was no cakewalk for Thapaliya to bear the challenge and to beat it. But he was not the one to give up. He imported modern machines from Italy in 2042 BS and started another furniture plant at Bhaktapur with plans to increase the production volume to meet market demands. "We root for quality and it pays back," Thapaliya maintains. "For me, there is no substitute for quality in business."

The plant bore the sought-after results for Thapaliya but his father wasn't there for long to cherish the good times. He died of heart attack in 2044 BS and it came down on the shoulders of junior Thapaliya to take the business to the next level.

Keeping timber shortage and environmental issues in mind, Thapaliya later imported machines from Germany and started an aluminium plant called Al-Tech Pvt. Ltd. at Bhaktapur. It supplied construction material of aluminium to different institutions, including Tribhuwan International Airport, Hotel Radisson, established real-estate developers and many other organisations and institutions.

In 2045 BS, Thapaliya set up Padmashree Pvt. Ltd., a trading company and through it, he started importingMazda cars from Japan from 1993 AD as the authorised distributor in Nepal. And from 2000 AD, he started the distributorship of Germany's reputed firm Robert Bosch. Recently, when petroleum and power shortage hit Nepal hard, he started importing electric cycles Foton Lovol from China and power generators from DEUTZ, the inventor of four-stroke engine and a leading German company with the history of more than 144 years. Now Thapaliya is looking into the business prospects in alternative energy; bio gas, solar panels and small hydropower projects.

Before remodelling Padma Furniture with modern machines, the unit used to employ almost 300 people but the staff size has been reduced now to 50 as manual work has been replaced by automated process. Similar is the case with Al-Tech, which has its employee number reduced to about 30 from a lot at the outset.

Thapaliya believes in honesty, dedication and the right product. "Quality is the mainstay of organised life, be it in personal presentation, diet, education or anything that matters in life," Thapaliya says about his belief and work ethic. When asked about his shift of priority to trading from manufacturing, he says, "An investor needs to be market-specific. Labour laws here are not helpful for manufacturing industries which require long-term investment. Political instability has paralysed the situation. We brought electric cycles because there was no fuel and we brought generators due to the chronic load-shedding, which, as experts believe, will persist for the next ten years. That prompted us to change our stand, keeping changing times in mind."

During his twenty-year stint with FNCCI at different posts before finally as its Vice President, Thapaliya has always advocated for linking labour with productivity instead of keeping them only under the 'minimum wage' scheme. He believes that there needs to be a cordial relationship between employers and employees for the sustainable development of any nation. He derives an example from a program that he recently attended in Germany where the German Chancellor had said something like: "We should not layoff our skilled and talented people. We should adjust them for now by cutting their work hours. We need to retain them and keep them in form as this financial crisis is going to be over sooner or later. We should and must save the German quality." Now in many companies in Germany, it's four-day-a-week working schedule. "It is fixed out of the mutual consent of workers and employers. We need to have similar spirit also here," Thapaliya stresses.

Thapaliya further believes that the economic policies need to be stable no matter which political party comes to power. "We need to ensure return on investment to local or foreign investors," he says. "Business is a tradition in Western world - companies there have histories of hundreds of years. Here in Nepal, we tend to worship the fast up, fast down flukes. Consistency is the hallmark of business success. And it needs loads of commitment, dedication and honesty without which a business might earn money but no identity, no credibility." Thapaliya has learnt to emphasise on quality from his tours to developed countries. "The sense for quality is in their genes. We need also to focus on our own indigenous products and services like these developed countries do. That is what is called competitive edge and with that comes quality."

Only two-third Nepalis fully employed: Labour Survey 2008

Only two-third Nepalis fully employed: Labour Survey 2008
Nepalnews, 11-Aug-09

Nepal Labour Force Survey 2008 has shown only two-thirds of Nepal's work force was fully employed with work available for 40 hours or more per week in 2008.

Of the remaining one-third, 19.5 percent worked between 20 and 39 hours a week, 11.6 percent worked less than 20 hours a week, while 2.1 percent didn't work at all.

The report of the survey, conducted by Central Bureau of Statistics with support from United Nations Development Programme (UNDP) and International Labour Organisation (ILO) between January and December 2008 on a representative sample of 16,000 households across the country, was released Monday.

For the purpose of the survey, all Nepalis aged 15 years or more seeking employment, available for work or employed were included in the 'work force.'

According to the report, only 16.9 percent of the employed population worked on a salary or wage, while the remaining 83.4 percent were self-employed.

Likewise, 73.9 percent of the people worked in agricultural sector, while only 26.1 were employed in non-agricultural sector.

Although agriculture is the major contributor to the nation's Gross Domestic Product (GDP) and the highest employer, agriculture in Nepal often means subsistence farming with seasonal work and under-utilisation of the labour force.

Meanwhile, the survey has shown an improvement in the literacy status and the lifestyle of Nepalis compared to the previous years.

The literacy rate has increased to 63 percent, 14 percent more than the rate shown in the previous labour survey conducted a decade ago.

Likewise, the survey also shows:
* 89.2 percent of the population live in their own homes, while 9.2 percent live in rented apartments.
* 68.4 percent use firewood as the main fuel for cooking and 12.3 percent use Liquefied Petroleum Gas (LPG).
* 56 percent of the households use electricity to light their homes, while 33 percent still depend on kerosene lit lamps.
* 45 percent of the population uses tap water, while 39 percent use hand pumps or boring wells.
* 58 percent households own a radio set and 33 percent owns a TV set.
* 9.8 percent households have a landline telephone and 28.3 percent of the population use mobile phones.
* 3.1 percent households have a computer.
* 78.4 percent of the households have arable land.
* 29.1 percent households have at least one person working abroad.

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An Impending Food Emergency in Nepal

Less food, more mouths to feed
NepaliTimes, Issue #463 (07-Aug-09 to 13-Aug-09)
KUNDA DIXIT

New report warns of an impending food emergency in Nepal

Nepal suffers chronic food shortage, but a convergence of crises has created a food emergency which could have serious political repercussions in the coming year.

An apocalyptic new report by the UN's World Food Programme (WFP) warns of a "sharp and sustained decline" in food production in Nepal. Even if only some of WFP's predictions come true, food shortages could trigger widespread social unrest.

'The Cost of Coping: A Collision of Crises' adds up the cost of the global fuel, food and economic crises and how these are magnified by a stagnation in Nepal's food production, growing population and political instability. In addition, a cycle of droughts and floods has pushed an already vulnerable population to the edge of famine.

As a result, 3.4 million Nepalis don't have enough to eat. An additional five million Nepalis have fallen below the poverty line in the past three years: forcing them to take children out of school, east seed stock or sell land.

'If current production growth rates remain constant?it is likely that within the next 3-5 years Nepal will become food deficit at a national level even during years of normal harvest,' warns the report.

There are more mouths to feed, but Nepal's rice production actually fell by one percent between 2002-2007, while harvests increased by 16 percent in Bangladesh and 31 percent in India. Nepal's investment in agriculture fell from 30 percent of the budget to 5 percent in 2008, and even so only 16.5 percent of the allocated money was spent.

"The three aspects of food security: production, availability and affordability, and we have to respond to each," says Yubaraj Khatiwada, the newly-appointed head of the National Planning Comission.

The winter drought in 2006-7 was followed by another eight-month drought last winter and then a bad monsoon this summer. This may lead to a food grain deficit of more than 200,000 tons because winter harvests in the mountains came down by half and even the Tarai may suffer huge rice harvest shortfalls this summer.

But at the Ministry of Agriculture and Cooperatives (MoAC), spokesman Hari Dahal says the WFP report is "alarmist". He admits the food deficit has affected 700,000 people, and adds: "I haven't heard anyone dying of hunger. there is no shortage."

But even the MoAC's own figures point to a harvest shortfall. This needs urgent investment in agricultural infrastructure and subsidies for inputs. New technologies for dryland rice like the System for Rice Intensification (SRI) need to be promoted. (See box, below) All this needs the political will to grasp Nepal's food emergency and do something about it.

Sixty percent of children under five in the mountains are undernourished: one of the worst figures in the world. Nepal is now even more unlikely to achieve the UN's goal of eradicating extreme poverty and hunger by 2015.

The government needs more effective distribution of subsidised grain to hotspots, expansion of food for work programs like the ones implemented by WFP, and school meals for vulnerable children.

The WFP report concludes with this dire warning: 'If urgent action is not taken to address Nepal's food crisis, then the situation will deterioirate further through this decade and the next?urgent prioritisation of national food security is required at the highest level of the Nepal government and supporting development partners.'

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