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In yet another twist in the long-delayed development of the Budhi Gandaki Hydropower Project, the government has started discussions to allow the Nepal Electricity Authority (NEA) to develop the multi-billion project. The government in the last fiscal year decided to build the reservoir project on its own and also established Budhi Gandaki Jalbidhyut Public Limited to develop the 12,00MW project. However, the company is yet to come into operation as the government has not provided the budget to get approval for commencement from the Office of the Company Registrar (OCR). The company was supposed to explore the resources after getting approval from OCR to carry on with its business. “Recently, there has been a discussion on developing the project under the leadership of NEA,” said a senior official of the Ministry of Energy, Water Resources and Irrigation (MoEWRI). “NEA has the technical expertise on developing big projects. So, we have asked NEA to take the lead role to develop this project,” the official said, adding, "For this, NEA could have a majority stake in the newly established company." An NEA official also confirmed such discussion saying that the government has said that NEA could develop the project by having a majority stake in the company. As developing storage-type projects is quite expensive compared to the run of the river-type project, a viability gap funding could be required from the government to develop this project. Budhigandaki is a ready-to-go project as its detailed project report (DPR) has already been prepared. Compensation distribution for the land acquisition and houses has also been in the final stage, according to MoEWRI officials. The project, which has been touted as important to ensuring Nepal's energy security as it is expected to help the country to be self-reliant even during the dry season, has been in limbo for a long due to uncertainty over the modality of its development. Nepal is currently importing electricity from India as domestic production has dropped sharply along with the reduction in water levels in the rivers where the hydropower projects are based. Even though the Budhigandaki Hydropower Project has been highly prioritized on paper, the company established to execute the project is yet to function seven months after its establishment. Earlier, Budhigandaki fell victim to policy inconsistency despite facing hardly any problem in land acquisition and completion of DPR. In 2017, the then government led by Pushpa Kamal Dahal awarded a contract to build the project without competitive bidding to China Gezhouba Group Corporation under the engineering, procurement, construction, and financing (EPCF) modality. The Sher Bahadur Deuba-led administration in November 2017 overturned the earlier government’s decision. A high-level team led by Swarnim Wagle, former Vice-chairperson of the National Planning Commission, was then established. The committee suggested that the project could also be developed using domestic resources. Again in September 2018, the government led by KP Sharma Oli decided in favor of the Chinese company, reversing the decision of the Deuba-led government. In April of last year, the Sher Bahadur Deuba-led government once more decided to terminate the license granted to the Chinese company since it was not making any progress on the project. Budhigandaki, which will be Nepal's largest reservoir-type project with an estimated cost of USD 2.6 billion, is situated at the boundary between the districts of Gorkha and Dhading. For the government, generating resources and closing the project's budget gap will be a difficult undertaking. The report prepared by the committee headed by Wagle in 2017 suggested that the government should develop the project on its own by providing viability gap funding, covering around one-third of the project development cost. As per its report, the government could cover the cost of land acquisition and resettlement of displaced families which could total as high as Rs 94 billion. A significant chunk of resources can be generated from government institutions. An infrastructure tax being imposed on imported fuel could be an important source of revenue that can be used to develop the project. “Based on an average increase in petroleum consumption by 10 percent a year, as much as Rs 164 billion can be collected from taxes imposed on fuel alone by the fiscal year 2026/27” reads the report submitted by the committee led by Wagle. The NEA official said that discussions are underway on how to generate resources for the project. “One option could be issuing an initial public offering for the development of the project,” said the official. According to the report, Nepal Electricity Authority, Employees Provident Fund, Nepal Telecom, Rastriya Beema Sansthan, Hydroelectric Investment and Development Company, Upper Tamakoshi Hydropower Company, Chilime Hydropower Company, Nepal Army, Nepal Police, and the General Public could be tapped for the project. The Wagle report also stated the resources could also be generated from international donor agencies or by the issuance of project-specific bonds and credits from the project’s suppliers.

The Nepal Stock Exchange (NEPSE) gained 1.02 points to close at 1,919.42 points on Wednesday. Similarly, the sensitive index surged by 0.62 points to close at 361. 14 points. A total of 2,539,048-unit shares of 258 companies were traded for Rs 816 billion. Meanwhile, Super Mai Hydropower Limited was the top gainer today, with its price surging by 10. 00 percent. Khaptad Laghubitta Bittiya Sanstha Limited was the top loser as its price fell by 4.41 percent. At the end of the day, total market capitalization stood at Rs 2. 78 trillion.

Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari and other high officials of the central bank have met with the country’s bankers to talk about the recent problems and contemporary issues in the banking sector. The meeting held on Monday went on for four hours and CEOs of all 21 commercial banks were present. The meeting was called at a time when the country's economy is facing multiple problems. The banking sector is currently reeling under high inflation, slow economic activities, and low demand for credit in the market. This situation has created difficulties for banks to recover their debts from borrowers. The non-performing loans (NPLs) of banks have increased sharply in the current fiscal year 2022/23. By the end of the first six months of the current fiscal year, the NPLs of commercial banks stood at 2.29 percent, a jump of 116 percent from 1.06 percent in the same period of the last fiscal year. Due to the increase in bad loans, the total provisioning amount of commercial banks has also increased to over Rs 29bn. As a result bank profits have also decreased. On top of that, protests against banks and financial institutions (BFIs) since January have worried bankers. Various groups are on the streets calling for non-payment of loans and loan waivers. There have also been reports about BFI employees getting assaulted in some parts of the country. According to Deputy Governor Bam Bahadur Mishra, the impacts of the country's economic problems and the incidents that have occurred recently were discussed with the bank CEOs. "By the end of the second quarter of the current fiscal year, NPLs of banks increased significantly and the third quarter is also ending soon. Protests against banks are also taking place. We discussed the ways to move ahead in this situation," he said. "However, the discussion did not reach any conclusion." Mishra started the meeting by presenting the current picture of the banking sector. The CEOs of all 20 commercial banks then presented their problems in turns, which was followed by the governor's speech. According to the bankers present in the meeting, Governor Adhikari did not offer any solution as to how to solve the current problems. "The issues were discussed for four hours. But there were no concrete words from the governor to come out of the situation," said a CEO of one bank. The governor tried to assure the bankers by telling them that there was no need to panic, as NPLs of banks in Nepal are still low compared to other countries. "Banks can return money to depositors even if they decide to withdraw all their deposit amount. The situation is not alarming even though the NPLs of banks have increased," Adhikari told the bankers. The bankers meanwhile asked for flexibility in the management of losses due to bad loans. They said the banks are not in a position to support borrowers from the current resources and the loan loss provision amounts are likely to increase further. They also urged the government to expedite spending to increase the flow of liquidity in the market. The bankers also asked the NRB officials for an alternative to raising the paid-up capital of banks. According to them, banks are still able to disburse loans easily on the basis of their capital levels. They demanded that banks should be able to increase paid-up capital through the issuance of rights shares and bonus shares. Governor Adhikari, however, did not address this issue. "His interest was in NPLs of banks. It seems the governor called this meeting just to boost our confidence,” said one bank CEO. “Nothing was promised."  

With the dismal growth and expansion of the manufacturing sector, Nepal has a very limited number of employers. According to the Population Census 2021, there are only 212,370 employers among people aged 10 years or above who are engaged in economic activities. The number of employers accounts for just 1.4 percent of the total economically active population who were involved in economic activities in the past 12 months before the census was conducted. According to the census, there are 14,983,310 economically active people engaged in certain economic activities over a year. “The low number of employers suggests that the country has failed to produce entrepreneurs adequately,” said a senior official of the National Statistics Office. “With the country failing to industrialize, the number of employers has also not grown." Manufacturing industries are considered mass employers but the share of the manufacturing sector in the country's gross domestic product (GDP) has been on the decline for the last several years. As per the Economic Survey 2021/22, the share of manufacturing in GDP stood around just six percent. The National Economic Census 2018 showed that the number of establishments in the manufacturing industry is 104,058 and this comprises 11.3 percent of all industries in Nepal. According to the Population Census 2021, among the employers, 160,292 are men and 52,078 are women. The largest number of employers are in Bagmati Province which is the center of the country’s major economic activities. The province has 70,289 employers followed by Koshi Province with 34,213 and Lumbini with 33,472. Then, the turn comes for Madhes provinces followed by Gandaki, Sudurpaschim, and Karnali as the number of employers comes down gradually. The number of employers is in line with business establishments and service providers in each province. According to the National Economic Census 2018, there were a total of 900,924 business establishments with Bagmati topping the list with 30.6 percent of enterprises being established in the province. There are 18.3 percent establishments in the second followed by Lumbini with 16 percent. The lowest number of business establishments is in Karnali where only 4.6 percent of total enterprises have been set up, according to the Economic Census. Most of Nepal's population engages in their own work. According to the population census, as many as 55.3 percent of the population aged 10 years and above who were involved in economic activities in the past 12 months, are engaged in their own work. The share of the population engaged in work for others stood at 28.6 percent. Bagmati once again tops in the number of people who work for others. As many as 36 percent of the total population aged 10 years and above, in the province work for others, according to the census.