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In the past decade, one thing we have repeatedly heard is prime ministers and ministers issuing instructions to their line ministries and departments to fix this and solve that. Many of these individuals have been prime ministers and ministers multiple times, yet every time they issue the same-old instructions. Why do elected executives seem unable to do anything about a clear case of insubordination, incompetence and neglect of duties? Why do they fail to get things done, the things that really matter to the public, but show great urgency in completing things that seem to benefit few individuals?

For instance the efforts to expand and relocate presidential and vice presidential mansions respectively, a recent push, have picked up steam in comparison to other public works, which have been in the pipeline for long. Have we built a public system that enables or incentivizes pri­vate gain at public expense? Does shutting down the existing police training center without a viable alternative justify as public good? It certainly may provide addition­al comfort for the president, but at what cost?

I am not against offering the highest office bearers of the coun­try befitting perks and privileges, but they also have to be incremen­tal and need to go hand in hand with the improvement of basic services for citizens. It some­how feels that our leaders have become unresponsive to public sentiments.

Perhaps not surprisingly, the prime minister on Dec 2 accept­ed a dubious good governance award carrying a cash prize of US $100,000 against the backdrop of news reports that the very organi­zation that give him the award is lobbying to get the state to cough up Rs 32 million. Even if the prime minister does not keep the cash for himself, it certainly feels like a bribery of sort.

One would credit Oli with few achievements, notable among them his role in helping Nepal gain a degree of strategic autono­my in its foreign policy. But to say that he has done anything remote­ly resembling good governance is a stretch. Absence of self-aware­ness and periodic reflection is a dangerous trait in any leader.

To be fair, PM Oli has made efforts, yet there often seems a wide gap between his words and deeds; he isn’t rigorous enough and gives people around him an easy pass. One cannot fault him too much here, given his poor health. But the least we expect from him is to invest in people who can bring about an improved system, one that promotes public good. When he took office, there was a lot of talk of governance reform and that it would start from the top—meaning the Prime Minister’s Office (PMO). Govern­ment reform means both mod­ernization and accountability. As I argued in my previous piece in this space, only if leaders them­selves shift gears from how they have been running their political parties can they hope to lead a modern government capable of delivering prosperity.

No doubt, attempts have been made to modernize the govern­ment, yet in the absence of a strategic direction and sustained leadership on these issues, they appear more of an accident than a new emerging norm.

In what seemed like a step in the right direction, Prime Minis­ter KP Sharma Oli recently sum­moned ministers and officials to assess their performance. But the PM should know that per­formance-based contracts for civil servants have been thrown around for quite sometime, and yet they hardly seem to have made a dent on the overall delivery, let alone resulted in quality work, of the public sector. Absence of political will and frequent govern­ment changes had made it difficult to enforce meaningful reform. But that was in the past, or so we were led to believe by the new govern­ment. Yet the business-as-usual continues.

If the current system perpetu­ates, we are sure to have a form of kleptocracy, not a prosper­ous democracy. It is still not too late for PM Oli to leave a legacy behind by putting his characteris­tic dogged determination, which he has shown on other occasions, to work.

By: John Narayan Parajuli

All major political parties in Nepal have intellectu­al wings, or so they say. But in reality, very few poli­cy ideas, let alone good ones, are generated within party struc­tures these days. Shrinking space for intellectual autonomy both in and outside the party in gen­eral further compounds this problem. As a result, the policy environment remains seriously compromised, allowing political hustlers to peddle half-backed ideas that serve particular interest groups rather than the general public. This is becoming a serious problem for our young federal republic.Our parties have to introspect on their structures and institute necessary changes, including their intellectual wings, if our third attempt (post-1950, post-1990 and now post-2006) at insti­tuting meaningful democracy is to bear fruit. Our major parties have not undergone the kind of mod­ernization Samuel P. Hunting­don discusses in his seminal book Political Order in Changing Societies. Parties are still stuck in this mindset of fighting against a totalitarian regime. Democracy has come and gone in Nepal, in part due to the inability of the victorious democratic forces to adapt to the task of governance. Governance is a complex process that calls for the right culture, autonomous institutions and dis­persion of power.

In our latest election cycle held for the three tiers of gov­ernment, Nepali Congress per­formed badly largely because of its unwillingness to change the narrative of that previous era. While the left parties offered a vision of prosperous Nepal, even though without specifics, Nepali Congress chose to raise the spec­ter of totalitarianism of the left forces. The public was simply tired of the nearly seven-de­cade-old fear mongering.

This was clearly a triumph of hope over fear. But unfortunate­ly, for a government that has been given a two-third majority to deliver on that promise, we haven’t seen the kind of clarity and drive towards modernization that is necessary to execute an ambitious vision of prosperity in the new federal set-up. On the contrary, all signs point towards regression under the misplaced notion of a strong government. A strong government doesn’t mean concentration of power or, in our case, a super prime minister—it means decisiveness enabled by an informed policy environment; it means delegation of authority with clear oversight and account­ability mechanism.

Prime minister undermining his ministers by emboldening secretaries to defy them sets a bad precedent. Ministers need to be given space to perform and get relieved of their duties when they fail to do so—a prime ministerial prerogative, no doubt. A clear test of the government commitment to modernization is whether it builds institutions or undermines them.

In the long run, a party can deliver and thus continue to remain in power only if it keeps generating new ideas. And this can only come from debate and contest of ideas, not simply by toeing a line. All of our political parties need to modernize, but in our case, there are few aspects that need extra focus.

Working culture: Our polit­ical culture remains stuck in a bygone era with all the trappings of a feudal system. Leaders do not like to be held accountable and expect the party rank-and-file, and increasingly, even the intellectuals, to be subservient. It feels like we removed one king only to be replaced by hundreds of minor kings, each with a sense of entitlement of emperors.

Party structure: If there are to be reforms in governance, reforms are necessary in the party structures, too. There can­not be a modern government without a corresponding modern party apparatus.

Competence and qualifications: Spending several years in jail for democracy cannot be the only qualification and justification for giving someone a key government position. Training and experience need to count besides the time one has invested in politics.

Individual discipline: Last but not the least being self-disciplined is the key to inspiring same level of rigor in others too. A minis­ter can only push his colleagues in the ministry for results if he/she shows high level of consisten­cy and commitment towards a common goal.

But it would also be unreal­istic to expect our senior lead­ers presiding over a traditional party structure and culture to suddenly push for modernization of the government.

 Provincial governments are running out of patience as the center delays promulgat­ing necessary laws to operation­alize the devolution of power. But none have been as vocal as the government of Province 2, large­ly because six of the seven chief ministers belong to the same par­ty. For that reason, securing the provincial autonomy as enshrined in the constitution now largely depends on the activism of lead­ers of the Madhes province. Last week the co-chair of the ruling Nepal Communist Party (NCP) Pushpa Kamal Dahal ‘Pra­chanda’ warned Province 2 Chief Minister Lal Babu Raut against trying to ‘overtake’ the center, suggesting that federalism would fail if the provinces tried to pre­empt the federal government. This response came after the pro­vincial government introduced legislation in the assembly to cre­ate its own police force.

For months chief ministers of all provinces have urged the cen­ter to expedite legislation in the federal parliament that clearly gives power to maintain a police force, hire civil servants and con­trol their finances. Yet the center has done very little to ease the inconveniences these subnational governments face in the absence of these laws. Currently the pro­vincial governments are in name only and they have very little authority on the ground to effect any change.

Prachanda should have nudged his co-chair and the prime minis­ter instead of issuing these omi­nous threats. Yes, the center lays the ground for the operational­ization of the federal structure. But nothing in the constitution prevents the provinces from legislating necessary laws so long as long as they do not contra­dict the provisions in the constitu­tion. So the fear that the Province 2 and its leaders are somehow trying to secede is nothing but paranoia, further compounded by the ignorance of constitutional provisions that the leaders them­selves signed on.

Some early conflict between the center and province is necessary to jumpstart forward momentum in the devolution of power. This is a conflict between those try­ing to find ways to preserve the status quo and those pushing for restructuring. Kathmandu’s polit­ical elite and their counterparts in the civil service aren’t quite ready to let go off the unitary system. Without the specter of some sort of constitutional crisis, the center seems unwilling to do its part.

In this case, the threat of pre­emptive action clearly worked: the Prime Minister’s Office (PMO) reached out to the Province 2 leaders, urging them to hold off certification of the legislation—promising swift action through an executive order on formation of provincial police force. The PMO is also said to have assured provin­cial leaders of required numbers of staff in next few weeks.

In an ideal world more provinc­es should take similar proactive actions on securing the autonomy the constitution has given them in governing their own affairs. But given the complete hold of NCP in six provinces and the reluctance of other chief minis­ters to challenge their party lead­ers at the center, that is unlike­ly. Chief Minister of Gandaki Province Prithivi Subba Gurung has already faced the ire of his party chief for having the nerve to organize a conclave of chief min­isters in September. The meeting that issued a nine-point decla­ration was perceived by prime minister as ‘ganging-up’ of the provincial leaders against him. Apparently, Gurung, who is con­sidered close to Oli, was threat­ened with a sacking, and other five chief ministers got the mes­sage loud and clear.

Against this backdrop, one would only hope that Province 2 leaders would be more proac­tive and rebellious in pushing our reluctant federalists to do their duty. And we in the media have a duty too. Instead of simply lapping up the narrative from Kathmandu, we need to do more to present a nuanced picture of this jurisdictional conflict.

 Two days after summoning the first ever meeting of the Inter-province Council, a constitutional mechanism to resolve disputes between the provinces and the center, in early September, Prime Minister KP Sharma Oli decided to abrupt­ly cancel it. He was reportedly furious at the nine-point declara­tion made by the chief ministers following their conclave held in Pokhara—right before the meet­ing—that squarely blamed the fed­eral government for withholding authority and resources required for the smooth functioning of the provincial structures.The prime minister’s anger may be understandable from a party functionary point of view given that six out of seven chief ministers are his subordinates in the party, but not acceptable for the head of a federal gov­ernment. Regardless of party affiliations, chief ministers are heads of autonomous subnational governments elected by people of the province.

Beyond the fire and fury of the news headlines, the nine-point declaration offers a clear road­map for ending the gridlock at the provincial level. The provinces have three interrelated problems: absence of laws, lack of person­nel and meager resources. The provincial government by now ought to have most laws enabling to maintain law and order, deliver services and implement develop­ment projects within the provinc­es, but they don’t. The onus lies with the federal parliament to pass most of these laws, clearly delegating the authority as pro­vided in the Constitution.

The center has been sitting on the provincial civil and local civ­il service bills that would have enabled them to do their own hiring. Provincial governments have no control over the exist­ing officials deputed by the center, as an interim measure; moreover, they are transferred frequently without consulting the provincial authorities. It makes sense for them to demand that the center allow them to do temporary hiring while they wait for the laws to be passed in the federal parliament.

The provincial governments also have no control over the law and order apparatus in the province. Even on this front, Kathmandu is sitting on a law to create provincial police force—while meddling in the affairs of the subnational governments through the Chief District Officers (CDOs) who continue to defy the provincial governments by virtue of being under the federal govern­ment. The chief ministers have merely requested that CDOs also report to the provincial govern­ment alongside the federal gov­ernment until a provincial police force is created.

Resource distribution is anoth­er issue that is creating friction between the two tiers of govern­ment. The Natural Resource and Fiscal Commission, as stipulat­ed in the Constitution, is long overdue. Without it, distribution of natural and other financial resources have been left to the mercy of federal government. This has also prevented clarity on local and provincial taxations—prolonging an uncertain fiscal environment for citizens and busi­nesses. Among other things, the declaration made by the chief ministers also demands an apex body under the prime minister’s leadership to implement federal­ism, besides calling for establish­ment of a permanent secretariat for Inter-Province Council. Noth­ing in their demands appears to be out of line.

Perhaps the problem lies else­where. The prime minister and much of his party were reluc­tant federalists prior to the uni­fication, more so in the case of province two. But one had hoped that the reality of governing a nascent federal system, along­side the obligation of deliver­ing prosperity, would force them to appreciate the impor­tance of delegating authority to subnational structures. As one of Oli’s party subordinates and Chief Minister of Gandaki prov­ince Prithivi Subba Gurung cor­rectly pointed out recently, the fear of province two is being used as a justification to deprive all the provinces of autonomy enshrined in the constitution.

Federalism will fail if the center continues to employ half-measures that only seem to increase financial burden on the taxpayers without attendant ben­efits of the system O

The provision of mandatory shares for affected locals in hydro projects introduced the concept of equity investment in rural communities. As a result there is a frenzy of sorts—and often one gets a sense that buying shares is akin to winning a lottery. Until recently long queues were often seen outside banks facilitat­ing the purchase of shares. While the introduction of automated process of late has eased the pro­cess somewhat, the questions about risks and returns—wheth­er or not applicants understand market risks—remains. Do these shares actually offer value for money in the long run? How do poorer and marginal­ized households manage funds required to buy these shares? What can government and developers do to ensure that locals—who have very little finan­cial literacy—are not exposed to market risks that can wipe out their entire savings?

A new comprehensive study conducted by the International Financial Cooperation (IFC), a pri­vate sector arm of the World Bank Group, seeks to answer some of these questions.

Nepal has taken an innovative approach in tackling complex issues in project development, particularly benefits sharing and ensuring cooperation of affect­ed-locals. This idea of offering local shares gives locals a sense of ownership and thus prevents any potential disruption to the projects. As Nepal government seeks to develop over 10,000 MW of hydropower in the next decade, IFC estimates that the value of local equity alone could be around half a billion dollar.

That is a significant amount of capital to be raised from poorer, rural and marginalized house­holds. This could in turn have serious implications on house­holds’ debts levels in rural com­munities. As the IFC study and other anecdotal reporting sug­gest, households have disposed of assets or borrowed money at high interest rates to invest in these seemingly ‘lucrative projects’. But the internal rate of return for these projects remains uncertain as delays and costs overruns hit the initial estimate.

Take for example the Upper Tamakoshi, hailed as a model project built with domestic cap­ital. The initial project cost was estimated to be around Rs. 35 billion ($ 330 million approxi­mately). But according to revised estimates, the final price tag could nearly double—costing over Rs. 60 billion. Then there is the issue of falling price of the shares. Since 2014, the value of hydro shares has fallen by almost one-third. Even so the share-buying frenzy for hydropower companies con­tinues unabated. This is clearly irrational and shows the failure of communicating market risks to prospective investors.

While allocating local shares offer a unique way to share the benefits of development with communities, particularly the vulnerable ones, protecting them from market risks—as well as creating a sustainable financ­ing mechanism—is critical if this innovative policy is to have the desired result.

The IFC study is timely and its recommendations, particular­ly for creating a dedicated fund to enable access to finance in favorable terms, makes real sense; locals, who meet certain eligibility criteria, can be giv­en concessional loans with the provision of shares as collateral. The study further recommends a mix modality of grant and loans in the case of mega proj­ects—where the dividends can be used for servicing the loans. The government also seems to be taking some steps to put in place additional safeguards.

The Ministry of Energy is in the process of formulating a new guideline whereby the public can buy shares during IPO by making just a 10 percent down payment, and linking the rest of payment to the progress in project implementation.

In promoting local shares, one also needs to be mindful of the license period for hydropower plants—at the end of which the entire ownership is transferred to the government. Some projects may not pay off enough dividends to cover the interest plus inflation within that period. For house­holds with cash to spare, this may be a fair gamble. But for poorer households, won’t the money be better spent elsewhere? 

The West Seti Hydropower Project is again in the news for wrong reasons. Twen­ty-one years after first license was issued for its development and seven years after it was handed over to the Chinese side, perhaps not unexpectedly it is on the verge of being cancelled again.Separate the fluff and the financial viability of West Seti was always a suspect. As a stor­age-type, it makes sense for Nepal to develop it for energy securi­ty. But it’s relative remoteness from urban centers in Nepal and the fact that it needs a very long transmission line for power evac­uation, if it is not exported to India, didn’t seem to make much economic sense. It was originally conceived as an export-type proj­ect for obvious reasons.

But with India’s new regula­tions on cross-border power import that proscribes import­ing power from Beijing-invest­ed projects in Nepal, the door for exporting it to the southern neighbor remains shut. While there may be talk about consum­ing the generated power in the far-west and developing a local economy, that is unlikely before the transfer within the Build Own Operate and Transfer (BOOT) period is over.

The China Three Gorges Corpo­ration was worried about the prof­itability of the project and return on investment. Nepal Electricity Authority (NEA) was expected to make a 25 percent investment in this $1.6 billion project—arranged through concessional loans from China EXIM bank. (Now there is talk of the project being built with the help of Nepali investors.) Even NEA management would much rather invest the borrowed amount in other projects, if it were not for political pressure.

When the government of Nepal cancelled the license given to Snowy Mountain Engineering Corporation (SMEC) in 2011, it had become clear that the SMEC would not be able to arrange financing for the project. By then ADB and China National Machin­ery and Equipment Import and Export Corporation (CMEC) had decided not to offer financing as well. But curiously enough the project was handed over to anoth­er Chinese state-owned firm in August 2011.

The story of repeated fail­ure of the West Seti hydropow­er project is emblematic of our lack of pragmatism. This is also a strong indictment of our devel­opment model that perpetu­ates a slack and nonchalant attitude in everything we do. A degree of discipline is required in any undertaking, more so in huge national infrastructural development. Our inclination to take at face value commitments made by our neighbors is also a problem. We tend to assume that China will fund anything and everything, if we only ask. Reality is much different. Chinese polit­ical leaders may give assurances to fund our request, but they are only being polite.

More important, the failure of West Seti is symptomatic of our unrealistic expectations from Bei­jing; our inability to see through cultural differences during nego­tiations continues to create a bub­ble of unrealistic expectations.

As Nepal begins a phase of negotiations with China on a raft of projects both in and out­side the ambit of Belt and Road Initiatives (BRI), the failure of West Seti offers a stark remind­er of what could happen to oth­er much-hyped undertakings, including the railways, if we do not do due diligence.

The half-yearly ‘progress report’ of KP Sharma Oli government is far from sat­isfactory. Some of the progress­es enlisted by the prime minis­ter can at best be described as incomplete. Take for instance the credit for dismantling the ‘syndicates’ in public transport. Suspicions are rife. Have the syn­dicates been replaced with some­thing better? Or has his Minister of Transport quietly allowed the status quo to remain? In the past few weeks, we have also seen public anger across the country over higher local taxes. There have been pro­tests, sit-ins and relay hunger rallies opposing higher taxation without corresponding improve­ment in services.

If you listen to people close to the government, they will tell you that they are under attack from the opposition, civil society, international community and the media. They see a similar narra­tive emerging from all fronts and suspect there is concerted effort to discredit the government.

When you raise the question of delivery, they will tell you that they have done more in six months compared to what the previous governments achieved in the same period; and they blame the ailing system of governance for slow progress on other fronts. I don’t think you can disagree on the last two points, yet the fact remains—unlike previous govern­ments, this one enjoys a two-third majority in the parliament and that people are thus entitled to expect more.

Structural problem

The problem lies in the inability or unwillingness, or both, to fine-tune government structures and processes—even six months after assuming the office. Clearly the existing executive structure and processes aren’t serving the twin government purpose of imple­menting the constitution and delivering prosperity.

The current civil service system, put in place in 1950s, has seen very little revision. While over 50 different committees have been formed to recommend reforms in the intervening years, many of those recommendations were never implemented. Compared to 1950s, the government today has a larger role in the society; the nature of public policy problems as well as modes of interventions are constantly undergoing chang­es; and the rapid technological innovations have added complex­ities to governance processes—often requiring instant actions. Add to this the new federal con­text of Nepal.

For these reasons, the feder­al government needs to go back to drawing boards and rearticu­late its mission and vision before thinking about the workforce, structure and processes.

Agenda for reform

Reform must be performance driven and it must begin at the top. The Prime Minister’s Office (PMO) appears to be overstaffed and underworked. Sure it needs party officials and loyalists, but it also needs professionals who can bring to bear their exposure from elsewhere to raise the standards. The first step is to clearly delegate roles and responsibilities of the teams at the PMO—dividing them into economic, foreign policy and national security, legislative, pub­lic relations and political manage­ment (including Center-Province relations) teams.

Each team will work with rele­vant ministry, department or tier of government to push through government agenda. Each team as well as each individual in these teams would be assessed on their performance on a peri­odic basis. As I argued in this space (July 20-26 edition) before, a designated Chief of Staff should ideally oversee their perfor­mance. This sort of set-up would be immensely helpful for the gov­ernment to deliver on its promises in a timely manner.

The government is currently behind on drafting several laws required to implement the consti­tution. If there were a functioning legislative team at the PMO, it would have been its responsibil­ity to work with Ministry of Law to ensure a timely submission of draft laws to the parliament. The economic team for its part would have already facilitated the formation of natural resourc­es and fiscal commission—there­by clarifying much of confusion and anger surrounding excessive taxes. In a functioning system, each team would have their daily, weekly, monthly, quarterly and yearly agendas cut out—offering a tangible basis for success.

Under the current system, it is more misses than hits. It could stay that way for the remainder of the government’s tenure, if they do not get to work on mod­ernizing its structure and pro­cesses immediately. And if NCP officials don’t want anti-incum­bency and underperformance to mar their chances of another term, they better get down to the business of modernizing the gov­ernment with urgency.

In its essence, parliamentary hearing for key appointments is aimed at transparency and open government. But in Nepal successive hearing com­mittees have acted merely as rubber-stamps, defeating their very purpose. Perhaps mind­ful of that, lawmakers from Nepal Communist Party (NCP) were eager to buck the trend by not confirming Deepak Raj Joshi as chief Justice. Certainly that was the popular thing to do given the public opinion, yet in doing so they betrayed the principle of ‘innocent until proven guilty’. If key appoint­ments can be derailed by mere allegations, floodgates of similar allegations will be opened against all future nominees. The first issue in this saga is the failure of the hearing committees to use its power to investigate.On all allegations, the commit­tee has the power to summon testimony and documents. No doubt, this will delay the confir­mation process but, at the very least, it would do the right thing: prove or disprove the allegations. One of the things that seemed to upset NCP lawmakers was that chief justice nominee Joshi’s refusal to answer questions, and he had even called into ques­tion parliament’s competence. The committee could have com­pelled Joshi to testify, or it could have threatened to start the process of contempt of parlia­ment. (Article 103 (7) of the Con­stitution has clear provision for contempt citation.) Not under­standing the scope of one’s responsibility and power is big problem in Nepal. Of the many lawyer-turned politicians in the parliament no one seemed to be providing right counsel.

While Nepal has made efforts to adopt some of best features of other systems of govern­ment, it is unfortunate that same level of energy wasn’t put in implementing these ideas in our context. The 15-member joint Hearing Committee (12 members from House of Rep­resentatives and three from the National Assembly) clearly had the mandate to investigate mat­ters. Article 17 of Parliamentary Hearing Committee Working Pro­cedure, 2075 clearly says so. To carry out investigation the com­mittee can seek assistance of any government entity.

It can also invite experts to give their opinion on the mat­ters under discussion. There is no legal restriction that bars the committee from going even fur­ther than that. Even NCP leader­ship seemed willing to give the Hearing Committee a long leash; that’s unprecedented in a nascent democracy where party bosses don’t take kindly to subordinates not toeing the line. So this was the perfect opportunity to raise the bar and set a new precedent for ending business as usual.

If the Hearing Committee and other thematic committees are to be effective, the parliament needs to seriously expand its own capac­ity. There should be a separate research department within the secretariat to support the pro­fessional needs of members of parliament and committees.

Flawed vetting

The blame also goes to Judicial Council, Constitutional Council and the government for not insti­tuting a vetting system for key appointments. If someone is so controversial, why nominate him and initiate a process that would embarrass the government and erode public trust in institutions? This clearly calls for a vetting pro­cess for all key appointments. Instead of ministers producing names from back pockets at the last minute, it should be part of advance planning put through a vetting process. With the ruling parties having such strong num­bers in parliament, there is no longer an excuse for not putting a system in place.

Not confirming an appointment without fully investigating the allegations is as dangerous as confirming someone despite the allegations.