Submit your Article

The price of gold has increased by Rs 600 per tola in the domestic market on Friday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 111, 800 per tola today. It was traded at Rs 103, 500 per tola on Thursday.

Meanwhile, tejabi gold is being traded at Rs 111, 250 per tola. It was traded at Rs 110, 650 per tola.

Similarly, the price of silver has increased by Rs 10 and is being traded at Rs 1,395 per tola today.

The Millennium Challenge Corporation (MCC) Nepal Compact hit a roadblock after the Finance Ministry raised concerns about the elevated cost of the transmission line project. Finance Minister Prakash Sharan Mahat has expressed dissatisfaction over the financial proposals, which have exceeded the estimated cost. 

According to the Finance Ministry sources, discussions have started to call for the tender again for the construction of the transmission lines. Mahat, on Monday, discussed with MCA-Nepal executive director Khadga Bahadur Bisht about issuing the tender again. 

Six Indian companies had submitted bids to construct the power line which will be constructed in three separate packages. An association of Megha Engineering and Infrastructure Ltd and Power Mech Projects Ltd along with Kalpataru Power Transmission Limited, KEC International Ltd, Transrail Lighting Ltd, Tata Projects Ltd, and Larsen & Toubro Ltd participated in the bid. 

MCA-Nepal has prepared an estimated cost of constructing the transmission line at $226m. However, when financial proposals were opened, the total cost of the three packages stood at $365m, a staggering 66 percent increase over MCA Nepal’s initial estimates. With the huge difference between the initial estimates and financial proposals, the Finance Ministry is inclined to initiate a fresh bidding process for the construction of the transmission lines.

“The amount quoted in the financial proposals is unusually higher than the estimated cost,” said a senior official of the Finance Ministry. “Even if we were to accept the lowest bid, it would pose a significant budgetary challenge for us. We have no alternative but to initiate a fresh tender process.” Amid the Finance Ministry’s reservation over the pricing, the MCA Nepal has not made any official statements or disclosures regarding the matter.

MCC, the US aid agency has committed to provide $500m while the government had earlier pledged $197m to implement the transmission line and road improvement projects under the MCC Nepal Compact. Since the MCC will not provide an additional amount, the Finance Ministry believes it has to bear the additional financial burden if it accepts the financial proposals.

According to Finance Ministry officials, should these financing proposals be accepted, half of the total budget would have to be allocated to the transmission lines, potentially leaving insufficient funds for other critical components of the Nepal Compact. Initially, the government had planned to invest $130m, but an additional $67m had been contributed for the Nepal Compact. 

A 315-km high-capacity transmission line will be built and a section of the East-West Highway upgraded under the $500m US aid. Five segments of transmission lines to be built are—New Butwal-India Border (18km), New Butwal-New Damauli (90km), New Damauli-Ratmate (90km), Ratmate-New Hetauda (58km), and Ratmate-Lapsephedi (59km). Three substations will be built in Ratmate, Damauli, and Butwal.

Once completed, these transmission lines are expected to provide a vital missing link for power projects of different river basins to the existing high-voltage grid in Nepal.

The government has allocated Rs 10.84bn for the MCA-Nepal for the current fiscal year. While Rs 9.27bn had been set aside for the entity in the last fiscal year, only Rs 4.11bn was spent, according to the Finance Ministry.

Six years after Nepal signed an agreement with the MCC, the much-debated MCC Nepal Compact entered into the implementation phase on Aug 30. The execution of the Nepal Compact will span a precise five-year duration from its initiation, at which point the responsibility for the projects will shift to Nepal. Once this five-year period concludes, the funding from the MCC for the execution of the MCC Compact initiatives will cease.

Initially, the Nepal Compact was supposed to enter into the implementation stage on 30 June 2020. However, the delay in the ratification of the compact by Nepal’s Parliament amid a controversy threw the US assistance into uncertainty. The Nepal Compact finally moved ahead after the parliament endorsed it in Feb 2022. 

Price quoted by bidders

The gold is being traded at Rs 111, 200 per tola in the domestic market on Thursday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, tejabi gold is being traded at Rs 110, 650 per tola.

Meanwhile, the price of silver has dropped by Rs 5 and is being traded at Rs 1,385 per tola today.

The way has been paved for the Nepal Stock Exchange (Nepse) to initiate the operation of the ‘Nepse 30’ index. The Nepse board meeting on Monday endorsed the procedures formulated for the launch of the ‘Nepse 30’.

Murahari Parajuli, a spokesperson for the Nepse, commented, “The board of directors meeting on Monday approved the Internal Procedures for the Development, Operation, and Management of the Nepal Stock Exchange Limited Index, 2080.”

Following the approval of the procedure, the board meeting also made the decision to establish a committee responsible for implementing it. Nepse has stated that this procedure will serve as a guiding framework for the operation and management of a variety of indices, both presently in operation and planned for the future.

The implementation committee will advance the preparations and oversee the operational and managerial aspects of the ‘Nepse 30’ index. Furthermore, it will propose a specific date for the commencement of the ‘Nepse 30’ index’s operations.

Having received approval for the procedure, Nepse is now in high gear to introduce the new stock trading index, ‘Nepse 30’, in less than a month. The ‘Nepse 30’ could be up and running as early as the first week of October, said officials.

Currently, the ‘Nepse 30’ index is undergoing internal testing. This testing phase, initiated on July 25, has confirmed the feasibility of operating the ‘Nepse 30’ index.

Nepse envisions the ‘Nepse 30’ as an index formed by tracking the share trading activity of 30 carefully chosen companies. This new index will consist of the leading 30 companies that meet the specific criteria established by Nepse from among all the companies listed on its platform.

It is important to note that ‘Nepse 30’ will not be an independent index. Currently, Nepse comprises 13 sub-indices, including sensitive, float, and sensitive float indices. Nepse’s plan involves the inclusion of companies from six distinct sectors, such as banks and financial institutions, microfinance, insurance, hydropower, manufacturing, and trade and services, within the ‘Nepse 30’ index. Each sector will be represented by at least one company and may have a maximum of eight companies included in the index.

To be eligible for inclusion in the ‘Nepse 30’, companies must meet specific requirements, such as demonstrating profitability over the previous three years, maintaining earnings per share (EPS) exceeding 10 percent of their paid-up capital, surpassing the inflation rate with their EPS, and additionally, having allocated a minimum of 25 percent of their shares to the public while boasting a shareholder base of no less than 20,000 individuals.

Likewise, companies must exhibit a daily turnover averaging at least 2.5m over the preceding six months and engage in daily share trading of no less than 5,000 units.

Nepse has announced its intention to introduce the ‘Nepse 30’ with the objective of enhancing the development, operation, and management of indices in order to bolster activity within the secondary market.

The ‘Nepse 30’ index will be structured as a market capitalization-based index, incorporating immediately tradable (free float) shares.

Previously, Nepse had plans for the ‘Nepse 50’ index, but it opted for the ‘Nepse 30’, citing potential challenges associated with managing 50 companies.

The procedure outlines specific criteria for categorizing companies selected for the development of the new index based on their minimum paid-up capital. In accordance with these criteria, companies with a paid-up capital of Rs 5bn will fall into the A category, while companies with a paid-up capital of Rs 3bn will be categorized as B class.