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The Nepal Electricity Authority (NEA) is planning to complete the financial closure of the Upper Arun Hydroelectric Project within 2023. The government-owned power utility has started preparations for the financial closure of the 1,061 MW project with the World Bank and domestic lenders. NEA has initiated the development of the project by establishing Upper Arun Hydropower Limited. NEA has estimated that it will require Rs 214.86 billion to develop the project. Of the total cost of the project, 70 percent, or Rs 150.40 million is being raised through loans. The World Bank has expressed commitment to invest Rs 97.06 billion as a loan in the project. The World Bank will be the lead international financial institution to finance the construction of the project that lies in the upper reaches of the Arun River at Bhotekhola Rural Municipality of Sankhuwasbha district. "An agreement with the World Bank will be reached soon," said a senior official at the NEA. The World Bank is giving concessional loans in collaboration with the European Investment Bank. "The World Bank has already promised to provide loans for this project. We are working to make a financial agreement with the World Bank within this year," said the NEA source. The project will be developed under a 70:30 debt-to-equity ratio. According to NEA, the project will be funded with Rs 150 billion in loans including Rs 97 billion from international financiers and Rs 53 billion from domestic creditors. This is the first time the global lender is back in the hydropower project in the Arun River after the debacle of the Arun-3 project in the mid-90s. According to NEA, Rs 53 billion rupees will be raised from a consortium of domestic institutions including Hydropower Investment and Development Company Limited (HIDCL), Nepal Bank, Rastriya Banijya Bank, and Citizen Investment Trust. A preliminary memorandum of understanding has been signed between the promoter company Upper Arun Hydropower Limited and these institutions in August last year. NEA plans to sign the final agreement with the World Bank and domestic institutions at the same time. The promoter company Upper Arun Hydropower Limited will invest 30 percent i.e., Rs 64.46 billion in the project as equity. The government had advanced the concept of this project in 1985 and a feasibility study was done in 1986. The government in 2011 had entrusted the development of the project to NEA. Currently, works are being carried out to design the tender for the construction of the project. NEA plans to start the construction of the project in 2024. It is estimated that the project will take about 6 years to complete the project which is the picking run-of-river project. NEA has said that about 100 meters high will be constructed on the Arun River and the water will be channelized through an 8.5 km long tunnel to an underground hydroelectric plant in Chongrak. The project will generate 4.51 billion units of electricity annually. That electricity from the project will be connected to the substation at Haitar Sankhuwasabha by constructing a 400 kV double circuit transmission line about 6 km long from the powerhouse.

At a time when the physical progress of national pride projects has been sluggish, the Office of the Auditor General (OAG) in its latest report has said that it is the government that should be blamed for the dismal progress of the projects that have been dubbed as 'game changers' for the Nepali economy. The 60th annual report of the OAG says has pointed out multiple reasons for the less than satisfactory progress in the national pride projects. According to OAG, starting construction work without preparing a detailed project report (DPR), no clarity in the project implementation modality, land acquisition, and compensation disputes, and lack of inter-agency coordination in the transfer of utility services have plagued these projects in which billion of rupees have been spent by the state. "While the periodic plan has always accorded the highest priority to the national pride projects and ensured resources, the progress of these projects is far from satisfactory," reads the report. The government in the fiscal year 2012/13 declared 17 projects as national pride projects and the number of such projects has increased to 21 now. Of these 21 projects, the physical progress of very few is satisfactory. As of now, the government has identified four irrigation projects, three hydropower projects, three international airports, six road projects, an electric railway project, a drinking water project, two projects aimed at promoting the holy sites of Pashupati and Lumbini, and an environmental conservation project as national pride projects. But the start of the construction of many of these projects is yet to see the light of day. While projects such as Upper Tamakoshi Hydroelectric Project, Gautam Buddha International Airport, and Pokhara Regional International Airport have been completed, the much talked about Kathmandu-Tarai Expressway, Second International Airport, Mid-Hill Highway are still under construction. The OAG report is critical of the projects that have been completed. In particular, the OAG has questioned the operation of Gautam Buddha International Airport, and Pokhara Regional International Airport. These two airports, in which billions of rupees have been spent, have still not come into operation at full capacity. Both airports have struggled to get foreign airlines to start international flight operations. The airport in Pokhara is yet to see any international airlines agreeing to start flights to connect Nepal's tourism hub to the rest of the world. Infrastructure experts said lawsuits against the projects, and delay in court decisions have also affected the implementation of projects. The second international airport project in Nijgadh is one such example. While the project was initiated in 1995, the project has been mired in controversy with lawsuits and environmental concerns. While Rs 3 billion has already been spent on the project for land acquisition but there is no sign of the project taking off. The Supreme Court in 2022 directed the government to proceed with the construction of the airport at a suitable location so that environmental damage is minimized. But, the construction of this project has been in limbo. The development of the 900 MW Upper Karnali Hydroelectric Project is also tangled in legal hurdles. Former government officials who had worked at the highest level at various ministries said unnecessary lawsuits filed at the court have also hindered the national pride projects. A former secretary said that some of the project's construction has been delayed due to court cases and the delay in its decision. "I am not saying that cases should not be filed in court if there are financial and other misdeeds. However, in some cases, cases are filed in the court to fulfill personal interests," he said, adding, "If the verdict was given early, the project could have progressed accordingly." According to him, structural problems, lack of capacity, and poor inter-agency coordination has hit projects such as Budhigandaki Hydroelectric Project, and Kathmandu-Tarai Expressway, among others. The lack of clarity and policy flipflop on the part of the government has delayed the development of the Budhi Gandaki Project. While the past governments had planned to award the project to a Chinese contractor, now the government is planning to hand over the project to Nepal Electricity Authority. Experts are of the opinion the hearing and judgment of the cases related to national pride projects should be expedited in the court. "Huge money is being spent on these projects. Hence, court cases should be decided quickly. Since time itself is a cost, the longer the case is prolonged in the court, the more time the construction of the project will be affected and the cost will automatically increase," said a former secretary of the Ministry of Physical Infrastructure and Transport. The latest report of the Ministry of Finance (MoF) shows only 15.16 percent of the budget allocated for these projects in the federal budget has been spent so far in the first six months of the current fiscal year. Among the 21 national pride projects, Sunkoshi Marine Diversion Project has an edge over others when it comes to budget utilization. The project has spent 88 percent of the allocated amount in the first half of this fiscal. Of the total allocation of Rs 2.71 billion, the project has used Rs 2.39 billion till mid-January. On the other hand, the much-hyped power transmission project of the Millennium Challenge Account (MCA) Nepal has the least progress. Only 3.66 percent of physical progress has been made till mid-January in this project. The MoF, in the mid-term review of the budget, has said 18 percent of the allocated budget has been spent on Pushpalal Highway, 42.60 percent on Postal Highway, 39 percent on Kosi Corridor, and 22.71 percent on Kali Gandaki Corridor in the first half of this fiscal year. The expenditure in Karnali Corridor is 9 percent, while Metro Rail and Monorail Development Project have utilized 22 percent. The much talked about Kathmandu-Terai Expressway is yet to expedite its works as only 9.11 percent has been spent in this fiscal. Meanwhile, the Budhi Gandaki Reservoir Project has spent only 15.86 percent of the allocated budget. The MoF report shows none of the four irrigation projects, namely Babai, Mahakali, Sikta, and Ranijamara, have budget utilization above 50 percent in the first half of this fiscal.  

While there are concerns growing over the rise in internal and external debt burdens of the country in recent years, Nepal appears to be in a safe position in terms of indebtedness compared to most South Asian countries. In South Asia, Nepal’s external debt to revenue ratio is the third lowest after Afghanistan and India, according to Debt Justice, an INGO, said in its latest report published early last week. Nepal’s projected external debt payment in 2022, 2023, and 2024 stands at 4.2 percent, 4.3 percent, and 4.5 percent, respectively, of total government revenue, according to the report. When it comes to Afghanistan, it is 1.5 percent, 1.6 percent, and 1.7 percent of the revenue in the three years, the report stated. India’s scheduled external debt payment is 3.2 percent, 3.1 percent, and 3.3 percent of its revenue in these three years. Sri Lanka is in the most vulnerable position followed by Pakistan. High indebtedness and shortage of foreign exchange reserves invited massive protests in both countries as the former strongman president of Sri Lanka—Gotabaya Rajapaksa was forced to flee the country last year. According to the report, Sri Lanka’s external debt payment to annual revenue ratio is projected to be 81.4 percent, 75 percent, and 78.6 percent in 2022, 2023 and 2024, respectively. The report said Sri Lanka is spending the highest percentage of its revenue on servicing foreign debt. When it comes to Pakistan, its projected external debt payment in these three years is expected to be 40 percent, 46.7 percent, and 42.5 percent. Projected external debt payment by Bangladesh, Bhutan, and Maldives in these three years compared to their government’s annual revenue is projected to be much higher than that of Nepal, according to the report. The Debt Justice said that the figures for external government debt payments have been calculated primarily from the World Bank’s International Debt Statistics database while the figures for government revenue are calculated from World Economic Outlook by the International Monetary Fund (IMF) in October last year. Data show that Nepal is less vulnerable to external debt compared to other South Asian countries. "Nepal still has a lot of fiscal space to grow its external debt," said an economist. According to the Public Debt Management Office, Nepal’s total outstanding external debt stood at Rs 1102.5 billion out of a total of Rs 2070.5 billion as of the second quarter of the current fiscal year 2022-23. Nepal’s total debt to Gross Domestic Product (GDP) ratio as of the second quarter of this fiscal stood at 42.67 percent and the share of external debt was 22.72 percent. Nepal’s newly introduced law on Public Debt Management allows the government to raise external loans up to one-third of the country's GDP in the past year. Officials say as nearly 90 percent of external loans have been received from multilateral donors like the World Bank and the Asian Development Bank, whose interest rate is below one percent, Nepal is not facing much risk of inflated cost. But in recent years, Nepal’s public debt has been growing rapidly. Both external and internal loans of the government have been surging to cover the cost of post-earthquake reconstruction since 2015 and to tackle Covid-19, according to the PDMO. As a result, the government has been forced to spend big on debt servicing. A total of Rs 186.6 billion has been allocated for loan repayment in the current fiscal year, of which Rs 134.32 billion is for internal debt servicing. In the last fiscal year, the government spent Rs 121.99 billion on debt servicing. Amid growing debt liability amid sluggish revenue collection, there are concerns that the debt would be used in projects with high yields. “It is necessary to ensure that debt is utilized in financially feasible high-yielding sectors,” said the economist. Percentage of external debt against govt's revenue  

These days, tourists can be seen holidaying around Pokhara's popular tourist attractions, such as lakes, caves, wetlands, and the popular Annapurna region in increasing numbers. Their presence here has brought new hope for Pokhara's tourism industry, which has been struggling after the COVID pandemic. The latest data from the Annapurna Conservation Area Project, which maintains data on trekkers heading to the Annapurna region, show tourist numbers getting closer to the pre-COVID era. This is a promising sign for the tourism industry in Pokhara and suggests that the negative effects of the pandemic are on the wane. According to industry insiders, about 80 percent of tourists who visit Pokhara want to explore the region for purposes like trekking and study. The Annapurna Round Trek, Mardi Himal Trek, Muktinath-Mustang loop as well as the Machhapuchhre Base Camp, Annapurna Base Camp and Khumai Dada are some of the popular trails and destinations around Pokhara. "Since most of the tourist areas in and around Pokhara fall under the jurisdiction of the ACAP, our data offer a clear picture of Pokhara’s tourism industry,” Narendra Shrestha of ACAP Office in Pokhara said. According to Shrestha, ACAP has been working in coordination with local government bodies for promotion of tourism in the Annapurna region. Autumn and Spring are the main seasons for trekking activities in the region. The autumn begins in September and continues till December or January, whereas the spring begins in March and continues till May. ACAP data show that Pokhara welcomed 129,000 trekkers in 2022, a drastic decline compared to the year 2019 when the city recorded 181,000 trekkers, before the pandemic threw the global tourism industry out of gear. The numbers dropped even further to 18,796 in 2020 and 16,105 in 2021, respectively before bouncing back in 2023. In the first three months of 2023, approximately 33,000 foreign tourists visited different destinations within the region. Data show that around 23,692 visited the region in March alone, indicating that the spring may see a significant surge in the number of foreign tourists.   Tourist arrivals in March (past three years) 2022 - 12,000 2021 - 2,134 2020 - 6,735 Tourist arrivals in first three months of 2023 March - 23,693 February - 6,353 January - 3,457 Arrivals (First three months) of 2019 and 2023