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The Nepal Stock Exchange (NEPSE) plunged by 35. 37 points to close at 2,150.99 points on Wednesday. Similarly, the sensitive index dropped by 9. 76 points to close at 402. 75 points. A total of 13,342,996-unit shares of 280 companies were traded for Rs 5. 97 billion. Meanwhile, Himalayan Life Insurance Limited and BPW Laghubitta Bittiya Sanstha Limited were the top gainers today with their price surging by 10. 00 percent. Likewise, Ingwa Hydropower Limited was the top loser with its price dropped by 6. 64 percent. At the end of the day, the total market capitalization stood at Rs 3. 15 trillion.

Independent power producers (IPPs) have said that 500 MW of electricity is being wasted after Nepal Electricity Authority (NEA) forced them to reduce the load (electricity generation). According to Independent  Power Producers Association Nepal (IPPAN), 30 hydropower projects have been forced to reduce their power generation by the NEA. The NEA has instructed IPPs to reduce their load at a time when it is not able to maintain a regular electricity supply to the country's industrial corridors. The NEA’s instruction has come at a time when hydropower projects are in a position to operate their plants to full capacity due to the surge in water levels in rivers. IPPAN on Monday held a discussion with the promoters of power plants who’ve been forced to reduce load, in which promoters said that they cannot even pay the bank’s interest by running the project at half capacity. According to IPPAN, they (IPPs) are ready to shut down the power plant for 5/6 months if NEA is ready to pay them as per the PPA. IPPAN President Ganesh Karki said that even if power generation is reduced, they should be paid the money as per the PPA. “NEA has signed a PPA with the private hydropower project in ‘take or pay’ modality. Hence, NEA must buy the power from the IPPs while the IPPs also must supply the quantum of power as mentioned in the PPA,” said Karki. After the Nepal Electricity Authority instructed independent power producers (IPPs) to reduce their power plants’ power generation capacity due to low load demand, the IPPs have said that NEA has to pay the money to them as per the power purchase agreement (PPA). According to Mohan Dangi, senior vice-president of IPPAN, more than 30 power projects having a combined capacity of 500 MW are facing this problem. “Even my project is facing this issue. The authorized capital of my company is Rs 400m but have lost Rs 220m due to not being able to sell electricity,” said Dangi. According to Arjun Gautam, the promoter of the Super Dordi B hydropower project, there is a transmission line that can carry 360 MW of electricity in the Dordi corridor, but the NEA has not purchased electricity accordingly. IPAAN Vice President Uttam Bhlon Lama said it was illegal to sign the load reduction agreement without informing the bank that invested 70 percent of the loan. The NEA, on its part, has sighted the problem of transmission lines to carry the load across the country. While electricity generation has increased by almost 600 MW in the last one year, not much infrastructure has been added to the transmission and distribution side. The lack of transmission infrastructure, according to the NEA has made it unable to deliver electricity as per the demand. However, the authority has not made public its official opinion on this. The NEA Executive Director Kulman Ghising, during a press conference a few days ago, said that there was a problem in the power supply as the transmission lines were overloaded.  

In what could indicate the quantum of capital flights taking place from Nepal, the amount of money deposited by Nepalis in Swiss banks has surged by 61.92 percent in 2022. According to the Annual Banking Statistics 2022 of Switzerland’s central bank, the deposits of Nepali individuals and firms in Swiss banks have reached Rs 70.764bn (482.542m Swiss francs), from Rs 43.701bn (298m Swiss francs) in 2021. The data of the Swiss National Bank also reveals that among the South Asian countries, only India will have larger deposits than Nepal in Swiss banks in 2022. The deposits of Nepalis are higher than the money parked by Pakistanis, Bangladeshis, and Sri Lankans. According to the report, the deposits of Pakistan, Bangladesh, and Sri Lanka in 2022 stood at 388.650m Swiss francs, 55.267m Swiss francs, and 66.539m Swiss francs, respectively. While the deposits from countries like India, Pakistan, and Bangladesh declined in 2022, the deposits from Nepal surged remarkably. As it is a tradition for Swiss banks to not disclose the details of their clients (depositors), it is hard to ascertain the names and numbers of Nepalis with deposits in Swiss banks. Since they maintain a high level of secrecy in banking operations, Swiss banks have been blamed for long for fostering money-laundering as critics accuse the financial institutions of keeping money earned from illegal activities including serious crimes, tax evasion, corruption, and arms trafficking. Bankers in Nepal attribute the rise in deposits in Swiss banks to the trend of depositing commissions earned through multi-billion government contracts in foreign banks as well as a surge in illegal practices in trade such as over-invoicing when using letters of credit (LCs) for importing goods and services from overseas. Government officials and bankers say trade mispricing accounts for the bulk of illicit outflows from countries like Nepal. According to them, over-invoicing has emerged as one of the methods employed in trade-based money laundering schemes, facilitating the transfer of a larger sum from the importer to the exporter. As Nepali commercial banks don’t usually deposit their foreign currency in Swiss banks, bankers and government officials assume the funds parked in Swiss banks belong to affluent Nepalis. According to a former government secretary, the deposits in Swiss banks are largely kickbacks that politicians receive for large deals. The Nepal Rastra Bank (NRB) is also showing its attention to over-invoicing practices to check the capital flight. The central bank recently cautioned the chairpersons of banks and financial institutions (BFIs), expressing concern over the escalating trend of over-invoicing when LCs are used for importing goods and services from overseas. Central bank officials say they have received reports of certain BFIs and businessmen opening LCs at inflated prices exceeding the actual value of the goods, resulting in the outflow of capital. While the central bank has not made any public statements regarding capital flight through over-invoicing, NRB Governor Maha Prasad Adhikari warned during an interaction with the chairpersons of BFIs on June 6 that the NRB could take action against BFIs found to be facilitating capital flight through over-invoicing. “It has been found that a group of BFIs and businessmen has been involved in the practice of opening LCs at prices surpassing the actual value of the goods and services and the capital has been illicitly transferred out of the country. This is a serious matter,” a BFI chairman, who was present at the meeting, quoted Adhikari. “It is necessary to stop this trend immediately. If the BFIs do not stop it, we will be forced to take action against the banks found involved in such practices.” The law of the land bars Nepalis from investing abroad or opening accounts in foreign banks. But the law hasn’t been able to stop capital flight. Bankers say leading international private banks used to visit Nepal to meet high-net-worth individuals (HNWIs). “But the frequency of visits by representatives of leading private banks like HSBC, Credit Suisse, UBS, Deutsche Bank, EFG, Citi Bank, and Coutts has declined in recent years,” said a former banker. Apart from Switzerland, new destinations such as Singapore and Dubai have emerged as lucrative destinations for wealthy Nepalis to park their money abroad. While many countries are seriously working to curb the illicit outflow of money, the government in Nepal has never taken capital flight as a major issue. After the Centre for Investigative Journalism (CIJ) Nepal, in its NepaLeaks investigation in January 2019, revealed the involvement of 55 Nepalis and non-resident Nepalis in moving money from Nepal to offshore destinations, the then Finance Minister Yubaraj Khatiwada had formed a committee to investigate the matter. However, not much has been heard about the committee’s work after its formation.

The price of gold has dropped by Rs 600 per tola in the domestic market on Wednesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow metal is being traded at Rs 110, 000 per tola today. It was traded at Rs 110, 600 per tola on Tuesday. Meanwhile, tejabi gold is being traded at Rs 109, 500 per tola. It was traded at Rs 110, 050. Similarly, the silver is being traded at Rs 1,375 per tola today.