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The Millennium Challenge Corporation (MCA) Nepal has announced the cancellation of all the bids that it had received for the construction of a 315-kilometer transmission line.

Assistant Communication Specialist with MCA Nepal, Pushkar Mathema, informed that all the tenders for the transmission lines have been revoked.

MCA Nepal had initiated a global tender in December of the previous year for the design, supply, installation, testing, and commissioning of transmission lines. After studying technical proposals of six bidders, it shortlisted five Indian companies—Kalpataru Power Transmission, Transrail Lighting Ltd, Tata Projects Ltd, KEC International, and L&T Ltd.

MCA Nepal officials said the tender process was canceled as the quoted costs were up to 65 percent higher than the original estimate. “We will now go for a fresh round of bidding,” Mathema added.

MCA Nepal had invited bids for the 315-kilometer Lapsiphedi-Butwal 400 kV Transmission Line by dividing it into three segments: Lapsiphedi-Ratamate-Hetauda, Ratamate-New Damauli, and New Damauli-New Butwal.

The MCC project officially commenced implementation on Aug 30 after nearly one and a half years of preparatory work. It must complete all the projects within five years. Failure to meet the five-year deadline allows the Millennium Challenge Corporation (MCC) to withdraw the project.

However, MCA Nepal has not completed even the preparatory works, including land acquisition, in some areas and tree felling activities.

MCA Nepal has already initiated a $100m bidding process for the construction of 400 kV substations at Ratamate in Nuwakot, Damauli in Tanahun, and Bhumahi in Nawalparasi. The land required for the Ratamate substation has already been acquired, and the process of land acquisition for the transmission line is underway, according to MCA Nepal.

Additionally, the project is in the process of inviting tenders for tree felling for the substation and the right of way for the transmission line. Correspondence and coordination with the Ministry of Forest and Environment are ongoing to secure tree felling approval, it added. The ministry has already assigned the relevant divisional forest offices to conduct tree counting.

Once the tree counting is completed, approval will be sought from the Council of Ministers for tree felling. Furthermore, discussions are underway with the ministry to determine the methodology for tree plantation as compensation for the felled trees.

The construction of the 400 KV transmission line will require the erection of 856 towers. As per the Environmental Impact Assessment (IEA) report, the project will need to fell approximately 202,200 trees across 354 hectares. MCA Nepal has expressed its commitment to planting one tree for every tree felled. However, the ministry has proposed to plant 10 trees for every tree felled or provide equivalent compensation. 

MCA Nepal and its consultants are currently engaging in consultations with local residents before conducting a detailed tree count. It hopes to get the actual details of the number of trees to be planted after the count.

Nepal was selected for the MCC Compact in Dec 2014, while the formal agreement was signed in Sept 2017. The compact was ratified by the parliament on 27 Feb 2022.

The Nepal Stock Exchange (NEPSE) plunged by 23. 16 points to close at 1,851.43 points on Monday.

Similarly, the sensitive index dropped by 3. 38 points to close at 355. 74 points.

A total of 4,837,893-unit shares of 284 companies were traded for Rs 1. 25 billion.

Meanwhile, Siddhartha Premier Insurance Limited was the top gainer today with its price surging by 7. 87 percent. Likewise, Sayapatri Hydropower Limited and Hathway Investment Nepal Limited were the top losers as their price fell by 10. 00 percent.

At the end of the day, the total market capitalization stood at Rs 2. 84 trillion.

The price of gold has dropped by Rs 700 per tola in the domestic market on Monday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow metal is being traded at Rs 112, 300 per tola today. It was traded at Rs 113, 000 per tola on Sunday.

Meanwhile, tejabi gold is being traded at Rs 111, 750 per tola. It was traded at Rs 112, 500 per tola.

Similarly, the silver is being traded at Rs 1,390 per tola today.

Margin lending by banks and financial institutions in Nepal experienced a significant decline over the past two years. However, it appears that investors, who were previously anticipating the central bank to relax restrictions on such loans, are now motivated to avail these loans. In the first month of the current fiscal year, ending in mid-August, margin loans of banks and financial institutions surged by 19.26 percent compared to the same period in the previous fiscal year, reaching Rs 76.53bn. Such loans stood at Rs 64.07bn at mid-Aug 2022. Margin loans refers to loans provided by banks by accepting shares listed on the Nepal Stock Exchange (Nepse) as collateral.

The total margin loans amounted to Rs 50.40bn in the fiscal year 2019/20. It, however, grew by a whopping 110.84 percent to reach Rs 106.28bn in mid-Aug 2021. Concerned by investment of over Rs 100bn in margin loans, the central bank imposed restrictions on such loans. As a result, such loans fell by 24.25 percent to Rs 80.50bn by mid-July 2022, further declining to Rs 64bn in the following month. However, margin loans have started to recover after the central bank eased restrictions on such loans.

The central bank initially restricted margin lending as it viewed share investment as an unproductive sector. The NRB took the decision after margin loans of banks exceeded Rs 1bn. The central bank first put a cap on margin loans at Rs 40m per investor per bank and Rs 120m in total. The introduction of the new margin lending provision had an immediate impact on the market, causing the Nepal Stock Exchange (NEPSE) index to plummet, reaching as low as 1,818 points from the all-time high of 3,198 points. The lower limit of Rs 40m was removed a year later, enabling individuals to borrow up to Rs 120m from a single bank.

Recently, the central bank further relaxed margin lending rules, permitting banks to invest up to Rs 150m for individuals and Rs 200m for institutional investors. However, investors, who had been advocating for the complete removal of lending caps, have not shown much enthusiasm as reflected in the low transaction volume on the stock exchange. Nabil Bank, Global IME Bank, and Nepal Bank Ltd are the largest providers of margin loans in the country. Until the first month of the current fiscal year, ending in mid-August, Nabil Bank had extended Rs 9.68bn in margin loans, while Global IME and Nepal Bank Ltd had invested Rs 6.28bn and Rs 4.09bn, respectively.

However, eight commercial banks have reported declines in margin loans. Rastriya Banijya Bank Ltd, Citizens Bank International, Sanima Bank, NMB Bank, Agricultural Development Bank, NIC Asia, Machhapuchchhre Bank, and Nepal SBI Bank have all observed a decline in their margin loans. While Standard Chartered Bank does not issue margin loans, other commercial banks have seen increases in their margin loans. Banks have extended margin loans from a minimum of Rs 24m to as high as Rs 9bn. Margin loans issued by development have increased by 21.28 percent to Rs 13.85bn as of mid-Aug 2023 compared to the same period in the previous fiscal year. In contrast, Class ‘C’ financial institutions have witnessed a decrease in their investments in margin loans. The total margin loans of finance companies have fallen by 4.17 percent to Rs 3.65bn in the first month of the current fiscal year compared to the same period in the previous fiscal year.