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With the dry season affecting domestic power production, the Nepal Electricity Authority (NEA) has started importing up to 350 MW of electricity daily from India. The government-owned power utility has said that the current average daily electricity production is between 900-1000 MWs. As production capacity drops to 40 percent during the dry season, NEA has to manage the electricity supply by importing from India. With a fall in temperature, the domestic demand for electricity hit as high as 30,125 MWh on Tuesday. NEA, however, supplied only 29,141 MWh of electricity, including domestically produced power and energy imported from India. Although Nepal has started exporting surplus electricity to India during the wet season, it has to import electricity in the dry season when demand rises while supply slumps. It is because almost all of the power production in the country is based on run-of-the-river hydropower plants. The dry season runs from December to April while the wet season lasts from May to November. According to NEA, the run-of-the-river type hydropower projects usually produce less than 40 percent of their installed capacity during the dry season. The government-owned power utility sold electricity worth Rs 11.16bn to India beginning in June last year until it stopped the exports in the third week of December last year owing to a decline in production during the dry season. India has allowed Nepal to sell 452.6MW of power generated by eight hydropower projects in India’s energy market. During the wet season in 2022, Nepal suffered spillage of power as domestic consumption slumped while there was approval for exporting power from India. According to NEA, over 700MW is expected to be added to the national grid in the current fiscal 2022/23 while over 550MW is expected to be added in the next fiscal year 2023/24. With more electricity that will be generated by various power projects across the country coming to the national grid in the current and next fiscal years, there is an urgent need to initiate the construction of more cross-border transmission lines between Nepal and India. According to Energy Ministry officials, Nepal and India will hold discussions on developing new cross-border transmission lines as the two countries have moved in the direction of creating a common electricity market in South Asia. The topic will be discussed in the upcoming meetings of the joint secretary-level Joint Working Group and secretary-level Joint Steering Committee to be held in India. NEA has proposed to develop a 400KV transmission line connecting Inaruwa of Nepal and Purnia of Bihar, India. Similarly, the 400kV New Lamki (Dodohara)-Bareli Cross Border Transmission Line has also been planned with the NEA preparing a comprehensive design of this project.

With China reopening outbound travel for Chinese Citizens from the second week of January, Himalaya Airlines has resumed its Kathmandu-Beijing direct flight after a hiatus of 32 months. The Kathmandu-Beijing flight was suspended in March 2020 after the Covid-19 pandemic swept the globe. Himalaya's Airbus 319 departed from Tribhuwan International Airport on Tuesday to Beijing Daxing International Airport. According to the airliner, Tuesday's flight is a reoperation flight and the regular flights will begin in February. The resumption of direct flights between Kathmandu and Beijing is expected to help increase the frequency Chinese tourist arrivals in Nepal this year. The airlines in October 2019 had started the Kathmandu-Beijing flight, making it the first-ever direct commercial flight between Kathmandu and Beijing, the capital cities of Nepal and China, respectively. However, the Covid-19 pandemic forced the airlines to discontinue the route in March 2020. According to Vijay Shrestha, Vice President of Himalaya Airlines, the reoperation flight took place on Tuesday, the regular flight will be Kathmandu-Beijing-Kathmandu every Saturday from February. "We will fly Airbus 319 aircraft with a capacity of 144 passengers on this route," said Shrestha. Established in 2014, Himalaya Airlines is a Sino-Nepal joint venture formed after an agreement between Tibet Aviation Development & Investment Company Ltd. (TADIC) and Yeti World Investment Pvt. Ltd. Travel trade entrepreneurs express their hope that the resumption of direct flights between Kathmandu and Beijing will contribute significantly to the growth of Chinese visitors in Nepal. "It is the most positive development for Nepali tourism," said Bishwesh Shrestha, owner of C&K Travels which specializes in Chinese tourists, "As soon as volume increases, we expect Himalaya Airlines to increase the frequency of flights also." Nepali tour operators say they are hopeful of a huge surge in Chinese tourist arrivals in Nepal in 2023. With the normalization of flights with China, Nepal can expect at least 100,000 Chinese tourists in 2023, they said. Tour operators specializing in Chinese tourists say they are getting a lot of inquiries from the northern neighbor currently. "In fact, FITs (free independent travelers) have already started coming to Nepal," said Shrestha. In 2022, tourist arrivals reached over 600,000 without any significant contribution from China, which was the second-largest tourist source market for Nepal prior to the pandemic. Most of the flights from China to Nepal have remained suspended after the northern neighbor suspended outbound tourism since the early days of the Covid-19 pandemic. Before the pandemic-related travel restrictions began in early 2020 in Nepal and across the world, China was the second largest source market for Nepal after India as the country welcomed 169,543 tourists from the northern neighbor. Nepali Ambassador to China Bishnu Pukar Shrestha has also said that the resumption of the Kathmandu-Beijing flight will help tourism promotion and people-to-people contacts in both countries. In an exclusive interview with China's Global Times, Shrestha said, "There is an increase in the visa applications by Chinese people, he said. With China reopening its borders this year, it is hopeful that more Chinese people will visit Nepal and will enjoy the natural heritages of Nepal."

Foreign direct investment (FDI) pledges in the country dropped significantly during the first half of the current fiscal year. As per the latest statistics of the Department of Industry (DoI), FDI commitments dropped by 43.27 percent in the first six months of FY 2022/23. FDI commitments totaled Rs 17.30 billion in the review period compared to Rs 30.50 billion in the corresponding period of FY 2021/22. In the first six months of the current fiscal year, a total of 131 industries having FDI pledges have been registered at the department. Of them, two are large-scale industries, 19 medium-scale, and 110 small enterprises. Government officials point out the global economic downturn and the tightening of visa rules for foreign investors by the Nepal government for the decline in FDI pledges. Ram Chandra Tiwari, Director General of DoI said the slowing of the global economy is the main reason behind the disinterest of foreign investors. “Not only in Nepal, but FDI flow has also decreased globally because the energy crisis and supply chain disruptions have worsened the investment climate,” he said. The United Nations Conference on Trade and Development recently reported that global FDI flows dropped by almost a third in the second quarter of 2022, with the investment flows to several emerging regions down significantly and flows to Africa near zero. FDI flow to Nepal declined this fiscal mainly due to a slowdown in investment commitment from China. The investors from the northern neighbor have been committing the largest amount of FDI in the last several years to Nepal. With China facing economic problems due to renewed Covid-19 crisis, and supply chain disruptions, investment pledges from the northern neighbor are also affected. “With the largest investor in economic trouble, it is natural that FDI pledges from that country come down,” said Tiwari. The tighter visa rules that the government enforced in early November 2022 discourage applicants from submitting fake documents to get business visas. DoI decided to recommend business visas for foreign investors only for three months at a time to prevent the misuse of the facility. Officials said that the move was taken to discourage the tendency of prolonging their stay in Nepal by taking concrete steps to invest in Nepal. As per the new rules, the department now recommends a business visa for three months by which time the investor has to submit a certificate of company registration. After the registration certificate has been received, DoI will recommend an extension of the business visa for another three months. Within this period, the investor needs to submit proof of having registered at the tax office and opened a bank account. According to DoI officials, the new provision has contributed to screening genuine foreign investors from fake ones and it has been reflected in reduced FDI comments. Nepal is one of the countries that receive the lowest FDI in the world. Despite many talks on attracting FDI in the country, the country has failed to attract foreign investors as expected. In November last year, the government lowered the minimum threshold for FDI to Rs 20 million from Rs 50 million to attract even the small foreign investors in the country. “The threshold was reduced as per the suggestions of stakeholders,” said Tiwari. “The decision is expected to encourage FDI in the information and communication sector which does not need big investments in physical infrastructure.”

With the automobile dealers delaying the clearance of vehicles and automobile chassis they've imported, for the last several months, the Department of Customs (DoC) has warned the importers to impose fines if they fail to clear the customs yards of the goods. According to the customs rules, the goods stored in customs warehouses should be cleared within sixty days from the date of their registration at the customs office. DoC said that around 2,900 four-wheelers and their chassis have remained parked at the customs yards, particularly at Birgunj Customs, Bhairahawa, and Inland Container Depot in Birgunj. The warning has come at a time when customs revenue has declined due to last year's import control measures and alleged leakages. Though the government imposed a ban on the import of automobiles along with many other products in April last year, the vehicles parked at the customs yards belong to the importers who had already opened letters of credit for importing the goods. According to DoC officials, the imported vehicles have arrived at customs yards over the last nine months on different dates. “We have requested the automobile dealers to clear vehicles as soon as possible by paying applicable duties,” said a senior DoC official. “We have also warned them that they would be fined for not clearing the goods.” As per the Customs Act 2007, if the owner of goods stored in a customs godown operated by the customs office does not get clearance and get delivery of such goods within the prescribed time limit, demurrage shall be charged as prescribed. Demurrage is a charge levied by the shipping line to the importer in cases where they have not taken delivery of the full container and moved it out of the port/terminal area for unpacking within the allowed free days. As per the Customs Rules 2007, the importer has to pay a charge of 20 paisa per day per kg up to thirty days, 40 paisa per day per kg from more than thirty days up to sixty days, and 60 paisa per day per kg charge for more than sixty days. The customs offices have not yet imposed such demurrage charges as the vehicles being parked at the customs yards are yet to be registered with the customs offices for clearance. “As they have been registered with Nepal Intermodal Transport Development Board, we can consider their registration with another government agency as registration with us and treat them accordingly,” the customs official said. In early January, the customs department held a meeting with the representatives of the NADA Automobiles Association of Nepal urging them to clear the imported four-wheelers as the customs department has been under pressure to boost customs revenue. “If these vehicles and chassis are cleared, we can generate revenue of around Rs 2.5 billion,” the customs official said. The vehicle importers have however been urging the central bank to remove the provision under which importers have to deposit a 50 percent cash margin to open LCs for importing automobiles after the import ban was lifted. Automobiles are among the largest revenue contributors to the government. Due to the import ban on them which was lifted finally in mid-December last year, customs revenue collection has been badly affected. The government had given the revenue target of Rs 315 billion for the first half of the current fiscal year, but the customs department said it collected only Rs 187 billion, around 60 percent of the target. “During Poush (mid-Dec 2022 to mid-Jan 2023), we could collect only Rs 30 billion in revenue against the target of Rs 58 billion,” the official said. In the last fiscal 2021-22, the government collected revenue of Rs 66.30 billion from four and two-wheelers in the last fiscal year, according to DoC. "The customs revenue is expected to increase in the coming days as the government has lifted the import ban," the DoC official said.