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As we mark the International Day against Drug Abuse and Illicit Trafficking on June 26 this year, it is the right time to reflect on our efforts to control drug abuse in Nepal. Even though Nepal has strict laws against drug abuse, the number of drug users in the country is increasing by more than five percent every year. This worrying trend continues even under the federal system where public health falls under the shared responsibility of the central, provincial and local governments.

At present, the Narcotic Drugs (Control) Act, 1976 is a special law governing the use of narcotic and psychotropic substances. Nepal has also been a member of the International Narcotics Control Board since 1987. This law replaced the earlier Intoxicating Substance Act, 2017 (1961) and the Intoxicating Substance Rules, 2019 (1962), meaning drug control was legally recognized even before the 1976 Act.

Despite provisions for heavy fines and even life imprisonment, drug abuse continues to rise. This clearly shows that tougher punishments alone are not enough to solve the abuse problems. There must also be other efforts such as public awareness, counseling, rehabilitation programs, and community support to reduce and prevent drug abuse effectively.

Speaking through data

The data released by the Home Ministry last year suggests that the number of illicit drug abusers in Nepal is increasing by 5.06 percent every year taking the total users to an estimated 156,821 as of mid-April, 2024. As per Nepal Drug Users’ Survey-2020, published by Home Ministry, the number of drug users in the country stood at 130,424 in 2020, which is the increment rate of 5.06 percent annually. If the survey report is something to stand by, the majority of drug abusers (69.5 percent) in Nepal are aged 20-29 years. The proportion of drug users was reported in Bagmati province (35.6 per cent) and lowest portion in Karnali (1.4 percent). 

Rigorous penal regime 

The Narcotic Drugs (Control) Act of 1976 prohibits the cultivation, production, purchase, sale, distribution, export, import, consumption or storage of cannabis/marijuana. The law also bans the cultivation of opium, the manufacture of narcotic drugs and the sale, purchase, possession, trafficking, import or export of such substances.

Section 14 of the 1976 Act outlines the penalties. It stipulates that if any individual found consuming cannabis/marijuana shall be punished with imprisonment for up to one month or fine of up to
Rs 2,000. A person found in consuming opium, coca or other drugs prepared out of them would be sentenced for a jail term of up to one year or up to Rs 10,000 fine. The Act also provides for 2-10 years of jail sentence and fine of Rs 100,000 to Rs 2m on a person found convicted in consuming prohibited drugs other than that of natural or artificial drugs and psychotropic substances. 

Also, if a person is found with marijuana of more than 10 kilograms, the law prescribes a prison term of 2-10 years along with a fine ranging from Rs 15,000 to Rs 100,000.

If a person is found cultivating up to 25 opium or coca plants, he may be sentenced to imprisonment for one to three years and fined between Rs 5,000 and Rs 25,000. But, in case of cultivating more than 25 plants of opium, the stipulated jail term for the said offence stands at three to 10 years of jail term, and fine of Rs 25000 to Rs 200,000. 

In case of trafficking of prohibited drugs, except that of cultivation and consumption of opium, coca or other drugs made out of them, of up to 25 grams, the prison term stipulated is five to up to 10 years and Five to Twenty-Five thousand rupees of fine. But, the jail term of 15 years to life imprisonment and fine of Rs 500,000 to Rs 2,500,000 has been prescribed for causing trafficking of prohibited drugs, except that of cultivation and consumption of opium, coca or other drugs made out of them, of more than 100 grams.  

The way forward 

The researches show that the controlled drugs, which are comparatively less expensive, are mostly used by drug abusers. The misuse of pharmaceutical drugs such as Tramadol (Opidol) tablets/capsules, Nitrazepam (Nitrosun) tablets, Pheniramine maleate (Avil) injections and Promethazine (Phenargan) injections is on the rise.

Importantly, the deployment of digital technologies such as scanners and detection systems could help identify drugs being smuggled either on individuals or within their belongings as they enter or exit Nepal. It’s imperative to have a balanced mechanism/strategy that combines legal enforcement with preventive, rehabilitative and awareness-driven interventions. There could be a new drug justice regime, where health professionals, legal experts, psychiatrists, drug experts, pharmacists and among others collaborate and cooperate, to evolve mechanisms to fight against drug abuse.  

There could be no one-size-fits-all solution to tackle drug abuse. A balanced approach is needed—combining strict laws, public awareness about legal and health risks, and understanding the financial and career impacts of drug use. Observing the International Day against Drug Abuse holds real meaning only if we can reduce drug abuse and its harmful effects in everyday life.

The authors are officers serving in the judiciary

Non-banking assets are a rising risk in Nepal’s banking system, despite not receiving as much attention as inflation or interest rates. They are a sign of more serious issues with credit risk, loan recovery, and regulatory supervision. 

What are Non-banking assets? When a borrower defaults to pay the loan, the loan becomes a non-performing loan (NPL), and the bank can take legal action to recover the debt. When collateral, such as real estate, cars, or machinery, has been pledged as security for a secured loan, the bank has the authority to seize the assets. In order to recover the outstanding loan, the bank may then put these assets for auction. If the auction of seized collateral is successfully completed, the loan is settled.

During settlement if the auctioned amount exceeds the outstanding loan, the bank returns the surplus to the borrower but if the amount is insufficient to cover the debt, the bank may take further legal action to recover the remaining amount. These seized assets acquired by the financial institution after an unsuccessful auction are referred to as non-banking assets (NBAs).

They are no longer utilized in the bank’s main lending activities and hence do not generate income for financial institutes so banks attempt to recover default loans via sale of these NBAs as soon as possible or convert them to banking assets as per the law. 

How do assets become non-banking assets? In Nepal's banking sector generally, loans are disbursed against collateral after accurate valuation with repayment terms and mutual agreement between the mortgagee and mortgagor. According to Nepal Rastra Bank (NRB) Directives 2081, loans are classified based on the duration of repayment delays ranging from performing loans (pass and watch list) to non-performing loans (sub-standard, doubtful and loss).

When a loan provided to the borrower is classified as a non-performing loan, the bank offers the borrower an opportunity to repay the loan before initiating legal recovery procedures. The collateral pledged for loans, including real estate, stocks, automobiles, machines, etc. may be seized by the bank in the case that a borrower fails to pay the loan, and the financial institution attempts to recover the loan through public auction. If these seized assets are not purchased by the public through auction, the lender (the bank) self, accepts the assets and it is referred to as non-banking assets. These non-banking assets should be sold as soon as possible however, with the Board decision and approval from Nepal Rastra Bank, such assets may be converted into banking assets if necessary. 

A mid-May 2024 report by the NRB shows that NBAs of banks and financial institutes (of “A”, “B” and “C” categories) is Rs 27.6bn till mid May 2024. Now the value has reached to Rs 45.11bn till mid-May 2025 which has been increased by Rs 17.51bn since last year. A significant portion of these assets are held by commercial banks. 

The NRB reports that 20 Class “A” financial institutions have non-banking assets valued at Rs 38.48bn as of mid-May 2025, which is an increase by Rs 14.78bn from mid-July 2024. Similarly, development banks have Rs 3.9bn worth of non-banking assets as of mid-May 2025. Likewise, finance companies have Rs 2.72bn worth of non-banking assets as of mid-May 2025. Financial sector’s continuous battle to get rid of mortgaged properties in a slow real estate market post-pandemic are the causes of this spike. 

NBAs burdens both sides of the balance sheet. First, they do not generate income, unlike performing loans that yield interest. Second, they come with a significant regulatory burden, as the central bank mandates that banks and financial institutions set aside a 100 percent loss provision once a loan remains overdue for more than a year. Third, NBA represents tie-up capital limiting the bank's liquidity and ability to generate future income. In other words, the longer the NBA stays unsold, the more it strains the bank’s liquidity and profitability. In today’s context, despite frequently publishing notices for an auction, they have been unable to sell these assets.

To prevent the accumulation of NBAs, financial institutions must adopt steps like analysis of assets or projects requiring accurate valuation for asset-backed loans and a comprehensive SWOT (strengths, weaknesses, opportunities, and threats) analysis for project base loans. However, it is important to give high priority on repayment capacity rather than just collateral valuation. For example, an individual taking the loan of Rs 3m for 10 year’s period at 8.5 percent interest rate, backed by Rs 5m collateral may seem low risk but with a monthly income of Rs 60,000 and existing family and living expenses, paying EMI of over Rs 37,000 could be difficult and unmanageable.

Such cases highlight the chances of increasing default risk and hence lead to non-banking assets so, banks must enhance their credit risk assessment processes using advanced analytics, predictive models, and periodic reviews. Leading financial institutions such as JP Morgan Chase (USA), ICICI Bank (India), Standard Chartered Bank (Global) have successfully implemented these models to manage credit risk. In addition to repayment capacity, credit rating systems for borrowers should be established in Nepal. Countries like India and the US use credit scores to assess borrowers risk that helps to improve transparency, reduce risky lending and encourage responsible financial behavior which ultimately helps to prevent loan defaults. Moreover, regulatory bodies must strictly enforce their acts, directives, and circulars.

In Nepal, ineffective regulation is evident as several banks have high NPL rates. While NRB is mandated to intervene if the NPL exceeds five percent, Karnali Development Bank reached an alarming 40.85 percent NPL before NRB took action. It has raised a huge question about delays and inefficiencies in regulatory oversight. A regulatory body in collaboration with financial institutions must conduct a financial awareness program about financial responsibilities, repayment obligations, and the consequences of defaulting to prevent the accumulation of non-banking assets. 

Furthermore, NRB should constantly assess the impact of NBAs on key performance indicators such as profitability and capital adequacy so that it can strengthen Nepal’s financial system.The rise in NBAs reflects deeper weakness in Nepal’s financial sector. Without stronger and efficient regulation and constant monitoring, NBAs will continue to threaten stability and it will gradually destroy trust in the banking system.

Prime Minister KP Sharma Oli is leaving for Spain next week to participate in the Fourth International Conference on Financing for Development. The United Nations has been organizing the conference to provide financial resources and facilities for the development of least developed and developing countries.

More than 50 heads of state, and heads of various regional financial institutions, including the International Monetary Fund, the World Bank and the World Trade Organization, will participate in the gathering. As Nepal is the chair of the Least Developed Countries (LDC) group, Prime Minister Oli will also represent Nepal as the leader of the LDCs.

The conference will focus on reforming the international financial architecture and addressing financing challenges to achieve the Sustainable Development Goals (SDGs). It will also assess progress on the Monterrey Consensus, the Doha Declaration, and the Addis Ababa Action Agenda. The event will also explore key areas of action, such as domestic public resources, private finance, international cooperation, debt sustainability, and international financial architecture.

The conference will address urgent financing needs for the SDGs, reform of the international financial system, and development effectiveness.

The aim is to address the urgent financing challenges that hinder the achievement of the SDGs, with focus on mobilizing large-scale capital, reforming the international financial architecture, and strengthening support, especially for developing countries.

Spain is a significant contributor to development financing, focusing on poverty reduction, addressing malnutrition and promoting the inclusion of persons with disabilities. Spain's development cooperation has included bilateral aid and support for initiatives such as “Aid for Trade” to enhance the integration of developing countries into the global economy.

The United Nations Economic and Social Commission for Asia and the Pacific plays a role in facilitating discussions and strategies related to financing for development in the Asia-Pacific region, including Nepal, with a focus on infrastructure development and the SDGs.

The Organization for Economic Cooperation and Development, meanwhile, monitors development finance and its characteristics, including its role in climate change adaptation and mitigation. 

Spain allocates part of its bilateral Official Development Assistance (ODA) to key areas of poverty reduction and addressing malnutrition. It also supports projects that promote the inclusion and empowerment of persons with disabilities. 

Nepal is actively engaged in discussions and initiatives related to financing for development, including infrastructure financing strategies for sustainable development. Nepal is also part of the Asia-Pacific region, where ESCAP plays a key role in facilitating dialogue and cooperation on financing for development.

Through the conference, Nepal hopes to overcome the challenges in mobilizing domestic resources and addressing the financing gap to achieve the SDGs.

The worldwide shift toward decarbonization has made green hydrogen an essential energy carrier to transition to a sustainable world. Green hydrogen, as a multi-purpose, zero-emission fuel that is generated with renewable electricity, has a massive potential in solving climate problems in areas where direct electrification is difficult. Nevertheless, mass implementation of hydrogen technology is experiencing one main challenge: hydrogen storage. In contrast to conventional fuels, hydrogen is unique with regard to storage due to its low volumetric energy density (8 MJ/L for liquid hydrogen, 5.6 MJ/L for compressed hydrogen gas at 700 bar pressure, compared to 32 MJ/L for gasoline under ambient conditions), high diffusivity and compatibility issues with materials. This article examines the techno-economics of hydrogen storage technologies, considering their prices, efficiencies, scalability possibilities and their best uses in a developing green hydrogen economy.

Storage technologies

Hydrogen storage technologies are a wide and developing field, where every technology has its own technical characteristics and economic consequences. There are various types of hydrogen storage, and all the methods have their own merits and demerits.

Gaseous storage

Compressed hydrogen is stored in a high-pressure tank at 350-700 bar. The tanks are usually made of carbon fiber composites, aluminum alloys or steel, which are durable and strong. Compressed hydrogen has storage densities of ~23-42 kg H2/m3. The storage cost of compressed hydrogen varies between $16-20 per kg of hydrogen, and the capital cost of a compressed hydrogen tank is about $500-1000 per kg H2 storage capacity at 700-bar systems. The storage duration is long-term, but hydrogen can be lost to permeation at a rate of 0.1-1 percent per day. The compression process alone uses 10-15 percent of the energy stored in hydrogen, and therefore, energy efficiency is an issue. This method is most frequently used in the hydrogen fuel cell vehicles (FCVs), industrial gas supply and refueling stations. The major factors are the high cost of storage, the possible leakage of gases and the need for constant refueling since the energy density of gaseous hydrogen storage is lower than that of liquid or solid-state hydrogen storage.

Liquid hydrogen storage

Liquid hydrogen storage involves cooling hydrogen to -253 °C and storing it in stainless steel cryogenic tanks with vacuum insulation to reduce the rate of heat transfer. The storage density of this method is much greater (70.8 kg H2/m3) than that of compressed gas storage. The process of liquefaction is, however, energy-intensive and consumes 30-35 percent of the energy content of the hydrogen stored. Liquid hydrogen storage costs $12-15 per kg of hydrogen, and the capital costs of the cryogenic storage tanks are relatively expensive at $1,000-3,000 per kg H2 capacity. Its storage life is medium-term, and boil-off loss is about 0.1-1 percent per day; thus, it is not suitable for long-term storage. This is applied mainly in aerospace (rocket fuel), hydrogen refueling stations and in some transport systems. The major concerns involved are the high energy needed in liquefaction, stringent insulation and boil-off losses.

Metal hydride storage

Metal hydride storage makes use of metal alloys where the hydrogen is chemically bound under moderate pressures of 1-10 bar and temperatures of 200-400 °C. Typical hydride-forming materials are magnesium hydride (MgH2), titanium-based alloys and lanthanum-nickel (LaNi5). This technique has an extremely high storage density of 40-120 kg H2/m3, which is far more than that of compressed or liquid hydrogen storage. The cost is, however, very high, the storage cost being $50-150 per kg of hydrogen, and the capital cost between $1500-4000 per kg H2 capacity, depending on the metal alloy used. The storage time is high since hydrogen is stored chemically and will not leak as it does with gaseous or liquid hydrogen. There is the issue of energy usage, where heat is necessary to release hydrogen and it uses up 5-10 percent of the stored hydrogen energy. It is a common form of storage in stationary energy storage systems, submarines and portable hydrogen fuel cells. The factors to be considered are high weight of the system, slow rate of hydrogen release and high cost of special metal alloys.

LOHCs

Liquid organic hydrogen carriers (LOHCs) represent a safe, stable and economical method of storing hydrogen at ambient temperature and pressure through encapsulation in an organic liquid like dibenzyl toluene. The storage density of this method is about 57 kg H2/m3 which makes it competitive with compressed gas storage. The storage rate is comparatively cheap at $5-8 per kg of hydrogen, whereas capital costs vary between $500-1,500 per kg H2 capacity. The storage time is unlimited, as hydrogen remains chemically attached to the liquid carrier until usage. But this involves catalytic hydrogenation and dehydrogenation at temperatures of 150-300 °C, and this makes the process more complex in operation and requires extra energy. LOHCs are primarily applied in long-range hydrogen delivery and in stationary hydrogen storage. The factors to be considered are specialized reactors, increased complexity in the production of hydrogen and comparatively lower rates of hydrogen release compared to gaseous or liquid storage.

Cavern storage

Salt caverns, depleted natural gas fields or aquifers can be used to provide large-scale hydrogen storage, enabling cost-effective and high-capacity storage. Each location has the potential to store 100,000 tons of hydrogen, which makes it one of the most viable ways of storing large quantities of hydrogen. The low-cost storage has been as little as $0.1-1/kg hydrogen, and the capital cost as little as $1-10/kg H2 capacity, depending on the geological formation exploited. There is no time limit on storage, and there is very little loss of hydrogen. The energy cost of injecting hydrogen and retrieving it is also very low (~1-2 percent of the energy stored). This technique is mainly utilized in grid-scale energy storage, industrial hydrogen supply and renewable energy integration. But it is constrained by geological feasibility, which demands particular underground structures and is also expensive to initially invest in the infrastructure.

Cutting-edge advancements

New hydrogen storage methodologies are also fast maturing, enabling the world to use hydrogen safely, more efficiently and at a large scale. The 700-bar carbon fiber reinforced polymer (CFRP) tanks developed by Toyota are an established high-pressure gas system with 5.7 wt percent gravimetric and 40 kg/m3 volumetric storage capacity, advanced multi-layer safety, and real-time monitoring at a price of ~$150,00 per tank system. The cryo-compressed hydrogen (CcH2) technology developed by NASA and BMW presents a cryogenic cooling of -253 °C combined with 350-bar compression to a density of 65 kg/m³ and energy densities 50 percent more than gaseous systems, with vacuum-insulated vessels and active pressure control with ~$20/kg H2 capacity. The NU-1501 MOF developed by Berkeley Lab offers 14.4 wt percent and 67 kg/m3 storage capacity at 77K and 100 bar with good thermal stability and an estimated cost of $50/kg at scale due to its ultrahigh porosity. GKN Hydrogen’s HY2MEDI metal hydride system has 6.5 wt percent, 105 kg/m3, and nano-enhanced magnesium hydrides with passive cooling, 85 percent energy efficiency and a cost of $3000/kg H2. The storage of hydrogen in the form of LOHC technology developed by Hydrogenious’ has a storage capacity of 57 kg/m3 in a safe, ambient, non-explosive liquid form with a long shelf life, and the cost of storage is $3.48–5.8/kg. HyStock has a salt cavern-based storage facility in the Netherlands with underground capacity of 5,400 tons H2 per cavern at a price of $0.41/kg with both micro seismic monitoring and brine curtain systems, which is ideal for storing seasonal and grid-scale storage.

Toward a sustainable future

According to Nepal’s latest Energy Roadmap, the country is estimated to generate 28,500 MW of electricity by 2035. With domestic demand forecasted at just 7,589 MW, Nepal could have a surplus generation capacity of approximately 20,919 MW after domestic consumption and export commitments. If this surplus remains unutilized, it could result in an annual loss of trillions of Nepali rupees. But through the production of green hydrogen by converting the excess power into this fuel, and storing it, Nepal will be able to turn this possible loss into a good economic opportunity. Given that 1 MWh produces 20 kg of hydrogen, the country will be able to produce more than 2.2bn kg of hydrogen every year. There are different storage technologies, including high-pressure tanks, cryo-compressed systems, metal hydrides and LOHCs, that have various benefits regarding capacity, safety and cost. In Nepal’s context, whose infrastructure is still developing, the average price of storing hydrogen using these approaches is Rs 250/kg. This makes the complete cost of storage per year Rs 549bn. This, combined with the cost of electrolysis, results in a total investment of 

Rs 1.28trn/year. Upon re-electrification during dry seasons, where imported electricity costs 

Rs 16/unit, this hydrogen could generate electricity worth Rs 1.17trn, resulting in a net annual loss of Rs 114.78bn under current economic conditions.

However, this apparent loss must be seen through the lens of a circular economy. Although the financial outcome of the process seems to be negative at the moment, the internal economic value of the process is preserved by the fact that the country does not have to import expensive electricity in the dry season. Instead of losing money out of the national economy, it flows within the country in the form of local production and use of hydrogen. Moreover, the high initial infrastructure investment and technological immaturity are justified when considering the strategic role of hydrogen as a fallback mechanism. In case of any unavoidable circumstances, Nepal cannot export its surplus electricity, may be because of limitations of regional grid, due to geopolitical reasons or may be due to fluctuations in the demand, under such circumstances, hydrogen production and storage can be the only possible solution, which can prevent the total wastage of energy produced. This will make sure that even otherwise stranded zero-cost electricity will be monetized in terms of real economic goods.

Recognizing this potential, the government has already taken key policy steps, exempting income tax and customs duties on hydrogen-related equipment. However, additional incentives, subsidies and regulatory frameworks are necessary to make hydrogen one of the enablers of national energy security and economic resilience. With global hydrogen prices projected to fall below $1/kg by 2050, Nepal’s strategic transition, from high-pressure cylinders to advanced LOHCs and metal hydrides, will enable cost-effective and large-scale storage. This roadmap positions Nepal to transform surplus hydropower into a multi-billion-rupee green hydrogen economy, ensuring grid stability, energy independence and regional leadership in clean energy development.