PM, ministers are in rush to launch industrial projects across Nepal, but there is not enough money to invest

Prime Minister KP Sharma Oli addresses his party leaders and cadres, in Kathmandu, on February 5, 2021.

Of late, Prime Minister KP Sharma Oli and other ministers have been busy laying foundation stones for industrial estates. The number of such events in the last two months is more than the number of events in the past three years, say government officials.

On February, Prime Minister KP Sharma Oli laid the foundation stone for the Daiji Chhela Industrial Estate in Kanchanpur. Oli reached Kanchanpur with Minister for Industry, Commerce, and Supplies Lekh Raj Bhatta on a helicopter. This is the same industrial zone that was announced 25 years ago (in 1995) by Prime Minister Manmohan Adhikari.

On February 28, PM Oli also laid the foundation stone for the Nepal-China Friendship Industrial Park in Damak, Jhapa. Similarly, Minister Bhatta laid the foundation stone for Nauwastha Industrial Estate in Banke on February 11 and for Mayurdhap Industrial Estate in Makawanpur on February 14. 

Minister for Finance Bishnu Prasad Paudel also laid the foundation stone for Motipur Industrial Estate in ​​Rupandehi on March 5.

While the ministers are busy laying the foundation stone, one after another with a grand ceremony, very little attention has been paid to the future of these projects. The initial estimated cost for the construction of these industrial zones is more than Rs one billion. But, so far only one project source has been secured while none has even reached the contract stage.

Unguaranteed investment

Prime Minister KP Sharma Oli addresses a function organised to lay the foundation stone for the Nepal-China Friendship Industrial Park in Damak, Jhapa, on February 28, 2021.

According to the Industrial Districts Management Limited (IDML), three of the mentioned five projects will be funded by the government of Nepal. Meanwhile, the rest including one Chinese project will be looking for development partners.

Of the agreed investment of Rs 64 billion for the Nepal-China Industrial Park, only Rs two billion has been received. The government has been assured of an additional Rs one billion.

The government says it will invest Rs 26 billion in total for Mayurdhap in Makawanpur, Nauwasta in Banke, and Daiji Chhela Industrial Estate in ​​Kanchanpur. But, according to the Industrial Estate Management Limited, Mayurdhap will require Rs 7.2 billion to complete, for Nauwaasta Rs 8.77 billion and Rs nine billion for Daiji Chhela. Motipur Industrial Estate is estimated to cost Rs 12 billion with possible foreign investment, however, no decision has been made.

According to Amrit Shahi, an engineer of the IDML, the ground clearance work for these projects has been almost cleared. “The work of land acquisition, detail project report (DPR), and environmental impact assessment have been completed to a large extent.”

Stakeholders, however, have expressed their concerns about the need for infrastructures and timely completion of the projects.

Progress so far

Daiji Chhela, Kanchanpur: It will be constructed in an area of ​​900 bighas. It is estimated that 22,000 jobs will be created in this industrial estate with 100 industrial plots. A DPR covering 355.70 bighas out of 900 bighas has been approved and the project can commence with a multi-year plan. The IDML aims to build the temporary infrastructure required within the next six months and complete it in the next five years.

Nauwasta, Banke: There will be 111 plots in 525 bighas. The land acquisition for the project is half complete. A master plan for settlement within the project has also been prepared whereas the DPR and an environmental impact assessment report have been approved. However, the rest of the work is halted. 

Motipur, Rupandehi: Land acquisition and the DPR preparation have been done for 946 bighas while the environmental impact assessment has just begun. There will be 262 enterprises, estimated to cost a total of Rs 12 billion. It will be funded either through foreign investment or grants or international financial institutions. Although the source has not been identified yet, the government claims that the industrial zone will be ready within five years.

Finance Minister Bishnu Paudel and Industry Minister Lekh Raj Bhatta lay the foundation stone for the Motipur Industrial Estate in Rupandehi, on March 5, 2021.

Mayurdhap, Makawanpur: It will cover 200 bighas of land with 62 plots. The DPR of the project has been prepared but the environmental impact assessment is pending. It is said that 10,000 people will be employed by constructing this industrial zone. The project is said to be built by the government, but the budget has not been approved.

Nepal-China Friendship Industrial Park, Damak: It will spread over 2,100 bighas. The construction and operation of the park has been entrusted to Lhasa Economic and Technology Development Zone and Jing-Ping Joint Creation Construction Project Development Company Limited. The land acquisition for the park is pending as soil testing and environmental impact assessment have not been completed. The government claims that the project will be complete on time and provide employment to 100,000 people.

Why the hurry?

There is a tradition of laying the foundation stone for projects after the contract process has been finalised, but not for the projects without a secured financial position, the DPR, and the environmental impact assessment. However, it seems a campaign is underway to lay the foundation stones for the projects which are still in the initial stage. The IDML Chairman Nanda Kishore Basnet prefers to call it a ‘new experiment’.

According to him, it first lays the foundation stone, calls for a letter of intent (LoI) from the industries and finally goes for the construction so to avoid creating an industrial zone without the industries. He claims that there will be no shortage of resources for the project. The IDML has Rs one billion, which it will use to work on the basic infrastructures, according to him.

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Nabin Dhungana is a business correspondent at Onlinekhabar.

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