1-7 March 2013 #645

A great leap forward

If Nepal’s politics stabilises, there’s a reasonable possibility that the country will take a great leap forward in the next 10 years

In the next 10 years, if existing hydropower, highway, mass transit, and airport projects are completed, Nepal could make a great leap forward. A better investment climate could make double digit economic growth possible, which in turn would create jobs so Nepalis wouldn’t have to migrate to work in such large numbers. There is only one catch: there should be political stability.

Energy

The biggest growth will be in infrastructure to meet a huge pent-up demand for energy and transportation. It may seem like a pipe dream in a country suffering 12 hours of power cuts a day, but hydropower projects already under construction would generate up to 2,000MW in the next five years. If politics stabilises and as more roads are built, a further 7,000-10,000MW could be added in 10 years. But this would need predictable government policy and the Nepal Investment Board to be given a free hand. Jobs would be created during the simultaneous construction of hydropower projects, and once completed, cheap and reliable power could attract more downstream industries like aluminium, cement, agro-processing, and information technology.

Trains

The detailed project report of the first stage of the East-West railway artery from Bardibas to Simara and Birganj has already been completed, and it is possible to operate the nearly 1,000km track under the BOOT mechanism in 10 years. As hydropower projects come on line, the surplus electricity can be put to use to also operate a Kathmandu-Pokhara railway. A 70km mass rail transit network is also being surveyed of which the 27km first phase could be built in ten years.

Highways

The Kathmandu-Tarai expressway is immediately feasible because it would save billions in fuel cost every year, and three Indian companies have proposed to build it under the BOOT scheme. The Kathmandu-Hetauda fast-track highway with two tunnels has also got investment from the private sector and a consortium of overseas Nepalis. The East-West Midhill Highway as well as the Indian-assisted Tarai Highway will be completely operational and blacktopped within 10 years. Four new North-South highways will link China and India through Nepal, and the existing Kathmandu Ring Road will be widened to eight lanes.

Telecommunication

The explosive growth in internet and mobile penetration rates will gather pace, with more than 60 per cent of the population accessing the net, up from the present 20 per cent. The mobile penetration rate will also rise to saturation, and more and more users will switch to smart phones and more people will access the net through hand-held devices than PCs or laptops.

Health-Education

The reason for optimism is the progress Nepal has made in improving its Human Development Index in the past 15 years despite a ruinous 10-year war, corruption, poor governance, and instability. With more accountability and more efficient service delivery, the progress could be better. The 2011 census also gives reason for hope, Nepal has effectively defused the population bomb with the growth rate down to a much more manageable 1.6 per cent. This does create a challenging demographic transition with a huge youth bulge, but experts say this should also be seen as an opportunity.

At present rate of growth in primary school enrollment, Nepal could achieve near-100 per cent literacy in 10 years, then the goal will be to improve quality and invest in higher education.

Water

The much-delayed Melamchi Water Supply project will finally be completed, augmenting water supply of Kathmandu Valley which will have a population of four million by 2022. A new water supply and drainage system in Kathmandu Valley will mean that the Bagmati will no longer be the sewer it is.