29 Aug - 5 Sept 2014 #722

Investing in investment

Interview with Radhesh Pant, CEO of Nepal Investment Board on Tough Talk, News24, 24 August

Dil Bhusan Pathak: What is the Investment Board’s current priority? 

Radhesh Pant: Nepal signed a lot of agreements and contracts in the last 40 years, but nothing substantial happened. Our objective is to come up with a transparent process, change the way the government signs these deals, and also compete with other countries who are looking for similar investments. We feel we are close to achieving this. It takes a lot of time to finalise projects that cost more than $100 million in minute details. It might look like we are doing nothing, but I want to assure everyone that we are working hard behind the scenes.

What would you say are your main accomplishments since the Board was set up? 

We have almost finalised the Project Development Agreement for hydropower development. We have drafted a nine-point principle to ensure the PDA doesn’t go against Nepal’s interests. Third, we have calculated risks against opportunities so that projects here are bankable, meaning investors can get loans to develop them. Fourth, we are trying to compete with other countries to see how we can best attract investors. There are three or four projects which, if we sign agreements in the next 12 months, will be built successfully in the next seven years.

Which are those? 

There are five hydropower projects: Upper Karnali, Arun III, West Seti, Upper Marsyangdi, Tamakosi III that are almost final totalling 5,000 MW.  A project for waste-management is also underway. We have started studies for a chemical fertiliser plant, which will have a large impact on Nepal’s agriculture. The problem here is that even feasibility studies take at least a few years, construction comes much later.

Which investors have actually signed on the dotted line so far? 

There have been investments. But these projects are so costly that investors want some sort of guarantee before taking the plunge. A major obstacle is that we don’t have political consensus about these projects. I don’t mean to say stability automatically brings in money, but even during this transition we could have stabilised policies. Now that there is an elected government with a majority in the house, everyone feels we musn’t squander the opportunity.

Aren’t you afraid that politicians will never come to consensus because they want their cuts from these projects? 

For Nepal’s sake, we must stop talking like that because these ‘expenses’ will also be added to project costs. Second, we must realise the companies that come to Nepal will not be the best ones in the world. If you look back 40 years, you will see what I mean. If we are to bring in the best, we must also be transparent.

It is said the Board doesn’t see eye-to-eye with the line ministeries. True? 

Totally untrue. If we didn’t have their support, we wouldn’t be where we are today. We are a new department in the government, so at first people were a bit apprehensive about what our actual work was. But these are small problems and should not distract from the final goal: bringing in investments. It doesn’t matter who does this – the board, the ministry, or some other agency – but it has to happen.

Have you been able to explain to politicians the kind of opportunities you see for Nepal?

Yes, we have a political dialogue group that holds regular meetings with senior leaders. Our politicians get a lot of information through various sources, including people with vested interests. We are too emotional and ideological about our resources and investment opportunities. It is time to get real. There is a definite deficit of trust, but we have been trying hard to teach everyone what Nepal stands to gain from consensus.

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