ADB poses to broaden investment scope in Nepal

Kathmandu, Jan 21: The Asian Development Bank will increase its annual lending to Nepal by 60 per cent in projects running with it funding, provided the work implementation capacity is enhanced.

On the occasion of the opening session of the annual Country Portfolio Review Mission of ADB projects in Kathmandu on Thursday, Finance Secretary Lok Darshan Regmi said the massive earthquake which struck Nepal in April and the obstruction at Nepal-India border resulted in acute shortage of fuel in the country hampering implementation of the ADB projects.
He said due to same factor implementation of the ADB invested projects had seen some delay which would pick up pace in the next year.
Director General for South Asia Regional Department Hun Kim urged the government and ADB staff to improve the project implementation performance of the ADB-funded projects to tap the opportunities of increased lending space provided by ADB. “Following the recent reforms of ADB’s financial resource, ADB is ready to increase the annual lending level to Nepal by 60 per cent starting 2017 from the present level of about $275 million per annum in the last five years. However, this will depend critically on acceleration of the implementation of the existing projects.”
Nepal’s overall performance of its portfolio has been trailing behind ADB average. Of the net available funding amount of 1.733 million US dollars spread over 33 investment projects, 55 per cent is still to be contracted and 72% yet to be disbursed.
“The greatest challenge is that annual disbursement has persistently trailed behind annual new commitments by almost 50 per cent in the recent years,” Kim said adding, “To date, unutilized amount has reached $ 1,255 million, almost equivalent to 6 per cent of GDP. This is sizable when the country’s annual capital expenditure is at less than 4 per cent of GDP.”
Kim also acknowledged some silver lining stating that in-coming projects will now be much more implementation-ready and have sizable contracts to be awarded upon loan signing.
Kenichi Yokoyama, ADB’s Country Director for Nepal called these progresses as notable and can start turning around Nepal’s overall project performance in a significant way. “We need to consolidate the progresses made and continue tackling these systematic constraints as well as project-specific problems,” Yokoyama said adding, “With these efforts, we are hopeful that annual disbursement can be substantially increased to reach at par with annual lending in the next few years, although the performance in 2016 will still depend on fuel and material supply conditions.”
Kim also requested particular attention to set out clear recovery plan and revised completion dates for major projects such as Melamchi water supply, Tanahun hydropower, and Tribhuvan and Gautam Buddha international airports, and other large scale highway and transmission line projects.
At the programme, of the 33 projects running under ADB funding, five projects were awarded with the Best Project Management Team for their good delivery of outputs such as contact awards and disbursement, including their quality. The projects include Community Managed Irrigated Agriculture Sector Project – Additional Financing, Community irrigation Project, Second Small Towns Water Supply and Sanitation Sector Project, Information, Communication and Technology Development Project (Public Service Commission component and Tanahun Hydro Power Project. The Raising Income of Small and Medium Farmers Project won the Best Performance in the important thematic area of Gender and Social Inclusion.
ADB also acknowledged contractor CTCE-Kalika Construction J/V as the Best Performing Contractor in 2015 for completing a technically challenging bridge construction over the Koshi River at Chatara under the Emergency Flood Damage Rehabilitation Project in 2015.