Kathmandu. The government has proposed a new law with the concept of mobilizing alternative development finance with the aim of developing projects that provide high economic returns.
The Ministry of Finance has registered the bill to make provisions regarding the mobilization of alternative development finance with the Federal Parliament Secretariat. After being passed by both houses of the Federal Parliament, the bill will be implemented as a law. This proposed bill is new for Nepal’s development process.
The government has proposed a new law with the aim of developing sectors including high-yield sustainable infrastructure by arranging the necessary resources for the overall economic prosperity and development of the country. The objective will be to identify and prioritize large and important projects, and to appropriately utilize financial instruments including internal resources, domestic and foreign investment required for investment.
Similarly, the government understands that a law on alternative development finance is needed to cover issues related to institutional structure, monitoring, and evaluation. The objective is to mobilize new sources of development and through this, to promote employment, ensure sustainable economic development and long-term investment, and attract the private sector to public infrastructure development.
Similarly, alternative development finance will be mobilized through bonds, equity funds and other financial instruments to manage resources for the overall economic development of the country by raising resources for national priority projects, filling the gap in current financial resources.
Based on studies conducted at various levels, it is seen that Nepal will require more than Rs 100 trillion in investment in the coming decade. Currently, only Rs 2 to Rs 3 trillion is being invested annually. The government has proposed a new law after realizing the need for new sources and measures to bridge the gap between investment needs and availability.
The long-term national target included in the government’s 16th Periodic Plan is to generate 40,000 megawatts of electricity. Huge investments are also required for upgrading, expanding, and accessing electricity generation, transmission, and distribution systems. Massive investments are also required in industrial sectors, special economic zones, smart cities, urban development, tourism development plans, road, irrigation, drinking water, airport construction, etc.
The bill has been introduced to make provisions for alternative financing mobilization with the aim of reducing the current shortage of financial resources and mobilizing resources for national priority projects. The bill was approved by the Council of Ministers on Chaitra 25.
The bill envisages the establishment of an alternative development finance mobilization fund as an autonomous institution. The authorized capital of the fund is proposed to be Rs 100 billion and the paid-up capital is Rs 25 billion. It is proposed that the Government of Nepal will invest 51 percent of the shares in it.
The government will invest Rs 12.75 billion, which will be 51 percent of the paid-up capital of Rs 25 billion. It is thought that it would be appropriate to adopt a policy of gradually reducing the government’s share ratio after its effective use and the institution becomes strong and capable or after the investment increases.
The bill aims to adopt various measures for the identification, study, development or implementation of projects that provide high economic returns, create additional employment opportunities or contribute to the economic development of the country.
Amount will be raised from investors or the general public by issuing financial instruments or bonds for a specific project or through equity, debt and mixed financial instruments. It has been proposed that special loans can be raised by taking the guarantee of the government or any international financial institution or an institution or body implementing a specific project. It will also be possible to raise project-specific loans.
The bill proposes to establish a guarantee fund to obtain loans or bonds or both from the general public or financial institutions by obtaining full or partial guarantees from the government or international financial institutions.
The bill proposes to establish an investment fund by collecting capital from domestic or foreign investors. Provision has been made to establish a remittance fund with the investment of Nepali citizens or non-resident Nepalis employed abroad. The bill proposes to establish a unified fund to monetize the assets of any entity or project, and to invest in various funds established to invest in infrastructure projects.
Similarly, resources will be provided by establishing a fund or issuing financial instruments using other financial instruments as prescribed. Alternative development finance will be used for infrastructure construction such as energy development or power generation, power transmission or distribution, road construction or expansion, railway construction, expansion, airport construction and improvement, tunnel construction, special economic zones, industrial parks, dry ports.
Similarly, the money raised from that source will be invested in infrastructure construction such as information technology parks, special tourism infrastructure, special sports infrastructure, urban infrastructure, establishment and operation of public digital infrastructure, cable cars, ropeways and other potential projects decided by the committee to provide high economic returns.
A committee chaired by the Secretary to the Government of Nepal will be formed to operate the fund. Arrangements have been made to have a Chief Executive Officer for the regular operations of the fund.
प्रतिक्रिया दिनुहोस्