Monday, August 20, 2018

Kathmandu-Kerung railway to cost US$2.6 billion, mandatory credit rating of loans and more


From The Kathmandu Post: The Department of Railways (DoR) on Sunday said construction of Kathmandu-Kerung railway is estimated to cost Rs257 billion. The construction of the railway running through complicated geological terrain and challenging engineering work is likely to be completed in nine years, the department said. The DoR observations corroborate the report prepared by Chinese team.

The railway would be 72.25 km in Nepal. Around 98.5 percent of the railway would either be bridges or tunnels. The project would cost Rs3.55 billion per kilometer. The project’s longest and most steep grade is up to 95 km long out of 121 km. A report obtained by the Post states, the railway plan that passes through rugged Himalayan mountains involves complex structural engineering.The report says engineering crews would build ramps along the northern and southern slopes leading to Lake Paiku, near Kerung, to connect tracks to the Kathmandu section. The ramps would overcome the huge difference in elevation between the southern and northern toes of the Himalayan mountains.

From The Himalayan Times: Bankers have sought incentives for borrowers to execute the provision of credit rating of borrowers who want to avail loans of Rs 500 million and above, and renewal of loans as provisioned by the Monetary Policy. Borrowers will not be encouraged to opt for credit rating without any incentive, as there are multiple challenges to execute this policy introduced by the Monetary Policy.

The firms that avail loans worth Rs 500 million and above are big companies and they will be reluctant to disclose all the information about their company that a credit rating requires to avail the bank loan because their competitors — businesspeople — might be in the board of the respective banks and financial institutions (BFIs), according to Gyanendra Prasad Dhungana, president of Nepal Bankers’ Association. “On the other hand, BFIs cannot issue loans on the basis of rating without collateral or guarantee. If collateral or guarantee is a must, the borrowers will not be encouraged for credit rating of their companies because it is a costly affair.”

As per the provision of the Monetary Policy, BFIs must float loans on the basis of credit rating for loans of Rs 500 million and above. “In this regard, the cost of rating could also be a liability for the BFIs and if so, the cost must be adjusted in lending rates,” said Dhungana. “BFIs cannot treat borrowers differently based on their ratings if the cost of rating has to be borne by the BFIs.”


Power leakage came down to 20.45pc last fiscal year

From The Himalayan Times: Nepal Electricity Authority (NEA) has said that it was able to reduce electricity leakage by 2.45 percentage points in the last fiscal year 2017-18. As per data released by NEA, it was able to meet its target to reduce the leakage of electricity. NEA had earlier set a target to reduce electricity leakage from 22.90 per cent to 20.45 per cent of the total electricity supply in the last fiscal. According to NEA, the 20.45 per cent electricity leakage figure is the lowest in NEA’s history. At present, NEA loses 5.5 per cent of electricity through leakage in its transmission system and 14.5 per cent through its distribution system.

“In this fiscal, we plan to reduce the electricity leakage by 1.95 percentage points to 18.5 per cent, however if possible we will try to bring it down to around 15 per cent,” said Kul Man Ghising, managing director of NEA. Currently, NEA has started taking strict action against electricity theft and has become more stringent in collecting dues. It has also installed high-capacity transformers, and upgraded the transmission and distribution system and substations to reduce electricity leakage. In the last fiscal 2017-18, NEA was able to earn net profit of Rs one billion (unaudited). NEA has forecast to earn net profit of Rs 1.1 billion in this fiscal. In the last fiscal, NEA earned operating profit worth Rs 7.86 billion.

A cabinet meeting on Sunday decided to form a five-member Public Expenditure Review Commission led by Dr. Dilli Raj Khanal. The commission will review public expenditure, its usefulness, policy reforms, and selection of projects among others. 

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