Grandiose schemes in doldrums despite massive cash flow

MAY 06 - Five years ago, the term “national pride projects” was coined and construction of the infrastructure was launched with generous budget allocations. Presently, many of these turbocharged schemes are struggling to survive or progressing at a crawl, if at all.

They had been accorded the highest importance in the budget with huge resources allocated annually for their construction. They were at the forefront of the government’s massive development offensive. However, the country has not much to show after all the hoopla.  

The Prime Minister’s Office (PMO), National Planning Commission (NPC) and line ministries are directly involved in executing the 22 infrastructure projects ranging from roads, electric railways and hydropower to airports and irrigation.

The government has shovelled Rs 21.50 billion into these projects in the current fiscal year. In terms of the budget size, the Melamchi Drinking Water Project has received the largest allocation of Rs 5.24 billion, a twofold increase from the Rs 2.53 billion it got in 2012-13.

However, spending in a majority of the projects has been low as of the first eight months of the fiscal year. According to the NPC, the Bhairahawa Regional Airport project has spent just 1.2 percent of its budget while the proposed Pokhara International Airport has used 0.1 percent of the allocated funds. Similarly, budget expenditure by Bheri Babai Diversion reached 2.1 percent and by the Postal Road Project 14.3 percent.

Spending by the Pashupati Area Development Trust has been a little higher at 17.8 percent, and the overall progress of the three North-South Roads is 36.8 percent.

“Projects making progress above 80 percent are considered good, those performing below 50 percent are considered bad, while those performing  between 50-80 percent are considered good enough,” said Puspa Lal Shakya, joint-secretary at the NPC. “Based on this yardstick, the majority of the national pride projects have performed poorly.”

According to the NPC, substantial progress in spending has been seen at the Ranijamara Kulariya Irrigation Project, Lumbini Development Fund and Shikta Irrigation Project with expenditure rates of 82.1 percent, 62.3 percent and 57.3 percent respectively.

Meanwhile, the President Chure Conservation Programme has spent 63.3 percent of its budget, but the NPC said that it had not received its programme document, and it is not known how much work has been done.  

Alarmed by the dismal progress of the national pride projects, Prime Minister Sushil Koirala has directed the concerned offices to get a move on. However, the slow pace of construction is not the only issue, the government has not been able to figure out what is going on at many projects.

The NPC said in its report to the National Problem Solution Committee, which is chaired by the Prime Minister, that it could not find out the actual status of spending at major projects like the Kathmandu -Tarai Fast Track, East-West Railway, Second International Airport in Bara, Budhi Gandaki Hydropower Project, West Seti Hydropower Project and Tamakoshi Hydropower Project. Spending by these projects was dismal during the first half of the current fiscal year.

Besides allocating huge budgetary funds to these projects, t

he government has also signed performance contracts with the chiefs of these projects for better output. A number of them are monitored online by senior government officials.

Finance Minister Ram Sharan Mahat has stated that the tendency of allocating lots of money without adequate preparation such as addressing the issue of land acquisition has resulted in a poor expenditure pattern at these priority projects.

The Finance Ministry’s half-yearly budget review report said that the national priority projects had been selected without any solid basis. Each year, the government added one or two projects under the national pride project category.

“The number of such projects increased while choosing them at random. The national pride projects have now just become projects eating up massive resources with little to show for it,” stated the report.

Among the 22 projects, only one, the Upper Tamakoshi Hydropower Project, is likely to meet its construction deadline. The oldest among the pride projects is the Babai Irrigation Project which began in 1989-90 but is nowhere near completion.

The long awaited Melamchi Water Supply Project is back on track, but it is still difficult to predict whether it will be completed as per its revised schedule. According to the NPC report, a 135-metre tunnel has been dug after a new contractor was selected for the project.

According to the NPC report, physical progress of a few projects has been relatively better than financial progress in the first eight months. For example, the ambitious Mid-Hill Highway recorded physical progress of 96.4 percent of the target. “This should be termed good,” said Shakya.

Regarding the status of the three North-South Highways, track opening of 11 km of the Koshi Corridor, 10 km of the Kali Gandaki Corridor and 10 km of the Karnali Corridor has been completed. It is 50.4 percent physical progress, according to NPC.

The physical progress of the Postal Road has been recorded at 8.2 percent. The Postal Road Project ground to a halt after a few contractors fled, said officials at the Ministry of Physical Infrastructure and Transport.

The future of Kathmandu -Tarai Fast Track is stil uncertain. The government is at a loss regarding how to build this express highway with international firms not showing much interest. Earlier, it had been decided to develop the project under the public-private partnership (PPP) model.

As no foreign companies have stepped forward with a concrete proposal, the government is now considering multiple options for the Fast Track. One of the options the Ministry of Physical Infrastructure and Transport has been considering is merging the expressway and the Second International Airport (SIA) in Nijgadh into one project. An official of Investment Board Nepal said that if the Fast Track is not built, no international investor will be attracted to put money in the airport project at Nijgadh.

The Investment Board is currently looking after the 750 MW West Seti Hydropower Project which looks like getting delayed as the developer CWE Investment Company, a subsidiary of China Three Gorges Corporation wants to do a pre-feasibility study which government officials say is “unnecessary”.

“During a recent visit to Nepal, officials of China Three Gorges had informed Investment Board officials that they had been putting off reaching a decision due to the leadership succession in China. They have assured us that they will be making a decision on the hydropower project soon,” said an Investment Board official.