let there be light (himalayan times)
TRANSCRIPT
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8/17/2019 Let There Be Light (Himalayan Times)
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legaleagle
ECONOMICS06
THE HIMALAYAN TIMES
S UN Y , JUNE 30, 2013PERSPECTIVES
burningbright
investosansar
Siddharth PoddarSingapore
Performance must meetpotential, a commonlyused refrain in sportscommentary — especial-
ly in reference to exceptional-ly gifted players or teams thatcontinue to underperformand to frustrate in equalmeasure.
The hydropower sector inNepal is not any different.The country has more than80,000 megawatts of hydropower potential of which 43,000 megawatts istechnologically andeconomically feasible. YetNepal’s grid-connected gen-eration capacity is currentlylower than 750 megawatts, orabout two percent of thefeasible potential.
Around three-fifths of thecountry’s population does nothave access to electricity, andthose that do are sometimesfaced with load-shedding of
up to 18 hours a day. The lackof power is the biggestinfrastructure bottleneckobstructing the growth of Nepal’s industrial sector andthe economy at large.
Several industries in Nepal
today are almost entirelydependent on diesel-poweredgenerators for their opera-tions and with the Nepalirupee in a freefall, entrepre-neurs are really feeling thecrunch due to increased
diesel costs. The lack of aregular power supply is a bigdeterrent preventing compa-nies from investing.Moreover, even the electricitythat is supplied to industriesis at tariffs among the highest
in the world.Some changes are happen-
ing for the better in Nepal’shydropower sector,especiallywith the government and themultilaterals realising thatbuilding huge dams is not
really the way to address en-ergy woes. The focus has dis-tinctly shifted towards small-er projects,most of which arerun-of-the-water. These pro-
jects are relatively less expen-sive, take less time to buildand are easier to manage.
Nepal needs to reduce itsdependence on multilateralinstitutions such as theAsian Development Bankand the Word Bank, andother donors. As long as mul-tilaterals are putting moneyin more money into the sec-tor than private investors, itis a clear indication Nepalhas not managed to addressrisks associated withinvesting in the hydropowersector. Investing in hy-dropower is a long-term playand for investors to put mon-ey in the sector they requireassurances from the govern-ment. That the multilaterals
are still the biggest investorsin Nepal’s hydropower sectormeans that the private sectorstill does not the propensityto take the risks involved.
The government’s maintask is to address these risks
as companies are still notvery comfortable with therisk-reward pictures theyhave in mind. The NepalElectricity Authority (NEA)is the sole buyer of electricityin the market and that bringswith it payment risks centredon the NEA’s potential(in)ability to pay for what Ibuys. Construction risks areanother concern,with almostno project being concludedon time and hence leading tohigher costs. Finally, thepolitical risk and the fear thatthere may be changes in poli-cies such as tax structures ortariff structures is anotherconcern for investors. How-ever, on recent evidence, thelast of the three seems to bemore of a perceived risk thana real one. It must be said thatdespite periods of abjectgovernance interspersedwith no governance, various
administrations have man-aged to bring about acertain degree if continuityin policy and in expectations.
Money is beginning toenter the sector. For instance,the China Three Gorges Cor-
poration is developing theWest Seti hydropower projectwhile Indian energy majorGMR Energy is working onthe Upper Karnali project.Similarly, on the multilateralside, the World Bank ap-proved a project in May thisyear, while the ADB and oth-er investors agreed to a USD430 million financing for theTanahu Hydropower Project.
A lot of work remains,andthe new government willhave to improve confidencein Nepal. Investors obviouslyknow making money is notgoing to be easy, but inorder to invest, they too needto see the light at the end of the tunnel.
(The author is a specialist on
globalisation and development
and a co-founder of StoneBench
Research and Communications.
He can be reached at
Let there be light
Concern about independenceHANDPICKED APPOINTMENT WILL GO AGAINST PARIS PRINCIPLE
Ananta Raj LuitelKathmandu
Since the commissionersof the National HumanRights Commission(NHRC) are retiring, the
question about independentand fair selection of theirsuccessors arises. The ParisPrinciple relating to the sta-tus of national institutionsadopted on December 20, 1993requires the selection of national human rightsinsti tutions to be done inde-pendently through electedinstitutions.
However, the selection of new NHRC commissionerscannot be done in the presentpolitical context of our coun-
try. Chairman KedarNath Upadhayay andmembers Ram NaginaSing, KB Rokaya,Leela Pathak and Gau-ri Pradhan areretiring on September17 after completingtheir six year termsand they have already decidedto ask the government toadopt an independent processfor selecting their successors.The rights body is all set towrite to the government onthe matter and to recommendselecting independent com-missioners transparently inline with the Paris Principle.
If elections to the Con-stituent Assembly cannottake place on time, the
appointments will alsofall into serious con-troversy because thereare only two options — either to extend thetenure of the incum-bent commissionersor to appoint them bythe present mecha-
nism as has been done withother constitutional bodiesrecently. As per the ParisPrinciple the composition of the national institution andthe appointment of itsmembers, whether by meansof an election or otherwise,shall be established inaccordance with a procedurewhich affords all necessaryguarantees to ensure thepluralist representation of
the social forces (of civiliansociety) involved in theprotection and promotion of human rights,particularly bypowers which will enableeffective cooperation to be es-tablished with, or through thepresence of, representatives.
It also talks about non-gov-ernmental organisations re-sponsible for human rightsand efforts to combat racialdiscrimination, trade unionsand concerned social andprofessional organisationssuch as associations of lawyers, doctors, journalistsand eminent scientists.Trends in philosophical orreligious thoughts, universi-ties and qualified experts,parliament and government
departments. If these areincluded, their representa-tives should participate in thedeliberations only in anadvisory capacity.
“Since there is no way forthoroughly abiding by theprinciple for selecting com-missioners in such a situationwhen the government itself ishandpicked and the appoint-ing authority, ConstitutionalCouncil comprises of minis-ters, the appointment will becontroversial,” Charan Pra-sai, chairman of Joint Forumfor Human Rights told THT
Perspectives. “The appoint-ment would be questionableand may not be acceptable forus and the international com-munity,” Prasai added.
THE FOCUS HAS DISTINCTLY SHIFTED TOWARDS SMALLER PROJECTS
Vivek RisalKathmandu
An individual, affiliatedwith the financial in-dustry, will treat theFederal Open Market
Committee (FOMC) state-ment like the latest releaseof a new sci-fi movie — high-ly anticipated and in thespotlight. This leaves noroom for surprises sincethere’s been a ton of specu-lation as to whether the Fedwill actually startwithdrawing stimulus mea-sures. Hence,on that fateful(or fortunate day dependingon the prevailing positionsyou were holding) of June 192013,when the markets tooka southern course, the mag-nitude of the importance of the statement went to anoth-er level altogether.
The FOMC statement, inbrief, said the US monetarypolicy will not see an immi-nent change even thoughthe economy is expanding ata moderate pace. There wasno inclusion regarding thetapering of the Fed’s month-ly bond-buying programmein the statement.The FOMCalso decided to keep therates unchanged at 0 to 0.25per cent as long as the unem-ployment rate remainsabove 6.5 per cent and 1-2year projected inflationremains below 2.5 per cent.
However, Ben Bernanke,the supremo of the FederalReserve, at his press confer-ence did hint that the Fed inthe coming months willback off on its monthlybond buying. The Fed state-ment came in more hawkishthan previously anticipatedwith policymakers seeing“diminished” downsiderisks to the economic out-look. Policymakers notedthat “the Committee sees
the downside risks to theoutlook for the economy andthe labour market as having
diminished since the fall.”Policymakers acknowl-edged that over the intermeeting period, “economicgrowth will proceed at amoderate pace and the un-employment rate will gradu-ally decline.” While admit-ting that inflation has re-mained below the Fed’slonger-run objective, it wasbelieved to have partlyreflected ‘transitory influ-ences’.
Financial marketsslumped as investorsremained concerned aboutthe Fed’s tapering of QEmeasures. Wall Street wasunder pressure as the USeconomic data beat expecta-tion, paving the way for theFed to reduce stimulus.
Fed’s indications of lessdownside risks in the eco-nomic environment andcompletion of QE taperingby mid 2014 have lifted thegreenback. Meanwhile, be-nign inflation has reducedthe appetite for gold pur-chases to hedge against in-flation. Besides the Fed,a re-turn of risk appetite, ETFoutflow and lack of physicaldemand are the key factorspressuring the yellow metal.
It’s time for the predic-tions to be laid on the tablefor future references and inno uncertain terms, minehas reached a hammering of sorts. So in a certain way,I will ask my ardent readersto please infer your predic-tions keeping the changingtimes in mind!
(The author is the senior
assistant manager at the
Research and Development
Department of Mercantile
Exchange Nepal Limited.He can
be contacted through
FOMC: Driving
the markets!Reuters
Shanghai
China’s stock marketsscored their biggestgains in two months onFriday in a sign of growing confidence that
credit conditions wereimproving as cash ratesextended their fall from peaksreached during last week’scredit crunch.
The central bank, whichhad let short-term borrowingcosts spike to record highs todrive home a message tobanks that they could nolonger count on cheap cash tofund riskier operations, saidit would ensure policy sup-ported a slowing economy.
“China’s current economicand financial operations andconsumer prices are general-ly stable, all of which showprudent monetary policy isappropriate and producinggood results,” Zhou Xi-aochuan, the central bankgovernor, said in his firstpublic remarks since the cashcrunch last week.
Without making directreferences to the turmoil,when short-term rates spikedas high as 28 per cent, Zhousaid that policy settings wereappropriate and the PBOCwould balance the need toreform China’s economy withthe need to keep growth on aneven keel.
Weighing in,the nation’s se-curities regulator said that fi-
nancial markets were stabilis-ing and the effects of recentshocks fading. Commercialbankers have also describedas exaggerated fears that theywould turn off the taps onnew lending after the cashcrunch scare and reduce theflow of funds to the alreadyslowing economy.
They say the crackdown onthe practice of funding
riskier activities in theso-called shadow bankingsystem with short-term cashwould have little bearing onregular lending, which isdetermined by the amount of deposits banks attract.
Earlier this week, thecentral bank moved to allayfears that the crunch couldescalate into a financialcrisis,with assurances that it
would ensure adequate funds,bringing some calm tomarkets after days of turbu-lence.
As the PBOC reiterated thatmessage on Friday, one of thenation’s three policy lenders,the Agricultural Develop-ment Bank of China, issued astatement saying that sincelate May it had supplied USD100 billion in money market
transactions to other lendersto help them cope with fundshortages.
HALF FULL
Friday’s bounce showedsome investors had shruggedoff their pessimism and wereincreasingly seeing theirglass as half full, at least fornow.
The index of the largestShanghai and Shenzhenstocks closed up 1.85 per cent,their biggest daily rise sinceApril 24, buoyed by a 4 percent jump in property stocksand rebounds in smallerbanks, which were hardest hitby the recent sharp sell-off.
Still, the index fell 5 percent over the week and lost15.6 per cent in June. Analystssay overall sentiment re-mains fragile given concernsabout funding conditions
ahead and China’s longer-term economic outlook.
“The problems, such as ex-cessive credit growth, shadowbanking activities and localdebt remain and will not goaway overnight,” said BenKwong, KSI Asia Ltd’s chief operating officer in HongKong.Alex Wong, director of asset management at AmpleFinance in Hong Kong, said
the central bank’s actions andwords convinced investorsthat Beijing even appearedready to risk missing its 7.5per cent growth target — a two-decade low — to curbworrisome expansion of unregulated credit. Theauthorities sent a messageto the market, and people willprobably be very cautious inlending and even borrowing.
China Vice President LiYuanchao seemed to under-line the message that thegovernment is willing totolerate a lower growth rate,saying on Friday that Chinacould maintain growth of sev-en per cent in the future.
Money traders said themarket was not quite out of
the woods ,even as fears of aprolonged crunch faded. Theweighted average for bench-mark seven-day repo ratewas down around 60 points to6.16 per cent — almost half of last Thursday’s record11.62 per cent, but still wellabove usual range of three tofour per cent.
The overnight rate fellabout half a percent point to4.96 per cent.“There will stillbe cash demand in the firsthalf of July, including theneed to set aside reservesbased on end-June depositsand to pay cash dividends tostock investors,” said a dealerat a Chinese commercialbank in Shanghai. “Overallmarket sentiment remainsvery cautious.”
China markets grow CONFIDENCE IN
CREDIT CRUNCH FEARS FADING