KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal is currently facing multiple challenges and developments: the country struggles with effectively utilizing up to 700 megawatts of excess electricity due to low nighttime consumption, while foreign companies have repatriated over Rs 150 billion in dividends over the past eight years, though the amount has recently declined.
In a positive development, Germany has committed Rs 7.5 billion in financial and technical support to Nepal for health, green energy, and local development projects.
Meanwhile, the Nepal Stock Exchange (NEPSE) saw a decrease of 22.21 points last week amid a market correction, and commercial banks have lowered their base interest rate to 7.92 percent due to surplus funds.
Additionally, Nepal Airlines Corporation (NAC) blames the government and the Civil Aviation Authority of Nepal (CAAN) for its financial difficulties, and sugarcane farming in Kailali district is declining due to lack of support and market issues.
Nepal struggles to utilize 700 megawatts of electricity
With the onset of the rainy season, Nepal’s river water levels have risen, boosting electricity production. Many hydropower projects are now operating at full capacity.
However, the increase in electricity production has led to a significant challenge: approximately 700 megawatts of electricity is wasted at night due to reduced consumption.
The Nepal Electricity Authority (NEA) reports that up to 700 megawatts of electricity goes unused at midnight because nighttime electricity consumption is lower than during peak hours in the morning and afternoon.
Foreign firms repatriated over Rs 150 billion in dividends from Nepal in eight years
Foreign companies have transferred more than Rs 150 billion in dividends from their investments in Nepal over the past eight years.
Nepal Rastra Bank (NRB) reports that these investments span various sectors, including agriculture, construction, electrical equipment, manufacturing, mining, food services, education, banking and insurance, health and social work, information technology, and transportation.
Despite the substantial amount of Rs 162.79 billion in dividends repatriated during this period, there has been a decline in the amount of dividends taken by foreign firms compared to previous years.
Germany to provide Rs 7.5 billion grant to Nepal
Bilateral discussions on development aid between the governments of Nepal and Germany have concluded in Berlin.
As a result of these talks, the German government has committed to providing 51 million euros (approximately Rs 7.5 billion) in financial and technical support to Nepal over the next two years. This funding will be directed towards enhancing health infrastructure and services, advancing green and renewable energy initiatives, bolstering local government institutions, and fostering economic and social development in Nepal.
NEPSE falls 22.21 points as investors lose Rs 30.38 billion in share trading last week
The Nepal Stock Exchange (NEPSE) experienced a decline of 22.21 points last week, marking a second consecutive week of losses following a prolonged period of gains.
Over the past two weeks, the market has corrected itself after rising nearly 900 points since the recent government change. The previous week saw a drop of 224.89 points.
Last week, NEPSE began at 2,749.57 points on Sunday and ended at 2,727.36 points on Thursday.
During this period, the index fluctuated between a high of 2,860.43 points and a low of 2,678.91 points, reflecting a volatility of 181.52 points.
Commercial banks lower base interest rate
Commercial banks have decreased their base interest rate to an average of 7.92 percent for this month (mid-August to mid-September), due to having an excess of loanable funds.
According to reports from the banks, the base rate has been cut by 0.25 percentage points compared to previous months. This reduction in the base rate suggests that banks may also lower their lending rates in the near future.
NAC holds govt and CAAN accountable for profit shortfall
Ubaraj Adhikari, the Executive Chairman of Nepal Airlines Corporation (NAC), has attributed the airline’s lack of profitability to the actions of both the government and the Civil Aviation Authority of Nepal (CAAN).
In response to an 11-point inquiry from Minister for Tourism and Civil Aviation, Badri Pandey, Adhikari accused the government of obstructing NAC’s efforts to expand its fleet and compelling the airline to operate exclusively from Gautam Buddha International Airport. He suggested that these factors significantly impacted NAC’s financial performance.
Sugarcane farming down for lack of grants
The area for cultivating sugarcane, an important cash crop, has not expanded in Kailali district.
Sugarcane farming is not expanded in lack of chemical fertilizer, seeds and other necessary materials in grant to farmers.
According to Agriculture Knowledge Centre, Kailali, the attraction of farmers towards sugarcane crops is decreasing also for lack of market to the products.
Farmers complained that the province government had not provided any grants to farmers involved in the cash crop so far. The tillers therefore have gradually switched to other crops.
(Prepared by Srija Khanal)
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