KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.

NEPSE inches up 3.93 points, daily turnover falls to Rs 3.89 billion

The Nepal Stock Exchange (NEPSE) experienced a modest rise of 3.93 points, closing at 2,113.27, despite a decline in daily turnover to Rs 3.89 billion. Sector-wise, hotels and tourism saw the largest decline, while manufacturing and processing posted the highest gains.

On Monday, the market started the day at 2,109.34 points, dropped to a low of 2,097.58 points within the first half hour, then rose to a high of 2,124.5 points within the next two hours, before declining by around 11 points to close for the day.

The sensitive index, which tracks the performance of ‘A’ class companies, decreased by 0.30 points. The daily turnover fell to Rs 3.89 billion from Rs 4.44 billion on Sunday.

Among the sectors that declined, hotels and tourism experienced the largest drop, falling by 26.72 points, followed by non-life insurance and banking. Conversely, manufacturing and processing saw the highest gain among the 10 advancing sectors, rising by 50.72 points.

Over Rs 286 million in royalties yet to be recovered from hydropower projects

The government has yet to recover Rs 286 million in royalties from various hydropower projects. According to the 61st annual report of the Office of the Auditor General, records from the Department of Electricity Development indicate that Rs 286.995 million remains outstanding as of FY 2022/23.

Section 11 of the Electricity Act, 1992, requires hydropower projects to submit Salami Dastur (royalty) to the Government of Nepal. The Office of the Auditor General noted the absence of interest and penalty charges for late royalty payments and suggested the establishment of legal provisions to impose such charges.

This recommendation aims to ensure the timely recovery of royalties and enhance compliance with financial obligations by the concerned projects.

Banks yet to return premium charged on loan interest against rules

Banks have not fully refunded the excess interest charged by raising the premium on loans contrary to Nepal Rastra Bank (NRB) directives. The 61st annual report of the Office of the Auditor General reveals that despite an NRB instruction on October 27, 2022, for banks to return Rs 4.66 billion in excess interest to borrowers, commercial banks have only partially complied.

The report highlights that the higher premium rates not only affect the cost of goods and services but also impact bank profits and income tax revenue. It calls for comprehensive monitoring of banks’ premium rates and recommends taking action against non-compliance.

Govt receives Rs 13.75 billion dividend from Rs 379.72 billion investment in public enterprises

The government received a dividend of Rs 13.75 billion from its Rs 379.72 billion investment in public enterprises. The Annual Status Review of Public Enterprises, presented to parliament by the Ministry of Finance, reveals that eight state-owned enterprises provided this dividend in the fiscal year 2022/23.

Despite a 9.19 percent increase in share investment, the government secured only a 3.62 percent return.

Out of 44 public enterprises in Nepal, 26 were profitable, 15 incurred losses, and three conducted no financial transactions. These enterprises had a total operating income of Rs 661.01 billion, with net profits rising to Rs 48.51 billion, compared to the previous fiscal year.

The government’s total investment in these enterprises, which included Rs 379 billion in share investment and Rs 281 billion in loans, provided employment to 32,180 people, with cumulative profits increasing to Rs 61.14 billion.

Notable profitable enterprises included Nepal Oil Corporation (NOC) with Rs 11.81 billion in net profits, Nepal Electricity Authority (NEA) with Rs 9.40 billion, Nepal Telecom (NT) with Rs 7.92 billion, and Citizen Investment Trust (CIT) with Rs 3.85 billion.

Conversely, Nepal Forest Corporation Limited and Nepal Airlines Corporation were among those incurring significant losses, with Rs 11.81 billion and Rs 652.9 million, respectively. Administrative expenses of public enterprises totaled Rs 43.10 billion, and among 18 privatized institutions, 10 were profitable.

Nepal exports tea wRs 2.46 billion in eight months

Nepal exported tea worth Rs 2.463 billion and imported tea worth Rs 2.4 million under the agricultural products category in the first eight months of FY 2023/24, according to the Economic Survey released by the Ministry of Finance.

In the previous fiscal year 2022/23, tea exports amounted to Rs 3.937 billion, while imports were Rs 129 million. During FY 2021/22, Nepal imported tea worth Rs 80.4 million and exported tea worth Rs 3.43 billion.

This highlights a significant trade surplus in Nepal’s tea sector, with tea exports reaching Rs 2.463 billion and imports only Rs 2.4 million in the first eight months of FY 2023/24.

This continues a trend from previous years, showing strong export performance despite fluctuating import values, indicating a robust demand for Nepalese tea in international markets and effective production capabilities.

NAC among 15 public enterprises operating at deficit

A parliamentary report has revealed that 15 public enterprises, including the Nepal Airlines Corporation (NAC), have been facing financial losses for multiple years.

The report, assessing the performance of 44 public entities up to the fiscal year 2022-23, disclosed that while 26 were profitable, 15 were in the red, with three showing no business activity.

NAC, recording the highest loss among these enterprises in the fiscal year 2022-23, was followed by Nepal Water Supply Corporation, Daily Development Corporation (DDC), Udaypur Cement Industry Ltd, and Nepal Television.

Despite a slight reduction in net losses compared to the previous fiscal year, NAC’s financial state remains unsatisfactory, with its accumulated losses surpassing Rs 16 billion. This trend of losses has persisted since fiscal year 2019-20.

Govt unveiling fiscal budget 2024/025 today

The government is unveiling the budget for the fiscal year 2081-82 (2024/025) in the Federal Parliament today.

Speaker Devraj Ghimire has called a joint meeting of the Federal Parliament at 1 pm to unveil the annual budget. Prepared by the government, the budget is expected to total around Rs. 2 trillion for the upcoming fiscal year.

(Compiled and prepared by Srija Khanal)

Economic Digest is a daily morning economic digest, basically relatable summations of the most important business news, and happenings from Nepal into easy-to-understand summaries.