KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s latest economic and governance updates highlight both emerging opportunities and persistent structural challenges.
While the government aims to bolster revenue through increased dividend collection and new fiscal reforms—such as the creation of an asset management company and plans for vocational training for youth—systemic issues like poor returns from public enterprises, large-scale tax evasion on EV imports, and high-profile financial frauds persist.
Infrastructure development continues with progress on the Rahughat hydropower project, Kathmandu-Terai expressway, and proposed tunnels, yet private sector concerns over “take and pay” hydropower policies suggest risks to investment in energy.
Meanwhile, India’s tariff cuts on crude edible oil threaten Nepal’s export earnings. On a positive note, initiatives such as green bond issuance, pumped storage projects, and organic fertilizer production signal steps toward sustainable development.
However, regional disparities—evident in Karnali’s budget cuts—and weak enforcement of regulations underscore the need for better policy execution and inclusive growth.
Auditor general reports nearly NPR 4 billion in tax evasion on EV imports
The Office of the Auditor General has flagged a significant case of tax evasion during electric vehicle imports in fiscal year 080/81. According to the audit, importers manipulated engine specifications to lower tax liabilities, resulting in an estimated revenue loss of NPR 3.77 billion.
The Auditor General has instructed relevant authorities to launch a thorough investigation and recover the unpaid taxes. In Nepal, EV tax rates are based on motor capacity, which was falsely reported in many cases.
Gold and silver prices see slight rise in Nepali market
The prices of gold and silver rose slightly on Sunday in Nepal. The Federation of Nepal Gold and Silver Dealers’ Association reported that hallmark gold was priced at NPR 188,800 per tola, up from NPR 188,500 on Friday. Silver rose to NPR 1,985 per tola from NPR 1,980 previously.
Former Karnali Development Bank CEO arrested for embezzling over NPR 2.5 billion
Rajendra Bir Raya, founding chairman and former CEO of Karnali Development Bank, has been arrested on charges of embezzling more than NPR 2.5 billion. The 65-year-old, a resident of Salyan, was taken into custody by the Central Investigation Bureau (CIB) of Nepal Police on Saturday in Belahiya, Rupandehi.
Authorities allege he misappropriated funds while leading the bank and then fled. The case is being investigated in coordination with Nepal Rastra Bank under the Banking Offense and Punishment Act, 2064.
Govt aims to collect NPR 66.58 billion in dividends next fiscal year
The government has set a target of collecting NPR 66.58 billion in dividends from its investments in various institutions for FY 2082/83 (2025/26). The majority of returns are expected from financial institutions.
In comparison, the target for FY 2081/82 was NPR 58.41 billion, while NPR 46.61 billion was collected in FY 2080/81. This revenue includes dividends from public enterprises and regulatory bodies such as Nepal Rastra Bank.
Private sector alarmed by budget plan to buy electricity from run-of-river projects on ‘take and pay’ basis
The new budget for fiscal year 2082/83 has introduced a policy to sign Power Purchase Agreements (PPAs) with run-of-river hydropower projects under a “take and pay” arrangement, raising concerns among private energy developers.
Industry leaders say this move could stall projects with a combined capacity of 17,000 megawatts. Ganesh Karki, president of the Independent Power Producers’ Association of Nepal (IPPAN), said financial institutions are unwilling to fund projects without “take or pay” guarantees, and the proposed provision may severely harm the energy sector.
Govt targets completion of Kathmandu-Terai/Madhesh expressway by 2026/27
The government has announced that the Kathmandu-Terai/Madhesh Expressway, also known as the Fast Track, will be completed by fiscal year 2083/84 BS (2026/27).
In his budget speech on Thursday, Finance Minister Bishnu Poudel said that 37 kilometers of road, 4 kilometers of tunnels, and 60 bridges will be completed in FY 2082/83. NPR 24.49 billion has been allocated for the project next year, up from NPR 22.54 billion this year.
Government to set up asset management company to handle rising bad loans
To address the growing number of non-performing loans (NPLs), the government has announced plans to establish an Asset Management Company (AMC).
Finance Minister Bishnu Poudel introduced the initiative in the newly presented budget, as part of the second phase of financial sector reforms. The AMC will focus on managing bad loans within banks and financial institutions.
Electricity from ROR hydropower projects to be purchased only as needed
The government has decided to adopt a “take and pay” model for purchasing electricity from run-of-river (ROR) hydropower projects, as outlined in the FY 2082/83 budget. Under this model, electricity will only be bought during times of actual need to balance supply and demand. However, licenses for ROR projects will still be granted under the BOOT (Build, Own, Operate, Transfer) model.
FNCCI welcomes new budget, urges effective implementation
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has welcomed the government’s budget for FY 2082/83 and emphasized the importance of full execution. On Jestha 15 (May 29), Finance Minister Bishnu Poudel unveiled a NPR 1.964 trillion budget. The FNCCI said the budget includes encouraging provisions for national economic development.
Public enterprises losing profits despite increased state investment
Government investments in public enterprises have continued to grow, yet profitability has declined. The Ministry of Finance’s “Annual review of public enterprises 2082” highlights that billions in funding are being misused due to poor planning. As of now, total investment has reached NPR 703.93 billion—up 5.86% from FY 2079/80—but dividends have continued to fall.
NEA to develop pumped storage hydropower projects to boost energy security
The Nepal Electricity Authority (NEA) has announced plans to begin construction of pumped storage hydropower projects to improve energy reliability. NEA Executive Director Hitendra Dev Shakya shared that sites like Kulekhani and Sisneri have been identified for development starting next fiscal year.
This system involves using electric pumps to move unused water to higher reservoirs, allowing for electricity generation when needed.
India cuts import duty on crude edible oil to 10%, likely to impact Nepal’s exports
India has slashed the import duty on crude edible oil from 20% to 10%, effective from Friday. This policy shift is expected to negatively affect Nepal’s edible oil exports, which have been a key contributor to its trade. With India promoting domestic production through duty waivers, reliance on imports from Nepal may decrease, posing a challenge to Nepalese exporters.
Rahughat hydropower project reaches 81% completion
The 40-megawatt Rahughat Hydropower Project in Myagdi district is nearing completion, with physical progress reported at 81%. The project, developed by Raghuganga Hydropower Limited—a subsidiary of NEA—is receiving technical and financial support from the Government of India. Senior officials, including the Indian ambassador and the NEA executive director, recently inspected the site.
Govt to offer free six-month training to 26,900 youths
The government plans to provide free six-month vocational training to 26,900 young people during FY 2082/83 (2025/26). The initiative will be implemented through the National Vocational Training Institute under the Ministry of Labor, Employment, and Social Security. It aims to support youth unable to pursue higher education and foster entrepreneurship across all provinces.
Bagmati Province ministry halts public visits for budget work
The Ministry of Economic Affairs and Planning in Bagmati Province has suspended public appointments to focus on budget preparation for FY 2082/83. A notice displayed at the ministry on Saturday informed the public that visits will be paused until further notice due to ongoing budget-related work.
NIFRA begins issuing green bonds
Nepal Infrastructure Bank (NIFRA) has started issuing green bonds from Sunday. The bonds, with a seven-year maturity and 6% annual interest, have been approved by the Securities Board of Nepal (SEBON). Of the NPR 5 billion issuance, bonds worth NPR 2 billion will be available to the public, including provisions for mutual funds.
Nepal’s largest organic fertilizer plant inaugurated in Rupandehi
The country’s largest organic fertilizer factory has been inaugurated in Rohini, Rupandehi. Operated by Grow More Fertilizer and Chemical Pvt. Ltd., led by industrialists Siddhartha and Poonam Kumari Agrawal, the plant began production last year with an NPR 300 million investment. Located in Rohini Rural Municipality-4, the facility produces 80 metric tons daily under the brand “Ratnam,” with a total capacity of 200 metric tons per day. Lumbini Province Chief Minister Chet Narayan Acharya officiated the inauguration.
Non-life insurance sector generates NPR 36 billion in revenue
Non-life insurance companies have recorded nearly NPR 36 billion in business so far this fiscal year, up to Baisakh. According to the Insurance Regulatory Authority, 14 insurers collected NPR 35.09 billion, while four micro-insurance firms added NPR 769 million to the total.
Tunnel planned on Nayapul–Hemja section of Mid-Hill Highway
To improve travel safety and reduce distance, the government has announced plans to build a tunnel in the Nayapul–Hemja section of the Mid-Hill Highway. The FY 2082/83 (2025/26) budget prioritizes this project and includes provisions for advancing tunnel construction where feasibility studies are complete, including resource management and other preparations.
Most Karnali Province programs slashed in new budget, drawing local criticism
Karnali Province has significantly reduced the number of programs in its FY 2082/83 (2025/26) budget, leading to public dissatisfaction. Citizen activist Rajendra Bikram Shah criticized the budget for not even naming districts affected by recent earthquakes. Former Minister for Economic Affairs Gopal Sharma remarked, “Kathmandu is not far from Karnali, but Karnali is far from Kathmandu.”
Rangkhani copper mine in Baglung awaits excavation
Among Nepal’s 22 traditional mines, the Rangkhani copper mine in Jaimini Rural Municipality-10, Baglung, remains unexcavated. The site features multiple abandoned tunnels, many of which have collapsed due to neglect and landslides.
Locals recall historical copper mining in the area, with some fatalities in past extraction efforts. Bambahadur Shrees, 95, said that his ancestors once mined copper near their home.
Tourist influx boosts homestays in Narchyang village
Homestays in Narchyang village along the Annapurna North trekking route are seeing increased activity due to a rise in tourist numbers. Although homestays were introduced eight years ago in Ward 4 of Annapurna Rural Municipality, significant growth in overnight stays is only now being realized. Homestay operator Sita Tilija Pun noted a growing preference among trekkers to stay in the village.
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