KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape reflects a mix of fragile market sentiment, regulatory tightening, and uneven governance performance. The NEPSE’s mild rebound after a prolonged slump, paired with falling turnover and mixed commodity prices, signals cautious investor confidence, while regulatory bodies, from Nepal Rastra Bank’s proposed AI oversight to the new Customs Act’s tougher enforcement, are moving toward stricter compliance and risk control.
At the same time, multiple ministries under Kulman Ghising are terminating billions in nonperforming contracts, highlighting deep structural inefficiencies in public procurement, echoed by irregularities in local governments such as Kailkot and the shutdown of an illegal crusher in Bhojpur.
Yet, development efforts continue: Karnali’s water projects, Rolpa’s household tap scheme, and Siraha’s community-backed bridge initiative reflect local attempts to address long-term infrastructure gaps.
In the real economy, sectors like dairy and sugarcane are stabilizing with significant dues cleared and new price agreements reached, while festivals and municipal waste projects demonstrate pockets of economic activity and improving service delivery despite broader fiscal and administrative challenges.
NEPSE edges up after six-day slump; turnover drops to Rs 3.75 billion
After six consecutive days of decline, the Nepal Stock Exchange (NEPSE) saw a slight rebound on the seventh trading day, gaining 7.39 points to close at 2,614. The index hit an intraday low of 2,606 at 2:54 PM before recovering in the final minutes. Daily turnover fell to Rs 3.75 billion compared to Rs 4.66 billion the previous day. Share prices rose in 148 companies and fell in 101. Among the sub-indices, development banks (0.31 percent), finance (0.40 percent), and life insurance (0.82 percent) posted gains. Swastik Laghubitta, Srinagar Agritech, and Upper Mailungkhola Hydropower each hit a 10 percent rise, while Himstar Urja recorded the steepest loss at 3.88 percent.
Gold price falls by Rs 1,000 while silver edges up
Gold prices declined on Tuesday, while silver posted a modest increase. The Federation of Nepal Gold and Silver Dealers’ Association reported that the price of fine gold dropped by Rs 1,000 per tola (11.66 grams) to Rs 251,900. Silver rose by Rs 15 to reach Rs 3,600 per tola. In the international market, gold was trading at USD 4,185 per ounce on Tuesday.
NRB issues draft AI guideline for regulated use in financial institutions
Nepal Rastra Bank has published a draft guideline for the use of artificial intelligence (AI) in banks and financial institutions (BFIs), aiming to ensure secure, transparent, and well-regulated adoption. The draft applies to commercial banks, development banks, finance companies, microfinance institutions, and payment service providers. It assigns full accountability to senior management and boards for decisions made by AI systems. The guideline categorizes AI risks into five levels, with high-risk systems involving major financial, legal, or operational consequences. BFIs must inform customers when AI is used, ensure AI decisions are explainable, protect customer data under the Privacy Act 2018, and submit annual AI activity reports to regulators.
PNP demands wildlife water pipeline alongside Rs 14 billion Amlekhgunj–Lothar petroleum project
A conflict has surfaced between government agencies regarding the 62-kilometer Amlekhgunj–Lothar petroleum pipeline extension. Parsa National Park (PNP) has made its approval of the environmental impact assessment (EIA) conditional upon the Nepal Oil Corporation (NOC) installing a separate water pipeline for wildlife parallel to the fuel line. Chief Conservation Officer Ram Chandra Khatiwada said building both at once would reduce future costs and address long-standing water shortages for wildlife. The project’s cost estimate includes Rs 4.28 billion for the pipeline and Rs 9.80 billion for the storage terminal, totaling Rs 14 billion. NOC officials worry the added requirement may delay the project further.
Ghising-led ministries cancel 60 inactive contracts worth Rs 16.28 billion
Minister Kulman Ghising has overseen the termination of 60 stalled development contracts valued at Rs 16.28 billion across the three ministries under his leadership. These include 38 road and bridge contracts, 19 irrigation contracts, and three related to urban development. Notices have been issued for the cancellation of 298 problematic contracts worth Rs 34.33 billion in total. The largest termination is the Rs 14.8 billion Sunkoshi Marine Diversion Multipurpose Project. The Federation of Contractors’ Associations of Nepal has strongly objected, warning that mass cancellations and large-scale forfeitures of bank guarantees could destabilize the construction sector.
Dairy sector clears nearly Rs 4 billion in farmer dues
The Dairy Development Corporation (DDC) and private dairy companies have collectively paid close to Rs 4 billion owed to milk suppliers. DDC has settled Rs 1 billion of its Rs 1.5 billion backlog, clearing dues up to mid-August, while private dairies have paid around Rs 3 billion. DDC reported clearing its remaining Rs 450 million in dues—covering three months—by selling stored butter and milk powder. The corporation currently procures 100,000 liters of milk daily. According to the Ministry of Agriculture, milk production reached 2.68 million metric tons in fiscal year 2023/24, driven by increasing market demand.
Karnali begins construction of three major water supply projects worth Rs 173.6 million
The Karnali Province Government has initiated a major drinking water campaign, emphasizing long-term, technically sound infrastructure. The Ministry of Water Resources and Energy Development announced three large projects—Adanchuli Drinking Water Scheme, Mulkhola Thara Drinking Water Project, and Kupinde Parigaun Kauche Drinking Water Project—will start construction this year. A total of Rs 173.6 million has been earmarked for these multi-year projects. Ministry spokesperson Padam Devkota said the shift from small, demand-driven schemes to large-scale, well-studied projects aims to solve persistent issues of ineffectiveness and poor sustainability.
Lumbini festival ends with Rs 120 million in business
The Seventh Lumbini Festival wrapped up in Bhairahawa on Sunday, drawing 120,000 visitors over 18 days. According to main organizing committee coordinator Sachin Rocca, the event recorded transactions totaling Rs 120 million. The festival featured 300 stalls and showcased Nepal’s first exhibition of a mermaid and a fish tunnel brought from Vietnam. Lumbini Province ministers Dhanendra Karki and Santosh Kumar Pandey attended the closing ceremony and expressed confidence that such events stimulate local production, trade, tourism, and the broader economy.
Sugarcane farmers accept new rate of Rs 690 per quintal
Sugarcane producers in Mahottari have expressed mixed but overall positive reactions after the government set the new sugarcane price at Rs 690 per quintal. Farmers had demanded Rs 750, but the new rate includes Rs 620 from sugar mills and a Rs 70 government subsidy—an increase of Rs 70 from last year. Naresh Singh Kushwaha, president of the Mahottari chapter of the Sugarcane Producers Federation, said farmers now urgently await the start of crushing operations at mills such as Everest Sugar and Chemical Industries, warning that delays would obstruct timely cultivation of subsequent crops.
Postal Highway terminates Morang road contract over poor progress
The Postal Highway Directorate has ended the contract for the six-kilometer Ratuwa–Keshaliya road section in Morang due to minimal progress. The Itahari Project Office announced the termination on Tuesday, cancelling its agreement with Shrestha Construction Company. The contract, signed on November 9, 2019, for Rs 839.9 million and expected to finish in three years, achieved only about 25 percent progress despite granted extensions. Authorities have started proceedings to seize the contractor’s Rs 41.9 million performance bond and recover the Rs 96.7 million advance payment along with a 10 percent interest charge.
New Customs Act 2025 introduces blue lane and tougher penalties
The Customs Act 2025, which came into effect on Saturday, has added a Blue Lane option for customs clearance, expanding the total lanes to four. Like the Green Lane, it permits release of goods without document or physical inspection, but mandates post-clearance audits—unlike the optional audits under the Green Lane. The Act also introduces the concept of an Authorized Business Person (ABP) to ease trade processes but enforces much stricter punishments. Penalties for undervaluing goods have doubled from 50 percent to 100 percent, while submitting fake documents to evade tax can now incur a fine equal to 200 percent of the revenue loss and up to one year of imprisonment.
Rolpa local unit completes ‘one house, one tap’ drinking water scheme
Aresh Dharakharka in Sunil Smriti Rural Municipality-8, Rolpa, has completed a “One House, One Tap” drinking water initiative, providing access to 45 households and one school. The project was executed under the Khada River and Goganpani River sub-schemes in partnership with International Nepal Fellowship (INF) Nepal and the rural municipality. The total cost reached Rs 4.1 million, with INF Nepal contributing Rs 1.8 million, the rural municipality Rs 300,000, and the community Rs 1.9 million. The project has greatly benefited residents who had long struggled with severe water shortages.
Siraha municipality commits Rs 10 million for Kamala River bridge reconstruction
Aurahi Municipality in Siraha has pledged Rs 10 million to support a public initiative to rebuild the collapsed Kamala River bridge linking Siraha and Dhanusha. Mayor Shivji Yadav announced the contribution four years after the bridge caved in before it could be inaugurated. Writer and Hulaki Road advocate Ram Rijhan Yadav launched the fundraising campaign on Saturday to restart construction. Minister Kulman Ghising inspected the location on November 21 and assured that the issue would be addressed. The original 470-meter bridge project, contracted in 2011 for Rs 249.1 million, was later handed over to Lumbini Builders Construction in 2019.
Four businesses fined after consumer market inspection
The Department of Commerce, Supplies, and Consumer Protection (DoC&CC) penalized four firms following monitoring in Kathmandu, Bhaktapur, and Lalitpur on Monday. Nyanu Nepali Sirak Industry in Madhyapur Thimi received a Rs 20,000 penalty. Shree Chonga Ganesh Hardware and Krishna Plywood and Paint in Sallaghari, Bhaktapur, were each fined Rs 10,000. Imran Readymade in Kathmandu-16 was also fined Rs 10,000. The firms violated several provisions of the Consumer Protection Act 2018. Of the 15 establishments inspected, 11 were issued general directives to make necessary improvements.
Illegal crusher in Bhojpur shut down by district monitoring team
The District Monitoring Committee has closed an illegally operating crusher plant in Leguwaghat, Arun Rural Municipality-6, Bhojpur. District Coordination Committee Chief Kamal Thulung confirmed the shutdown, stating that the plant had been extracting natural resources unlawfully without meeting any legal requirements. The committee found the crusher violated the Stone, Gravel, Sand Excavation, Sale, and Management Standards 2020, operating only 300 meters from the Leguwa–Bhojpur Highway bridge and 60 meters from the Arun River—both prohibited distances. Thulung said pressure to reopen the facility persists, but the committee is committed to bringing all noncompliant crushers within legal boundaries. The plant had been running illegally since 2016.
Koilabash customs office falls short of revenue target by Rs 1.8 million
The Koilabash Customs Office in Dang collected Rs 3.9 million in the first four months of fiscal year 2025/26, failing to meet its target of Rs 5.7 million by November 16. Revenue collection was affected by business disruptions during the Gen Z protests and increased restrictions from Indian security forces at the border. The office mainly collects daily entry fees from Indian vehicles—Rs 600 for cars and Rs 200 for motorcycles.
Kailkot rural municipality ordered to recover nearly Rs 7 million
Mahabai Rural Municipality in Kailkot has been instructed to retrieve Rs 6.981 million that was distributed without proper procedure, according to the Auditor General’s 2023/24 report. The audit identified Rs 24.3 million in irregularities across several unverifiable projects, naming specific individuals including Chairman Khem Bahadur Singh for reimbursement of unauthorized expenses. Overall outstanding audit queries for the municipality have now reached Rs 234.9 million. The report also pointed out inflated claims—such as Rs 94,000 billed for travel between Mahabai and Manma, far exceeding the real cost—suggesting misuse of funds.
Godawari waste center earns Rs 5 million in revenue
The Integrated Waste Management Center (IWMC) in Godawari-3, Chowkidanda—constructed at a cost of Rs 562.7 million—has generated steady income, earning around Rs 500,000 monthly for the past four months. Total revenue of roughly Rs 1.5–1.6 million has come from selling compost fertilizer and recyclable materials. Built by Sichuan Province Geologic Engineering Company of China, the facility can process 13.51 tons of solid waste and 13 cubic meters of fecal sludge daily. The center also charges a subsidized rate of Rs 1,500 for septic tank cleaning, bringing in more than Rs 100,000 a month and demonstrating strong financial viability.
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