KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The recent economic developments in Nepal highlight significant fluctuations in key sectors, including stock market volatility, ICT investment, and power supply concerns.
The Nepal Stock Exchange (NEPSE) saw a sharp decline despite increased trading activity, reflecting ongoing market instability. Meanwhile, the ICT sector continues to expand, with private sector investment driving job creation, though dependence on imports and limited foreign direct investment remain challenges.
The abrupt power supply cut from India has intensified industrial strain, coinciding with the controversial dismissal of NEA MD Kulman Ghising, which has sparked political and public debate.
Additionally, regulatory actions on IPO pricing aim to curb market manipulation, while transparency efforts in agricultural subsidies and resumed flights at Taksar Airport indicate attempts at sectoral stabilization.
The resignation of Nabil Bank’s CEO has further fueled speculation regarding leadership shifts in Nepal’s financial landscape, underscoring the broader economic and political uncertainties shaping the nation’s trajectory.
NEPSE falls below 2,600 after two months
The Nepal Stock Exchange (NEPSE) dropped 2.19% (58.05 points) on March 25, closing at 2,582.73, marking its lowest point in over two months. Despite gaining 0.99% in the previous session, the index has only closed higher twice in the last 16 trading days.
However, trading activity surged, with turnover increasing to Rs 5.18 billion from Rs 4.48 billion. More than 11 million shares changed hands across 62,021 transactions.
All major indices ended in negative territory, with the Finance Index suffering the steepest decline at 3.50%. The Sensitive, Float, and Sensitive Float indices dropped by 1.90%, 2.20%, and 1.91%, respectively.
Three companies list bonus shares on NEPSE
Sangrila Development Bank, Chilime Hydropower, and Supermai Hydropower have listed their bonus shares on the Nepal Stock Exchange (NEPSE). Sangrila Development Bank registered 12,52,844 shares at a rate of 3.6516%, Chilime Hydropower listed 79,83,997 shares, and Supermai Hydropower added 3,50,000 shares.
Following the listing, Sangrila Development Bank now has 3,55,62,568 shares, Chilime Hydropower holds 8,78,23,974 shares, and Supermai Hydropower has 53,50,000 shares in circulation.
Gold prices drop slightly
Gold prices have decreased by Rs 200 per tola, bringing the new rate to Rs 173,300, down from Rs 173,500 on Monday, according to the Federation of Nepal Gold and Silver Dealers’ Association. Meanwhile, silver prices remain steady at Rs 1,980 per tola.
Private sector invests Rs 7.1 billion in Nepal’s ICT Sector
A recent World Bank report shows that Nepal’s private sector invested Rs 7.1 billion in the Information and Communication Technology (ICT) sector between 2017 and 2023, generating 6,746 jobs.
The ICT industry encompasses small, medium, and large enterprises based on capital investment. However, Nepal remains reliant on imports for ICT products and services, spending Rs 4.7 billion on internet bandwidth in 2023, primarily sourced from India and China.
The telecom, computer, and IT services sector accounts for 10% of Nepal’s service exports, contributing 0.3% to GDP. With an annual growth rate of 11.6% from 2005 to 2023, Nepal ranks second in South Asia for IT service exports.
Despite this, low foreign direct investment (FDI) continues to hinder local ICT goods production. The report suggests increasing FDI, following models seen in China and Vietnam, to strengthen Nepal’s ICT sector.
India cuts 350 MW power supply
India has halted the supply of 350 MW of electricity under the Project Steering Committee (PSC) agreement for the past four days, exacerbating load-shedding in Nepal’s industrial sector. While Nepal has approval to import 450 MW, India has proposed restricting supply to solar hours between March 15 and June 30.
Meanwhile, the Ministry of Energy has sought clarification from former NEA MD Kulman Ghising for agreeing to higher power tariffs without ministry approval. The Cabinet officially removed him from his position on Monday.
Govt confirms Kulman Ghising’s removal as NEA MD
The government officially announced the dismissal of Kulman Ghising as the Managing Director of the Nepal Electricity Authority (NEA). Government spokesperson and Minister for Communications, Information, and Technology, Prithivi Subba Gurung, confirmed the decision on Tuesday following a Cabinet meeting. Despite earlier denials, the minister revealed that Hiteendra Dev Shakya from Lalitpur has been appointed as the new MD.
Ghising had faced multiple requests for clarification from the government, with Energy Minister Deepak Khadka accusing him of non-cooperation. However, Ghising questioned the government’s justification for his removal.
PM Oli rejects sole credit to Kulman for ending load-shedding
Prime Minister KP Sharma Oli stated that Nepal’s elimination of load-shedding was not the achievement of a single individual. He emphasized that multiple governments contributed to the effort and warned against attributing success to one person.
During an event in Baluwatar on Tuesday, without naming Kulman Ghising, Oli sarcastically remarked, “Did he bring a lamp or a transmission line the day after his appointment?” He criticized the previous administration for replacing an official with a retired individual.
Securities Board cracks down on companies exploiting IPOs for profits
Under the leadership of newly appointed Chairman Santosh Narayan Shrestha, the Nepal Securities Board (NSB) has issued strict directives targeting companies using Initial Public Offerings (IPOs) to generate profits rather than expand operations.
Two firms in the IPO pipeline, initially set to issue shares at Rs 50 per unit, must now revise their pricing to Rs 100 per unit. One such company, linked to MP Rajendra Bajgai’s hotel investment, must seek approval through a special general meeting.
The directive also affects firms like Hathway Investment Nepal, whose shares had surged to Rs 1,284 per unit.
The board aims to prevent market manipulation and ensure that at least 20% of shares are offered in IPOs, safeguarding investors and curbing unethical profit-making practices.
RSP condemns government’s decision to oust Kulman Ghising
The Rastriya Swatantra Party (RSP) has strongly criticized the government’s removal of Kulman Ghising as NEA MD, calling the move an act of “cowardice disguised as arrogance.”
During Tuesday’s committee meeting, RSP MP Manish Jha accused the government of delaying the collection of overdue payments and urged swift action. MP Hari Dhakal echoed similar sentiments, highlighting Ghising’s efficiency and popularity. The RSP has demanded that the government reconsider its decision.
Flights resume at Taksar Airport after three-month hiatus
Flights at Taksar Airport in Bhojpur have resumed after being suspended for three months due to maintenance issues with twin-otter aircraft. Nepal Airlines Corporation (NAC) restarted operations on Tuesday, introducing a new flight schedule for the district.
The airport, which relies solely on NAC, had faced major disruptions, particularly affecting patients and travelers. One aircraft is now fully operational, while a second remains under maintenance. Normal services are expected to resume once both planes are repaired.
Agriculture Minister promises transparency in subsidy distribution
Agriculture and Livestock Development Minister Ramnath Adhikari acknowledged past irregularities in agricultural subsidies but assured that future allocations would be transparent.
Speaking at an investment conference organized by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Adhikari announced that the Ministry had begun publicly disclosing subsidy details to prevent corruption.
Over the last five years, Rs 105 billion has been allocated to agricultural subsidies. The minister emphasized that achieving self-reliance in agriculture requires collaborative efforts, with the private sector playing a crucial role in meeting national goals.
Parliamentary Committee debate intensifies over Ghising’s dismissal
The removal of Kulman Ghising as NEA MD sparked intense debate in the Public Accounts Committee. A day after the Cabinet’s decision, Maoist MP Amanlal Modi attempted to address the issue during Tuesday’s session.
Ruling party MPs opposed him, insisting that he wait his turn, leading to a heated exchange. The confrontation escalated between Committee Chair Rishikesh Pokharel and Modi, with Rastriya Swatantra Party MPs siding with Modi.
Nabil Bank CEO resigns amid speculation over NRB Governor appointment
Gyanendra Dhungana, CEO of Nabil Bank, has stepped down, fueling speculation that he may be appointed as the next Governor of Nepal Rastra Bank (NRB). His resignation comes just weeks before the term of the current Governor, Maha Prasad Adhikari, ends.
A selection committee, led by Deputy Prime Minister Bishnu Paudel, has been formed to choose the next governor.
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