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Biz News January 2016

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Digital Signature Launched
President Bidya Devi Bhandari, Prime Minister KP Sharma Oli and Information and Communications Minister Sher Dhan Rai jointly launched digital signature for the first time in the country on Dec 2. For the time being, digital signature has only been implemented in government offices. But the authorities said, it would soon be available for the general public as well.

“The introduction of the digital signature is a milestone in the area of electronic governance,” said Bhandari.  Similarly PM Oli emphasized on how the use of digital signatures will save time, create credibility, quality and help in social transformation. “The use of digital signatures will be important in business, government and community centre work,’ he said.

Digital signature is a special government certified identification code which is used to authenticate digital information such as documents, e-mail messages by the sender or the signatory and ensures that the document is unchanged and genuine.

International Finance Corporation (IFC) and Word Bank have assisted the government in the implementation of digital signature in government offices. Radiant InfoTech Nepal (RIN), the certifying authority, has formally opened digital signature registration for the public.

5th National Robotics Competition
The Robotics Association of Nepal (RAN) organized the 5th National Robotics Competition during Yantra 4.0 Art, a tech and science festival, in association with Karkhana and Siddhartha Art Foundation Education Initiative. The robotics competition was held on Dec 19.

Tech enthusiasts and robot makers from schools, college and freelance professionals participated in four different events and competed with each another in terms of knowledge, skill and design. “We have been creating this platform for the last four years …and more than 1000 students have already gained the knowledge of robotics,” said RAN Media Coordinator Ramesh Ghimire.

Diesel from Plastic Waste: NAST
Nepal Academy of Science and Technology (NAST) says it will produce diesel from plastic waste within a few weeks. The announcement comes at a time when the country is reeling under an acute fuel shortage due to India’s blockade.

“We are searching for alternatives to oil,” said Birendra Dhakal, bio fuel research head at NAST. “This type of diesel is widely used in Japan. The fuel is prepared by melting plastic and converting it into hydrocarbon. The potential for this in Nepal is high,” he added.

According to Dhakal, current methods can produce seven litres of diesel using 10 kilo grammes of plastic. However, a maximum of nine litres of diesel can be produced using thicker plastic. “We are shifting our point of study and are focusing more on producing high quality fuel at effective costs,” said Dhakal.

The government has already put Rs 10 million into the project. The machine used in the production process is being imported from China.

Around 75 metric tonnes of solid waste is accumulated everyday from Kathmandu Metropolitan area. “At least 15 percent of the solid waste is plastic waste,” said Raviman Shrestha, Environment Management department head of Kathmandu Metropolitan City. The study conducted by NAST reveals that 40,000 litres of diesel can be produced daily from plastic waste.

ICAO Invited to Assess Aviation Sector
A team from the International Civil Aviation Organization’s (ICAO) Asia-Pacific division will be arriving in Nepal in mid February to inspect and asses Nepal’s aviation sector. The team is coming to Nepal at the invitation of the Civil Aviation Authority of Nepal (CAAN). After the inspection, the team will recommend to the ICAO to audit Nepal’s aviation sector, according to Rajan Pokhrel, deputy director general of CAAN’s Civil Aviation Safety Regulation Directorate.

“The ICAO audit will be crucial for removing Nepal’s aviation sector from the blacklist of the European Union. Nepal can get off the list if the verdict of the audit is positive,” said Pokhrel.

According to Pokhrel, the ICAO team will assess eight areas: legal structure of Nepal’s aviation sector, organisational structure, individual and organisational licensing, airplane maintenance, investigation after airplane accidents, airport and its services. The findings of the audit will decide if Nepal can be removed from EU’s black list.

The EU has continued to blacklist Nepal’s aviation sector accusing it of not making satisfactory improvements. But Pokhrel said he is confident that improvements were being made and that the aviation sector will be removed from the black list within a year.

Infrastructure Company ‘Emerging Nepal’ Established
An infrastructure company is all set to come into operation with the investment of industrial groups, former administrators and bankers. Named ‘Emerging Nepal’, the company has decided to invest in roads and hydroelectricity projects at the first stage. It has also planned to revive ailing industries by investing in them or taking over their management. ‘The company will concentrate on the development of most essential infrastructures for economic development’, Chairperson of the company, Lalmani Joshi said. The company has been established with a view to invest in infrastructure development, initiate consultancy services and to undertake feasibility survey for the infrastructure development. The company was registered at the office of the Company Registrar on 17 August 2015.

The company’s authorized capital is 5 billion rupees while its paid up capital is 100 million rupees.  It will be increased as per need. The government has invested 500,000 rupees in the company.  In addition to that, there is investment of business houses, industrialists, administrators, bankers and non-resident Nepalis. “Though the company is in the stage of starting the operation by collecting paid up capital, it is delayed somewhat  due to the unofficial blockade as well as for the time consumed in the process of the appointment of the company’s CEO,” he said. The management of the company has claimed that it will come into operation by the end of this fiscal year at the latest.

The company will be operated on public-private partnership basis. ‘We will in fact present ourselves as a model of public-private partnership’, Joshi said.  According to him, the investment of the government in the company will increase the confidence of national and international institutions on this company increasing the possibility of attracting more investments.  However, it is structured in such a way that the private sector will take up its management responsibility. According to the investors, this will facilitate many things ranging from policies and infrastructure building.  

The company is also visualized as a ‘think tank’ in addition to its role to organize trainings and seminars. It has an objective of investing in infrastructure; provide infrastructural support to other organizations and to offer consultancy services when asked for. According to Joshi, the company may also issue bonds and debentures with prior permission from Nepal Rastra Bank.  It may also contribute to develop financial, educational and medical hubs in some areas of the country.

Renowned business people like Manoj Bahadur  Shrestha from Himalayan Bank, Chandra Dhakal from Global IME Bank, Industrialist Shrawan Kumar Agrawal, Senior Vice President of  Confederation of Nepalese Industries Haribhakta Sharma and Business Houses such as Vishal Group, Sanghai Group, Murarka Organisation, Golchha Organisation and Jyoti Group are also participating in the company. Former finance secretary Rameshwor Khanal and retired officers from various banks are also part of the company.

Illegal Transactions of Indian Currency Flourish
The blockade at the Nepal-India border has triggered illegal transactions of Indian currency together with the smuggling of other goods including petroleum products.  According to officials of the exchange department of Nepal Rastra Bank (NRB), the demand for Indian currency has increased due to the use of the currency by petty traders and smugglers.

“The demand for Indian currency is growing at an unsustainably high rate,” said an official of the department.  According to him, Indian Rupees 100 is being exchanged for Nepali Rupees 170 to 200 in the Terai.  NRB has fixed the exchange rate of 160 Nepalese rupees for 100 Indian rupees. As the Nepali currency is pegged with the Indian currency, the exchange rate remains fixed in formal transactions.  With the increase in the use of Indian currency in smuggling, people are buying Indian currency at a higher rate.  

Lately, the local business people are reported to be bribing up to 200,000 rupees to Indian police to free their goods at the border.  As this payment is also made in the Indian currency, illegal transaction of currency is flourishing.

Black market and smuggling have become widespread after the blockade badly affected the import of goods through the formal channel.  In the month of October of last fiscal year, goods worth Rs 40 billion were imported from India to Nepal.  The value of the import carried out in the same month of the current fiscal year was only Rs 14 billion. In the three months of the current fiscal year, Nepal has imported goods worth Rs 80 billion. The value of import was Rs 123 billion in the same period of the previous fiscal year.

Prabhu Group Set to Fly High
Prabhu group has taken a big step into the airline business after purchasing a 55 percent stake in Muktinath Airlines. Even though the purchase happened two months ago, Muktinath recently changed their brand name, says general manager Binod Thakali.

The group has also ordered an R-66 Helicopter from the US based airlines company Robinson Helicopter Company for Rs 100 million. The helicopter can fly up to 14000 feet, said Thakali.

3,600 Heavy Equipment Lying Idle since September
Ninety percent of heavy equipment has been lying idle since September as under-construction infrastructure sector projects have been brought to a complete halt because of the scarcity of petroleum products. According to Tara Bahadur Kuwar, president of the Heavy Equipment Association of Nepal, out of the 4,000 heavy machineries in the country, nearly 3,600 are lying idle and only about 400 are operating in the Western region and in areas near the Indian border.

Construction entrepreneurs say that heavy machineries are lying idle for the lack of fuel because of the Indian blockade. They also complain that as some equipment were still at the construction sites, there was a risk of their parts being stolen and their engines falling into disrepair. Kuwar said that the government should provide fuel for bringing these machineries to safety. Construction entrepreneurs feel that they can prevent these machineries from going out of order if they are provided fuel on a daily or weekly basis.

 In Nepal, heavy machineries are used mostly in hydroelectricity projects, cement factories, stone quarries, sand excavation, crusher industries, brick kilns, bridge construction, and road widening and pitching of roads.  “This situation has emerged because no project has started operation since the beginning of the current fiscal year,” entrepreneurs say. Some projects have, however, managed to continue operation by buying fuel even at a higher price.

According to Heavy Equipment Entrepreneurs’ Association, Rs 40 billion has already been invested in this sector. On an average, a heavy machine costs Rs 6 million. “Most of the entrepreneurs have not been able to even pay their installments to banks,” said Kuwar. According to him, out of the total investment, 50 percent of investment comes from loan. So far,   a loss of Rs 3.36 billion has already been incurred. The monthly loss is Rs 840 million. One unit of Heavy equipment gives a monthly business turnover of around Rs 200,000.

About 20 thousand workers have been directly affected because of so many heavy machineries lying idle. According to the association, there are 2,500 backhoe loaders out of four thousand pieces of heavy equipment. Likewise, there are 500 loaders, cranes and dozers. Out of 2 thousand excavators, about 1 thousand are in irreparable condition. In addition to this, there are 200 platform trailer trucks for carrying heavy equipment lying completely idle.

Rastra Bank to Exit Gurkha Bank Mgmt
Nepal  Rastra Bank is preparing to leave the management of Gurkha Development Bank by mid January. Gurkha Development Bank and Kathmandu Finance have called special general meeting of their respective shareholders with a plan for merger. The Rastra Bank source has said that it will endorse the merger and handover management within a week of the general meeting. Gurkaha was declared a troubled bank on 25 March 2011 andNepal Rastra Bank had taken control of the management of the bank on 3 January 2013. The management of the Bank is being handled at present by Muktinath Sapkota and Drishnasharan Fuyal from the Rastra Bank.

Merger with Kathmandu Finance
According to the Due Diligence Report prepared by Nepal Rastra Bank,  the paid up capital of Gurkha Bank  has come down to 10.9 million rupees from 661.6 million. On the basis of the final DDA report of both the institutions  the share swap ratio has been fixed at 1:1.  Though the Kathmandu Finance has been issuing rights shares at the ratio of 1:1, the paid up capital of the merged institution is expected to reach only 509 million rupees. If it becomes a development bank after the merger, it has to raise its paid up capital to 800 million rupees by June 2017   as per the new directive of the Rastra Bank. Since the paid up capital is not likely to reach the required level, there is a strong chance of the merged institution to become a ‘c’ class finance company.  

The name of the merged bank is yet to be finalized. Gurkha had initially 22 branches, but it has come down to five branches after it sold some of its branches. Kathmandu Finance, however, is planning to buy three branches. With this, the number of branches of the new institution will reach eight. The last transaction of the shares of Kathmandu Finance in the stock exchange had taken place on 26 May 2015 at the rate of Rs. 141 per share.

The changes Gurkha Bank introduced  
Gurkha bank had an accumulated loss of 1.37 billion rupees when NRB had taken control over it but this has  now been reduced to 445.9 million rupees. Recently it was able to recover 350 million rupees out of the loan issued to Abdul Kawadi and Krsi Premura Properties for constructing JSB Financial Tower.  

The capital adequacy ratio was negative 40 percent but it has now come down to negative 11 percent The ratio of bad loan on the total loan was  80 percent until some months back, but it has come down to about 70 percent by early December.

Nepal Vocational Qualification System Project Launched
With an aim to increase workforce skills and competency, the Ministry of Education (MoE) and the Swiss Foundation for Technical Cooperation (Swisscontact) have jointly agreed to establish a National Vocational Qualification System (NVQS) project. The NVQS project which will be under the MoE, will be implemented by the Council for Technical Education and Vocational Training (CTEVT) / National Skills Testing Board ((NSTB). Swisscontact will provide the technical assistance.

The NVQS project, which is slated to stretch over a period of ten years, will provide a gateway into jobs for more than 500,000 youths who enter the labour market yearly.

While praising the new initiative, Bishwo Prakash Pandit, secretary at MoE said, “Nepal needs economic growth in order to utlise its resources and only skills help to prioritise the development agenda of the country.”

Rs 60 billion for TIA Expansion
The long-awaited expansion of Tribhuvan International Airport (TIA) will start sometime in 2016, said TIA General Manager Dewanand Upadhyay. A French consultancy firm is working on the design of the project which is backed by a Rs 60 billion loan and grant from the Asian Development Bank (ADB).

The increasing pressure from the rising number of travellers and the current space limitations at the airport have had an impact on passenger convenience, said Upadhyay, admitting that though the number of passengers has more than doubled over the years, the services, facilities and airport security has remained the same.

The current TIA building was constructed in 2002 to handle around 1400 passengers at peak hours. A project to expand the airport in 2010 to handle the increase in passenger volume –up to 2460 passenger at peak hours- is still underway and has been extended till 2018 owing to different reasons.

Started as a long-term upgradation programme, the new expansion project aims to enable the airport to serve 3600 passenger at peak hours, according to Upadhyay. He said the new airport building is going to be built to the north of the current building. The expanded airport will be spread across 90,000 sq meters and will have parking space for 20 international airplanes and 42 domestic planes.

Six boarding bridges will also be constructed and modern pipelines will be used to fuel airplanes. After the expansion, the airport will be extended to Gaushala in the north and Koteshowr in the south. The current international terminal will be transformed into the domestic terminal after the new airport is built by 2028, said Upadhya.

Compulsory Solar Energy at Urban Homes
To find a solution to the energy crisis gripping the country, the government is preparing to make it mandatory for urban homes to install solar roof-top systems. According to sources, the Ministry of Federal Affairs and Local Development (MoFALD) will soon direct all local bodies not to grant building permits and not to approve the design (blueprint) of government offices, public, commercial and corporate buildings that do not incorporate plans to install solar roof-top systems.

A joint meeting of MoFALD officials and representatives from the Kathmandu Metropolitan City and Alternative Energy Promotion Centre recently reached this conclusion, said the source.

If the system is implemented then the building construction cost will rise slightly. “It costs Rs 100,000 to 120,000 to install solar panels of 500W capacity,” says Gopi Krishna Khanal, joint secretary at the ministry, adding “Those who can invest millions of rupees to construct their homes should not hesitate for this little spending.”

The main source of domestic energy in Nepal is electricity but the supply of electricity is far less than the demand, leading to long hours of load-shedding. “This is why the government is encouraging the use of alternative energy,” said Khanal.

According to Khanal, each private home built in urban areas will have to install a solar roof-top system of 500W capacity. Similarly, the concerned local bodies will approve the blueprint of government, commercial and corporate buildings only if the applicant agrees in writing to generate at least 25 per cent of total energy it consumes a day or 1,500 watt, whichever is higher, through installation of solar roof-top systems. If all goes well, installation of such solar roof-top systems is expected to generate around 20MW of electricity. The power generated thus can also be connected to the national grid to reduce load-shedding during peak hours.

The country has one metropolitan city, 12 sub-metropolitan cities, 217 municipalities and 3,157 village development committees. The government has pledged to promote solar power in the budget for fiscal year 2015-16. It has also assured of purchasing excess electricity generated by government, commercial and public buildings using solar roof-top systems.

NTB Gets CEO after Four Years
Nepal Tourism Board (NTB) has finally got a new Chief Executive Officer (CEO) after a four-year gap. A NTB board meeting held under the chairmanship of the Secretary of the Ministry of Tourism, Culture and Civil Aviation, Dinesh Thapaliya appointed Deepak Raj Joshi as the new CEO.

The board selected Joshi as the most eligible candidate. The other two contenders for the post were Gyaneshwor Prasad Singh Mahato and Gyanendra Ratna Tuladhar. Joshi got 39.5 votes and will now lead the NTB for the next four years.

The position of CEO had remained vacant at NTB since November 2011, after the then CEO Prachanda Man Shrestha completed his tenure.  

“We are highly motivated this time because despite the blockade and the crisis, 61 teams have registered for the competition,” he added.

FM to Coordinate Energy, Irrigation and Road Construction Projects
The Finance Ministry (FM) has said it will coordinate with the relevant government bodies for the effective implementation of energy, irrigation and road projects of national pride. As these projects have been moving very slow, the ministry will coordinate the construction work of such projects, according to Finance Secretary Lok Darshan Regmi.

“We are focusing on the building of infrastructures for a prosperous economy and industrialisation of the country. For that, we are going for the effective implementation of these projects, he said, “It will increase the government’s capital expenditure and at the same time help to create capital.” Regmi added that the finance ministry will give priority to such projects while allocating budget.

In the current fiscal year, most of these projects are interrupted by the April 25 earthquake, Terai unrest and India’s unofficial blockade. As of Dec 5, the government has been able to spend only Rs 9.93 billion or 4.76 percent of total development budget. The government has not been able to send the money as the construction works of such projects have been halted because of the lack of fuel and construction material. The government has allocated Rs 200.8 billion as capital expenditure also known as development budget.

RTI President Inaugurates 3 New Tables in Kathmandu
Round Table International (RTI) President, Tabler Altaf Jeevunjee, along with the RTI board, inaugurated three new tables in Kathmandu on Nov 28, a press release from Round Table Nepal (RTN) said. The 3 new tables are Kathmandu Knights Round Table, Kathmandu Saints Round Table and Kathmandu Titans Round Table.

The day before the inauguration, on Nov 27, the National Executives Meeting along with the Charter for a new table - Kathmandu Royals Round Table 23 - was held at Soaltee Crowne Plaza in the presence of the RTI Board, which was also followed by a fellowship event.

RTN is a part of the RTI. At present there are 22 tables in Nepal. Working under the motto, Freedom Through Education, RTN is focused on building schools in rural Nepal. After the earthquake, RTN started to re-construct around 100 classrooms in various schools in Nuwakot.

In 2016, RTN will host the Round Table International World Meet in Kathmandu. The four-day event will start on Aug 31 and end on Sept 4. Around 400 members from various parts of the world will be attending the mega event.

Syakar’s Give a Lift Campaign
Syakar Trading Company, the authorised distributor of Honda Cars, Motorcycles, and Scooters in Nepal, has initiated a CSR campaign to address the current crisis in the country. The campaign titled “Jimmewar Nepali Ma: Seat Khali Chha” tries to manage, organise and encourage the lift giving/taking trend that has been growing in the country. The company said it will be distributing free "Seat Khali Chha" badges to the willing volunteers.

According to the company, any volunteer willing to take part in the "Seat Khali Chha" campaign may put this badge on the mirror of their motorcycles or scooters, or on the windscreens of their cars (through a hassle-free clipping method). Syakar Company has also stated that these badges for cars, motorcycles, and scooters are available at the authorised distributors of Honda inside the Kathmandu Valley. Furthermore, these badges may also be downloaded from Honda Facebook page for temporary use.

Gems Wins Real School of Nepal Award
Gems Higher Secondary School has won the title of “Real School of Nepal 2015”. Bal Kalyan Bidya Mandir and Reliance International School stood second and third, respectively. With the award, Gems received a cash prize of Rs 100,000 and Rs 10,000 scholarships for each of the participating students. The second and third placed schools each won Rs 50,000 and Rs 25,000 respectively with participating students getting a scholarship worth Rs 5,000 and Rs 3,000 respectively.

TeliaSonera Sells Holding in Ncell
TeliaSonera has agreed to sell its 60.4 percent ownership in Ncell to Axiata, one of Asia’s largest telecommunication groups, for USD 1,030 million on a cash and debt free basis. At the same time, TeliaSonera will dissolve its economic interests in the 20 percent local ownership and receive approximately USD 48 million, said a press release from the company. The transactions are conditional on each other.

“In September we announced our ambition to reduce our presence in our seven Eurasian markets and focus on our operations in the Nordics and Baltics, within the strategy of creating the new TeliaSonera. Today, I am very pleased to announce a first step and proof point in this reshaping of TeliaSonera. I am also glad to see Axiata as a new owner. That gives me comfort that our dedicated employees are in good hands when taking Ncell to the next level,” said Johan Dennelind, TeliaSonera’s President and CEO.

Axiata has more than 260 million customers and 25,000 employees. Ncell will complement its portfolio of Asian telecommunications assets, which includes operations in Malaysia, Indonesia, Sri Lanka, Bangladesh, Cambodia, India, Singapore and Pakistan. Axiata, which is listed on the Malaysian stock exchange, is a reputable company with a strong focus and expertise in South Asia and is also a long-term investor contributing to development and advancements of the countries it operates in.

The press release stated that TeliaSonera divests its direct ownership of 60.4 percent to Axiata for USD 1,030 million on an cash and debt free basis, Ncell had a net cash position of approximately USD 284 million, after purchase price adjustments, as of September 30, 2015, and TeliaSonera will be paid for the cash position at closing in proportion to its economic interest of 80.4 percent.

As part of the divestment of Ncell to Axiata, TeliaSonera will dissolve its economic interests in the 20 percent local ownership and will receive approximately USD 48 million from Sunivera Capital Ventures Pte Ltd, a Singapore registered company. One Bhavana Singh Shrestha has been chosen by Axiata as local partner. As part of the transaction, Visor will sell its 19.6 percent of Ncell to Axiata.

According to the release, the deal is subject to approval from Department of Industries in Nepal, Nepal's Telecom Authority, Malaysian Central Bank and Axiata’s shareholders, respectively. Closing of the transaction is expected to take place in the first half of 2016.

Meanwhile, a press release from Axiata said, "Through its wholly-owned subsidiary, Axiata Investments (UK) Limited, Axiata has entered into a conditional sale and purchase agreement with TeliaSonera UTA Holdings B.V. and SEA Telecom Investments B.V. for the 100% acquisition of Reynolds Holdings Limited (Reynolds). The acquisition of Reynolds for the purchase price of USD1.365 billion plus customary adjustments at closing, effectively secures Axiata an 80% equity interest and controlling stake in Ncell."

Unnamed (VR) Wins Ncell App Camp 2015
Unnamed (VR) has won the Ncell App Camp 2015. The team also won under the ‘Games and Entertainment’ category. The startup won a total cash prize of Rs 750,000 (Rs 250,000 as category winner and the Rs 500,000 grand prize).
CEO of Ncell Erim Taylanlar handed over the grand prize amid a function in Kathmandu. Unnamed (VR) is a 3D game in which the user is inside an old abandoned hospital haunted by ghosts. Earlier in December, Ncell had selected 24 teams for the final of the Ncell App Camp 2015. The teams included six each from four categories: Games and Entertainment, Health, Tourism and Utilities.

Ancients of Mandala, Arcube Games, Flipped, Lishn, Unnamed (VR) and Up had been selected as finalists under the Games and Entertainment category. In the Health category, there were Hamro Hospital, Mero Health, Mumma-Care, Naari, Skin Consult and Tele Medic as finalists. Six teams that found way into the finals by obtaining the highest scores under Tourism were Food Nepal, Nepali Coders/ Arts & Crafts, PinPeaks, Thingsle, Trail It and Travel Auctioneer.

Similarly, 8 Byte/ Ghum Gham, Bulletin Board (Quiddity), Drop Me Here-my Cab, Nidaar, NTyles, Pangraz were selected as finalists under the Utilities category. The 24 teams also received one-to-one mentorship on developing a business model, improving user interface and experience, and pitching their ideas.

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