Siddhartha mutual fund to open today

KATHMANDU, NOV 28:

Siddhartha Mutual Fund’s New Fund Offer (NFO) — Siddhartha Investment Growth Scheme I — will be opened to general public starting tomorrow.

“Collection centres will start accepting applications from tomorrow and will be open till Sunday at the earliest,” said CEO of Siddhartha Capital Dhurba Timilsina.

This is the first mutual fund in a decade. The opening day of this mutual fund scheme coincides with the closing of the existing scheme — NCM Mutual Fund.

Nepse suspended NCM Mutual Fund’s trading from today following the completion of its 10-year tenure.

Siddhartha Capital –– a merchant banking subsidiary of Siddhartha Bank Ltd — will launch NFO of the close ended scheme named Siddhartha Investment Growth Scheme I worth Rs 400 million with a five-year tenure.

A unit of the scheme will be primarily priced at Rs 10, and according to the Mutual Fund Guidelines 2069, a single investor has to buy a minimum of 100 units. A single unit holder can obtain 10 per cent of the offer at maximum. The units will later be listed at Nepal Stock Exchange for secondary trading.

“The company is planning to allot the fund units to the applicants within the next 20 days, to start buying the securities as soon as possible,” pointed out Timilsina.

Siddhartha Capital has appointed 100 collection centres across Nepal. Branches of Siddhartha Bank, Growmore Merchant Banker, Western Development Bank and Goodwill Finance will work as collection centres, covering the major cities and towns.

The mutual fund is estimated to offer eight per cent dividend to unit holders in the first year and increase the amount in subsequent years to up to 13 per cent till the end of its tenure, but it can change depending on market conditions.

Source: THT

Inflation moderates, BoP surplus shrinks

KATHMANDU, Nov 28. 2012

Inflation eased to 10.5 percent in October from 11.2 percent in September, as prices of food items, like cereal grains, legume varieties and fruits, coupled with communications cost fell.

Prices of cereal grains and their products, which command a weight of 14.81 percent in the inflation basket, came down by 0.2 percent in mid-October compared to a month ago, while prices of legume varieties and fruits fell by 1.1 percent and 4.9 percent, respectively, Nepal Rastra Bank´s latest macroeconomic report shows. Communications cost too dropped by 0.2 percent during the period.

These reductions backed by prices of sugar, sweets, alcoholic beverage and tobacco products that did not change over the month helped inflation to moderate in mid-October. Also, costs of housing, transport and education remained unchanged over the month which did not exert upward pressure on the consumer price index.

The central bank report shows consumer prices rose 11.1 percent in the hilly region, the most in all three regions of the country, followed by 10.8 percent in the Tarai and 9.7 percent in Kathmandu Valley.

BoP Situation

The overall balance of payment (BoP) surplus fell to Rs 347.3 million in the first three months of the current fiscal year, as against a surplus of Rs 33.66 billion recorded in the same period last fiscal year.

The contraction in surplus came as current account posted a deficit of Rs 2.94 billion in the three-month period this fiscal year as against a current account deficit of Rs 13.82 billion in the same period last fiscal year. "The current account deficit was reported due to a substantial rise in imports of merchandise and service”," NRB report says.

The fall in BoP surplus was triggered by net service income deficit of Rs 2.47 billion in the three-month period as against a surplus of Rs 3.29 billion recorded in the same period last year. However, 25.5 percent growth in net transfers to Rs 110.42 billion in the period partially offset pressure created by current account and net service income deficits.

Under net transfers, remittances sent by Nepalis working abroad rose 28.8 percent to Rs 97.72 billion. Nepal also received foreign direct investment of Rs 2.05 billion in the three-month period.

Forex reserve

Despite hike in remittances, gross foreign exchange reserves shrunk 2.2 percent to Rs 429.95 billion in mid-October from Rs 439.46 billion in mid-July 2012. However, in terms of US dollar, the forex reserves expanded by 2.5 percent to US$ 5.08 billion in mid-October.
On the basis of import trend seen in the first three months of the current fiscal year, the existing reserve is sufficient for financing merchandise imports of 9.7 months and merchandise and service imports of 8.2 months, according to the central bank

Source: Republica

ADB raises eyebrow over Nepal's insufficient project readiness

KATHMANDU, Nov 28, 2012

Nepal failed to capitalize on loans and grants allocated by the Asian Development Bank (ADB) for the country in 2012 as bureaucratic feet-dragging and insufficient government budget led to delay in contract awarding and fund disbursement processes, an ADB review shows.

The Manila-based regional development bank allotted US$171.1 million for the purpose of awarding contracts for Nepal in 2012 and another $117.8 million for disbursement purpose. But the country met mere 40 percent of the target set for contract awards and 62 percent for fund disbursement purpose as of November 23.

Since there is only a month left for the year to end, it is believed the gap between annual target and real achievements cannot be narrowed substantially in the coming days, leaving much of the funds separated for different sectors unused.

This kind of performance is expected to hamper development initiatives of Nepal, eventually creating the pressure on economy.
“At the moment, the country´s capital investment is less than what is required. The country needs to enhance public investments substantially, in terms of both quantity and quality, in order to go into a much higher growth trajectory of 7-8 percent per annum,” Kenichi Yokoyama, country director of ADB Nepal Resident Mission, said while delivering opening remarks at the two-day Country Portfolio Review Workshop which kicked off in Kathmandu on Tuesday.

Nepal´s performance was highly praised by the ADB in 2011 when the country met 93 percent of the target of $246.5 million set for contract award purpose. During the year, the country also attained 97 percent of the target of $216.2 million set for fund disbursement.
The ADB considers 100 percent contract awards and disbursement of 20 percent of funds within first year of project approval as an idle practice. But in case of Nepal it takes over two years to award 25 percent of the total contracts and similar amount of time to disburse 10 percent of the funds allocated for disbursement purpose, ADB report shows.

“These delays are basically caused because of insufficient project readiness,” Priyantha DC Wijayatunga, chief of portfolio management unit at ADB Nepal, said.

For instance, the government takes an average of four months to sign a project agreement and another three and half months to make them effective, ADB report shows.

“A lot of time is spent on preparing bidding documents and completing other bureaucratic formalities. These factors prevent us from disbursing the amount needed for approved projects in time,” Wijayatunga said.

In case of 2012, the introduction of one-third budget also affected many projects, as it prevented the government from providing counterpart fund - money that the state has pledged to contribute in donor agency-supported projects.

ADB report shows energy related projects were the most affected in 2012 as only 37 percent of $15.02 million allocated for disbursement purpose was actually given away. Transport and communications sector also bore the brunt as only 41 percent of 20.39 million allotted for disbursement was actually distributed.

“2012 was a challenging year. We hope the ongoing workshop will discuss these issues and come up with viable actions to improve portfolio performance in terms of timely and quality implementation,” Yokoyama said.



ADB awards best projects

The Asian Development Bank has awarded three projects in recognition of their excellence in delivering results and for improving lives of the rural poor. The Rural Reconstruction and Rehabilitation Sector Project, the Subregional Transport Enhancement Project and the Secondary Town Integrated Urban Environmental Improvement Project were given the awards amidst a function held in Kathmandu on Tuesday. All of these projects are supported by the ADB.

“The awards recognize the project teams´ strong performance, efficiency in implementation and achievement of targets,” said Kenichi Yokoyama, country director of ADB Nepal Resident Mission. ”The successful implementation of these projects has significantly contributed toward maximizing ADB´s overall contribution to helping reduce poverty in the country, and in supporting efforts to promote sustainable development.”

Source: Republica

More than a dozen international firms keen on 80MW diesel plant

KATHMANDU, NOV 28 - 2012

More than a dozen international firms have shown interest in setting up an 80 MW diesel plant that the government proposed to establish under its load shedding reduction action plan.

According to Nepal Electricity Authority (NEA) sources, a total of nine bidders have so far purchased the bid documents, while another eight international firms have enquired about the bidding process.

NEA had invited sealed bids through international competitive bidding from eligible The manufacturer/contractor on November 12. In the bid notice, the NEA had said that the bidder would operate and maintain the power plant for five years and hand it over to the authority after that period.

Ram Chandra Pandey, general manager of NEA’s Generation Construction Division, said that among the bidders, three are Chinese and one each from Singapore, Australia, England, Dubai, the US and India. Bidders from Iran, Nepal, Hong Kong and Russia, among others have also been making inquiry to submit their bid document.

“We have been receiving overwhelming responses from international bidders,” said Pandey. “Given the overwhelming trend of the last few days, we believe there will be more than 25 bidders till the bid closing date.”

The bidders can buy bidding documents till December 11 and they have to submit the documents by December 12. “Once we collect the documents from bidders, we will begin to evaluate them,” said Pandey adding, that the evaluation process will be completed within three weeks at maximum.

Each bid document is being sold at Rs 30,000 as per the NEA bylaws, which has fixed the form charge at Rs 30,000 for any contract worth more than Rs 100 million.

A board meeting of the NEA had decided to install the generating plant in two phases—the first one will have a capacity of 36 MW and the other with 44 MW.

While the NEA announcement of tender suggests the diesel plant purchase process has gained some momentum, there are doubts at some quarters of the NEA and the Energy Ministry over the successful implementation of the plan. “As there is no mention of the project’s funding in two-thirds budget, how could it be purchased?” said a ministry official.

On the other hand, NEA employees unions—the Employees Association and the Employees Union—have launched a protest against the government’s plan to purchase the power generation plant, claiming it financially unviable. The NEA estimates the power plant to cost Rs 9.80 billion. “Those involved in the diesel plant purchasing process are clueless as to how they will generate the required amount at a time when the budget appears to have no plan for any new projects,” said an NEA source.

According to him, it would cost around Rs 30 to generate a unit of energy from diesel plant—much expensive than Rs 7 that the NEA is currently charging its customers. “The proposed plant will result in an additional loss of Rs 23 per unit to the NEA,” he warned.

Pandey, however, ruled out funding crisis for the project, saying that a Cabinet meeting had already decided to allocate Rs 9 billion to implement the Load Shedding Reduction Action Plan. “Around Rs 3 billion has been allotted to initiate the diesel plant buying process.”

 

 

Source: The Kathmandu Post

Two airlines eye struggling Agni Air

KATHMANDU, NOV 28 - 2012

Debt-ridden Agni Air is in ‘serious talks’ with prospective buyers. Multiple sources said two airline companies—Yeti Airlines Domestic Pvt Ltd and Swift Air Nepal—are in the race to acquire the struggling domestic carrier.

The airline is currently grappling with multiple problems—huge bank loans, staff payment dues, landing and parking charge dues to Tribhuvan International Airport.

Sources say Agni Air had initially priced its entire property and aircraft at Rs 1 billion. However, given the mounting pressure from lenders, it has now lowered the price to Rs 850 million, a source said.

Tuesday’s talks failed to reach a conclusion over the price. “The negotiation will continue on Wednesday,” said an Agni Air official on condition of anonymity. According to sources, one of the prospective buyers had offered Rs 620 million during Tuesday’s talks.

Officials from Agni’s lenders were also present during the talks. Three banks and financial institutions—Sunrise Bank, Grand Bank and International Leasing and Finance Company—had given loans to the airline. “The loans stand around Rs 650 million,” said the source, adding the deal could be finalised within a week.

Started in 2006, Agni Air owns five aircraft—three Jetstream 41 and two Dornier. However, only one aircraft—Dornier—is in airworthiness condition. Other four aircraft have remained grounded due to technical glitches.

Two weeks ago, the Civil Aviation Authority of Nepal (CAAN) suspended the operation of Agni Air, citing its failure to settle fuel, landing and parking charges. CAAN officials said the airline’s owes around Rs 2.5 million to the Nepal Oil Corporation and around Rs 6 million to CAAN. The airline has not paid salaries worth Rs 10 million to its staff.

Agni’s woes began with the problems in the real estate sector, given its key promoter Sudhir Basent, one of big real estate players, defaulted huge loans taken from different banks and financial institutions.

Sensing the possible outflow of funds to pay other liabilities of Basnet, lenders of the airline had made a separate arrangement for the loan payment, excluding Basnet from the management team, according to a senior official of a lending bank. “As per the arrangement, Agni would have to pay the outstanding loans first from the income generated from its operation,” said the bank official.

In its heydays, Agni Air used to operate in eight destinations within the country, including mountain flights. In the first half of 2012, it stood third among the domestic airlines in terms of passenger carriage.

Source: The Kathmandu Post

NOC fails to implement PMO directive

KATHMANDU, NOV 27, 2012

The state-owned oil monopoly Nepal Oil Corporation (NOC) has found a good excuse to ignore implementation of two-colour cooking gas cylinder — red for domestic and blue for industrial purpose — as directed by Prime Minister’s Office (PMO) from tomorrow.

“The Nepal Oil Corporation cannot introduce different colour cylinder by tomorrow,” spokesperson at the Ministry of Commerce and Supplies (MoCS) Deepak Subedi, said, adding that NOC cannot bring the blue coloured cylinder on time due to standard provision of Nepal Bureau of Standards and Metrology (NBSM).

The blue colour Liquefied Petroleum Gas (LPG) cylinder — popularly known as cooking gas — cannot be produced unless the bureau will change its existing regulations, he quoted Nepal Oil Corporation acting managing director Suresh Kumar Agrawal as saying.

The process to change existing provision is a lengthy one, according to the ministry that wants the PMO to form a committee led by Industry Minister to amend the existing provision of Nepal Bureau of Standards and Metrology.

Earlier on November 20, Prime Minister’s Office had re-directed Nepal Oil Corporation strictly to implement the decision within a week or face the music.

The PMO’s deadline ends tomorrow but the corporation and traders have done nothing till date.

“Ministry of Commerce and Supplies had asked Ministry of Industry to give consent to amend the provision,” Subedi said, adding that they have asked for the consent of Ministry of Industry after Nepal Oil Corporation informed them of the legal hurdle in changing the colour of the cylinder.

The government had warned LPG traders that it would take action against them, if they failed to bring out blue and red colours cooking gas in the market within a week.

Earlier in July too, PMO had directed Nepal Oil Corporation to introduce cooking gas cylinders with separate colours for domestic and industrial purpose.

Despite frequent follow-up and direction to the ministry, NOC and traders, Ministry of Commerce and Supplies, they all have been reluctant in reforming the petroleum sector.

Cooking gas usage increases 

The number of households using cooking gas has increased by three times in the last one decade, decreasing dependency on firewood. According to a new census, 21.03 per cent of households use cooking gas, compared to 7.67 per cent in 2001.

Earlier, in 2001, families using firewood stood at 65.20 per cent, which has now decreased to 64 per cent. Families using kerosene, guitha (dry cow or buffalo dunk), gobargas (mithen gas derived from cow and buffalo dung) and electricity are one per cent, 10.4 per cent, 2.4 per cent and 0.1 per cent respectively.

Source: THT

NT to distribute new mobile lines by July next year

KATHMANDU, Nov 27- 2012

Nepal Telecom (NT) is distributing the new mobile lines starting from the end of the current fiscal year.

While the delay in the implementation of the Package A (5.2 million GSM lines) continues, NT is gearing up for the timely completion of the Package B (4.8 million GSM lines) of the mega project of 10 million GSM lines to address the growing demand.

According to NT, the equipment delivery for many areas of the capital has been completed and installation has begun. “We will be able to distribute new lines by the end of the current fiscal year,” a senior official at NT said.

Chinese vendor Huawei had signed the agreement with NT about five months ago to supply and install the equipment, completing the project of 4.8 million GSM lines by mid-2014. As the lowest bidder, the vendor had bagged the contract for Rs 6.75 billion earlier this year.

Although the operator had invited tender for the mega project more than a year ago, it failed to start on time following the enquiries from Commission for the Investigation of Abuse of Authority (CIAA) and later various legal and administrative continued to delay the implementation of remaining lines. As a result of the delay, NT is left with limited stock of SIM cards and shrinking marketshare.

After the completion of Package-B, NT will be capable of distributing lines in Bagmati, Dhualagir and Gandaki zone. “Currently we are issuing SIM cards by enhancing the existing networks as we are running out of stock. Unless we hand over the 5.2 million GSM lines to the vendor immediately, it will be very hard for us to manage the demand,” the official added.

Although ZTE had agreed to work on 5.2 million GSM lines, it later declined citing the high cost. The other bidder Ericsson also turned down NT´s offer. Although Huawei is positive about implementing the remaining lines, the NT board is yet to make final decision on this issue.

Pramod Gurung, one of the board members said, “We are aware about the consequences of the delay and are positive about handing over the project at the earliest.”

Source: Republica

Gold traded at record price

KATHMANDU, NOV 26, 2012

The price of gold jumped by Rs 1,000 on a single day’s trading, pushing its price to another high in the domestic market.

Gold reached another record at Rs 61,850 per tola (11.664 grams) today. It had hit Rs 61,760 per tola in early September, following the US Federal Reserve’s announcement of a monetary stimulus package.

“The dollar has become weak which has led to an increase in gold price even here,” pointed out president of Nepal Gold and Silver Dealers’ Association Tej Ratna Shakya.

The increased gold price has also been fuelled by the ongoing gold shortage in the market. “We have requested authorities to increase the import quota of gold from 15 kg per day but so far nothing has been done,” he said. According to bullion traders, at present, daily demand for gold is as high as 35 kg per day.

Price of gold crossed $1,745 in the international commodities market after the dollar index fell against a basket of other currencies. The weaker dollar propelled investor confidence in gold.

Moreover, central banks worldwide are purchasing more and more gold which has shot the demand up even among smaller investors.

The central banks that have been buying gold in recent years include Russia, Mexico, South Korea, Thailand, India, China and lately Brazil.

Source: THT

Blacklisting floor set at Rs 1 million

KATHMANDU, NOV 26-2012

Borrowers defaulting on loans of as less as Rs one million will now be blacklisted by the Credit Information bureau (CIB).

Nepal Rastra Bank (NRB) issued a circular today saying that financial institutions should blacklist defaulted loans of Rs one million or more. According to the earlier regulation, the floor was fixed at Rs 2.5 million.

NRB’s move to reduce the blacklisting default amount will increase the number of people and firms listed in CIB’s blacklist. There are 2,691 borrowers that are in the CIB’s blacklist as of now. CIB blacklists borrowers within 15 days of a financial institution’s request.

Likewise, from now on, financial institutions need to provide CIB with details regarding all loans permitted by the financial institutions exceeding Rs one million in principle amount within 15 days. In addition, information about the loans that are not repaid within 90 days of the repayment deadline also needs to be provided to CIB within 15 days of the deadline. In this case too, earlier only loans amounting to Rs 2.5 million needed to be reported promptly to CIB.

Borrowers that have failed to pay the principle amount for more than one year of

the deadline, or were found to have misused the borrowed amount can be blacklisted by CIB. Likewise, borrowers not in contact or who are bankrupt will also get blacklisted.

Being blacklisted makes the borrower — any person or firm — ineligible for acquiring or rescheduling any new loan from any financial institution, not even credit card. Such blacklisted people cannot even become a guarantor for other loans. Moreover, such blacklisted people will also be ineligible to be a director of any publicly listed company.

Source: THT

Civil Bank to float primary shares on Dec 10

KATHMANDU, NOV 26 - 2012

Civil Bank said that it will float primary shares to the public on December 10.

“The bank, which is on the verge of issuing shares to the general public, has been organising interaction programmes at various places across the country,” said chief executive Kishore Maharjan. The 30th commercial bank of the country will issue eight million units of shares worth Rs 800 million.

Currently, 26 commercial banks have listed over 510.77 million units of shares at Nepal Stock Exchange (Nepse), with a total paid up value of over Rs 51.07 billion. Civil Bank will be the 27th commercial bank to list its shares at Nepse that is dominated by banks and financial institutions due to the dismal performance of manufacturing companies.

There are still five commercial banks that need to float primary shares to the public according to the central bank regulation.

The secondary market is currently showing favourable signs for investment and Civil Bank’s issue is also expected to provide a good opportunity to small and medium investors, said Maharjan, adding that the capital market is expected to garner attention from the general public towards primary shares after the issuance of shares of Civil Bank that posted an operating profit of Rs 35.6 million in the first quarter of the current fiscal year.

The bank was able to mobilise deposits worth Rs 10.3 billion and disburse loans and advances worth Rs 9.24 billion during the period.

The bank — that is issuing the second largest public offering after Agriculture Development Bank — has appointed Citizens Investment Trust, NCM Capital Markets, ACE Capital Markets and Nabil Investment as issue managers for its Initial Public Offering (IPO).

Civil Bank — that has successfully completed its second year of operation — has a total of 15 branches spread across prime locations of the country.

The interaction programme in Pokhara today saw the participation of respected personalities from the industrial and commercial sectors of the country including enthusiasts of the share market. It will organise another interaction in Birgunj tomorrow.

Source: THT

Nabil eSecure card service launched

KATHMANDU, NOV 26 - 2012

Nabil Bank on Sunday launched Nabil eSecure, a value addition to its card service which enables users to carry out internet shopping in a secured environment.

According to Nabil Bank, it is the first bank to provide e-commerce facility with three-domain (3-D) secure service. The 3-D secure service provides users a password to protect their online transactions like the PIN used at ATMs.

A bank official said that they have offered the service in association with Visa and MasterCard. “We have used technical guidelines from Visa and MasterCard to provide this service, and it almost eliminates the possibility of fraudulent transactions,” said CEO Anil Gyawali. There are no web portals in Nepal accepting payment through the card, but users can enjoy shopping at Indian vendors, according to Niraj Sharma, head, card division at Nabil. “However, US dollar cardholders can use their cards throughout the world,” said Sharma.

With the introduction of this service, around 200,000 debit cardholders and 20,000 credit cardholders of the bank can enjoy the privileges of internet shopping, the bank said. They can purchase goods and services like railway and airline tickets and book hotel rooms and tour packages, among other things, over the internet.

Source: The Kathmandu Post

NRB: NHCL to settle all cheques from mid-December

KATHMANDU, NOV 25 - 2012

Nepal Rastra Bank (NRB) has announced it would stop clearing and settlement of cheques from banks and financial institutions (BFIs) begining mid-December and that all BFIs have to switch to Nepal Clearing House Limited (NHCL) for electronic clearing of their cheques.

The NHCL has been carrying out electronic cheque clearing of its memers, while the central bank has been clearing and settling the cheques of those who have not yet become member of the NHCL. While all the commercial banks have taken membership of the NHCL, only 19 development banks and 18 finance companies have been clearing and settling their cheques through the NHCL.

NRB spokesperson Bhasker Mani Gnawali said that the NRB about two months ago had issued a circular, asking all BFIs to become NHCL member by December 16 for clearing and settlement of cheques.

Under the manual settlement, financial institution (presenting bank) collects the cheque of other institutions (paying bank) and take them to the NRB for settlement, which takes up to two days. On the contrary, for electronic settlement the presenting bank scans cheques and send them to the NHCL, which forwards them to the paying bank. The paying bank, after verifying the signature and other details, sends them back to the NHCL, which then forward them to the NRB for the final settlement. According to the NHCL, the entire process is completed in real time.

Neelesh Man Singh Pradhan, CEO of the NHCL, claimed the number of financial institutions (FIs) approaching it was increasing by the day and that the remaining FIs would become its members.

In a bid to accommodate a large number of BFIs in their system, the NHCL recently upgraded its system and software and the upgraded infrastructure has been in use for the past one week. “Currently, we are clearing and settling 8,108 cheques on average daily,” said Pradhan. “With the upgradtion we can provide facility to all the players of Nepali financial sectors.”

The NHCL was established about four years ago in the joint ownership of 23 commercial banks, two development banks, Nepal Rastra Bank (NRB) and Smart Choice Technologies (SCT) in order to switch the manual clearing into electronic system. However, it came into operation only a year ago as its operation was halted by the Commission for Investigation of Abuse of Authority (CIAA) to investigate over alleged misappropriation during the software procurement.

Some bankers had expressed strong reservation over the high cost at which the software was purchased as the cost associated is ultimately transferred to the member BFIs.

Source: The Kathmandu Post