Plan to permit FDI in poultry rejected

KATHMANDU, APR 26 - 2013

The Industry Ministry’s plan to open the poultry sector to foreign direct investment ( FDI ) has run aground after being rejected by the Cabinet’s Infrastructure and Development Committee. The proposal had been presented to the Cabinet last February by the then Industry Minister Anil Kumar Jha.

A meeting of the Infrastructure and Development Committee held a week ago decided that it would not consider plans tabled by the previous government unless the present government makes a fresh proposal. The Cabinet’s approval is mandatory as the Foreign Investment and Technology Transfer Act (FITTA) 1992 has barred FDI in 23 sectors, including the poultry sector.

“Though the committee has asked the ministry to submit the proposal with a minister-level decision, we have no desire to do so at present,” said Industry Secretary Krishna Gyanwali. He added that the ministry had been dissuaded from re-sending the proposal by the uproar from local poultry entrepreneurs against allowing foreign investment.

Poultry entrepreneurs have been up in arms against the ministry’s plan to withdraw the ban on foreign investment in the sector. A group of entrepreneurs belonging to the Nepal Poultry Association had also submitted a memorandum to the ministry asking it to revoke the decision. They have accused the ministry of reaching a decision without holding extensive consultations with them. The Industry Ministry has defended its decision saying that opening the sector to FDI would bring improved breeds, modern technology, generate employment and enhance the quality of local meat products.

The ministry said it planned to allow foreign capital in a joint venture model with foreign companies being allowed to hold a maximum share of 75 percent. They would have to make a minimum investment of Rs 500 million, and their poultry farm would have to keep at least 200,000 chicks. The ministry said it also planned to introduce a strict standard to ensure that FDI would not hamper domestic entrepreneurs.

The association said there are around 10,000 small and big poultry farms in the country. Around Rs 32 billion has been invested in the sector, which has an annual turnover of Rs 60 billion.

According to a Nepal Rastra Bank (NRB) study, Chitwan district is the largest producer of chicken meat in the country with a share of 35 percent. The district is also the largest egg producer, accounting for 60 percent of the total production.

“Though the decision had been taken to attract FDI in the poultry sector with the view of making it more competitive and professional, the Cabinet’s rejection of the proposal and protests by entrepreneurs have discouraged the ministry from going forward with this idea,” said Dhruba Raj Rajbanshi, director general of the Industry Department.

Source: The Kathmandu Post

Renewable energy to make products competitive

KATHMANDU, MAY 31, 2012

Financing in sustainable and renewable energy will help reduce the cost of production and dependency on fossil fuels making domestic products more competitive, according to a study.

“It provides cover for the rising cost of fuel,” said ‘Sustainable Energy Finance Market Study for Financial Sector in Nepal’ carried out by the SouthAsia Enterprise Development Facility, managed by International Finance Corporation (IFC) in partnership with the UK Department for International Development and the Norwegian Agency for Development Cooperation.

The study, that has analysed the current energy use pattern by the industries and identified areas where financial institutions can invest for greater efficiency, reported that the country can save around $9.02 million — from the selected industries — with the adaptation of energy efficient methods.

Currently, domestic industries consume more energy, which could be reduced bringing their operation cost down, said the report that has studied some 265 industries — 72 large, 154 medium and 39 small — including cement, brick, steel, food and beverage, paper and pulp, poultry and feed, tourism, dairy and tea.

The country had imported petroleum products worth Rs 67.38 billion in the first nine months (mid-May) of the current fiscal year against imports of Rs 52.35 billion in the same period of last fiscal year. The increasing dependency on fossil fuel due to lack of energy required for industries has increased the cost of production of the domestic industries making Nepali products

less competitive in both domestic and international markets. According to the Environment Sector Programme Support, domestic industries can save up to 30 per cent of energy costs by implementing energy efficient measures alone.

There is also a significant investment potential estimated at some $17.92 million for energy efficient and renewable energy projects in the country’s 10 selected industrial sectors, the report concluded, adding that the payback period is also comparatively less, a little over two years for equipment and technology change, process modification, installation of modern technologies and fuel switching, whereas for retrofit options it will be upto two years only.

With the study, IFC targeted financial institutions to help develop sustainable energy lending business.

Together with energy service providers and end-users, the project aims at making sustainable energy projects bankable by carrying out energy audits too. With IFC’s support in building capacity for proposal evaluation, loan product development and due diligence, Clean Energy Development Bank specifically is launching a unique sustainable energy financing product, the first such offering by any financial institution in Nepal. ”Clean Energy Development Bank invites all stakeholders to join the Sustainable Energy Finance initiative to tackle the energy crisis responsibly and effectively,” said chairman of the bank Manoj Goyal. “Promoting energy efficiency is particularly significant in the country which is completely dependent on petroleum imports,” he said, adding that additionally, unreliable grid power supply forces plants to use expensive diesel generators.

“Energy is a major priority for industrial growth,” said IFC programme manager Thelma Tajirian, adding that the sustainable energy finance market study will help financial institutions make strategic decisions in the new market and spur the private sector to take the lead in clean and sustainable economic development.

Similarly, head of energy finance of IFC Pavol Vajda said that the developing world could move up towards higher income generating countries by using efficient energy forms and not just traditional energy sources. “As energy is a key economic driver, its efficient use will boost GDP,” he said.

Source: THT