MADESH FRONT WORKING TO EXPAND

MADESH FRONT WORKING TO EXPAND
Kathmandu, 22 March: A front of Madeshbadi parties is
wooing parties outside it and government to join it, RSS reports.
The front met Wednesday.
The front is wooing Upendra Yadav of MJFN, Anil Jha of NSP
and others.
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UML STANDING TO DETERMINE OFFICIAL POLICYON PROVINCS
Kathmandu, 22 March: A meeting of the UML standing
committee is being convened to formulate party policy on a
federal structure.
A report of a government commission on a federation will be
presented at the constituent assembly Sunday.
The standing committee is expected o meet in another 10 days.
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GOVT. ASSUAGES THREE GORGES’ CONCERNS
Kathmandu, 22 March: The Ministry of Energy today [Wednesday]wrote to China Three Gorges International Corporation, four days after the Chinese company sought information on developments regarding the West Seti Hydro Project for which it had signed a Memorandum of Understanding with the ministry recently, The Himalayan Times reports.

According to Energy Ministry Spokesperson Arjun Karki, the ministry in the letter has informed the Chinese company that discussions at the parliamentary committee were but a regular phenomenon and that there was no need to worry.

The Chinese firm had expressed its concern following discussions at the parliamentary Natural Resources and Means Committee regarding the MoU, during which lawmakers had not only raised some questions, including why the government decided to grant the project to the Chinese firm without calling for international bidding, but also had doubted whether there was any ill-intention involved. “We have written that the (House) committee will take a decision in favour of the MoU rather than complicating the whole process,” said Karki.

The House panel on Monday said it would reach a decision regarding the project in 10 days.

The Energy Ministry today also replied to the parliamentary committee, which had raised 16 questions regarding the MoU. The ministry has said the MoU was signed as per the existing laws and that there was no ill-intention involved. “The ministry has said the understanding was reached as per the Clause 35 of Electricity Act 1992 which allows the government to grant any project to any developer that it finds eligible,” said a high-level source at the ministry, adding that in due course all the concerns raised by lawmakers will be addressed.

“Issues like Power Purchase Agreement, currency for PPA, dispute resolving agency and incentives to be given to the company will be discussed in future as MoU is not the perfect and final agreement; it’s just a common understanding to start work,” the letter has mentioned.

The 750 MW West Seti in the far-west region is the only ready-for-construction project with detailed project report already completed. “This project was granted to Snowy Mountain Energy Company 16 years ago in the same way it has been awarded to China Three Gorges. As there was the need of an urgent decision, the government accepted the proposal of the Chinese firm and the MoU was signed,” said Energy Secretary Hariram Koirala.

The Energy Ministry today said it would apprise the Chinese firm of the decision taken by the House committee in its next letter.
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SHARE PRICE CORRECTION AFFECTS BANKS’ RETURNS
Kathmandu, 22 March: The banking sector that is the key player in the share market in terms of volume and returns till date, is correctly priced, if one goes by the average price-to-earnings ratio (PE ratio) of the listed banks, though they might not be able to pay returns as compared to a few years back, Kuvera Chalise writes in The Himalayan Times..

The average PE ratio — that measures the price paid for a unit of share relative to the annual net income or profit earned by the company per unit — of the 25 listed banks stands at 17.60 times, which is the correct pricing. “It stood at 19.55 times in the second quarter of the last fiscal year.”

Similarly, a PE ratio under 10 means the stocks are underpriced. “But the current average PE ratio of 17.60 times means that shares of banks are correctly priced but they may not be able to pay dividends as compared to a few years back as other indicators do not support it,” said share market analyst Rabindra Bhattarai.

Investors should buy stocks that have a high return on assets and low price-to-earnings (PE) ratio, he added. Return on assets (RoE) — that reveals how profitable a company’s assets are in generating revenue — has come down to 1.21 per cent in the second quarter of the current fiscal year from 1.75 per cent during the same period in the last fiscal year.

Similarly, low PE ratio has not been able to made investors comfortable as other key indicators of listed banks, like earning per share, return on equity, capital adequacy ratio, cost of fund and non performing assets could not ensure equal dividend cheque compared to last fiscal year.

The measuring rod of the rate of return on shareholders’ equity of the common share holders, return on equity (RoE) has also come down to 11.54 per cent in the second quarter of this fiscal year from 17.17 per cent in the same period last year. It also revealed the efficiency of banks in generating profits from every unit of shareholders’ equity.

Similarly, earning per share — that is the amount of earnings per unit share — came down to an average of Rs 19.68 per unit in the second quarter of the current fiscal year as compared to Rs 25.98 per unit in the same period of the last fiscal year, which means shares could not earn as much as they earned thus investors will also get less returns.

Similarly, non performing assets (NPA) — that compels banks to make loan loss provisioning which hits their profits — has increased to 3.24 per cent from 2.49 per cent of the second quarter of last year, which means investors will get less dividends next year. NPA of some banks have reached the highest accepted level by the central bank, which will ban the banks to open new branches after they cross the minimum NPA level.

However, the capital adequacy ratio (CAR) has seen an increase to 14.04 per cent from 13.59 per cent of the second quarter of last fiscal year. The increase in capital adequacy ratio — that is a ratio of a bank’s capital to its risk to ensure that it can absorb a reasonable amount of loss and complies with statutory capital requirements — shows further growth possibility of the banks through lending, which has contracted lately.

The central bank’s data has revealed that banks have a liquidity of Rs 29 billion till March 12. High interest rate has made the private sector shy away from borrowing despite banks sitting on surplus liquidity.

Banks have been unable to lower the interest on lending due to high cost of fund, which has increased to 8.38 per cent from 7.39 per cent in the same period last year. The cost of fund that is the interest paid on deposits has also forced banks to lower new deposit rates.

The industry average not only helps investors take informed decisions while buying shares but also helps compare the players within the sector on where they stand.

• Indicators of listed banks

Indicators Unit This Year 6 Months Last Year 6 Months

Cost of Fund % 8.38 7.93

CAR % 14.04 13.59

RoE % 11.54 17.17

RoA % 1.21 1.75

NPA % 3.24 2.49

EPS Rs 19.68 25.98

PE Ratio Times 17.60* 19.55*

(*Machhapuchhchhre Bank (150 times), Kist Bank (84 times) and Sanima Bank (84 times) are omitted while calculating PE ratio as their very high PE ratio could distort the overall PE ratio average. The

indicators are an average of 25 listed banks only. Source: SRCS)
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GOVT. FOR ENDING IOC MONOPOLY

Kathmandu, March 22: In a bid to cultivate competition in petroleum exports to Nepal, the government is mulling over requesting India to allow it import fuel from any Indian oil marketing companies along with the present supplier - Indian Oil Corporation (IOC), Milan Mani Sharma writes in Republica..

Presently, Indian Oil Corporation (IOC) holds supply monopoly in the Nepali market.

Ministry of Commerce and Supplies (MoCS) is pushing the issue through Nepal Oil Corporation (NOC), which is presently holding talks with the IOC to review the bilateral Petroleum Supplying Agreement that expires on March 31.

“As existing bilateral agreement signed in 2007 already allows Nepal to import fuel from any countries, we see no point in India limiting oil supply authority to IOC alone,” said a highly placed MoCS official.

If required, we will also hold talks with India at the higher governmental level, said Lekh Raj Bhatta, Minister for Commerce and Supplies.

The government is raising the issue after Bharat Petroleum Corporation Limited (BPCL) - another state-owned oil marketing company (OMC) of India - formally approached the ministry, expressing interest to export petroleum products to Nepal.

Senior officials of the company had recently met with the top MoCS officials and expressed their interest personally.

“As addition of another supplier can put us in relatively comfortable position, both in terms of pricing and supplies, we have asked the company to submit a clear plan on how it plans to make supply to Nepal, among others,” said Bhatta.

This is not the first time BPCL showed interest to export fuel to Nepal. The company in 2010 had approached the Indian government to end IOC´s monopoly in exports to Nepal and open it to all oil marketing public sector undertakings.

Also BPCL is not just one company that is eying Nepal´s petroleum market. In late 2009, Essar Group -- a private petroleum group of India -- too had approached the MoCS for opening imports from private Indian suppliers as well.

Officials tagged such interest in Nepali market as ´pretty obvious´ as country´s petroleum consumption is fast growing and anticipated to touch Rs 100 billion in next one year, whereas it was just around Rs 30 billion in 2007. “Besides there is intense competition among Indian OMCs themselves,” said the source.

Presently, the Indian government has allowed only IOC to export petroleum products to Nepal without any payment of duty. And officials said formal approval of the Indian government was necessary to open imports from other Indian OMCs as only that would enable them to make supply at zero-duty facility.

Officials at the MoCS opine that Nepali consumers could witness dramatic changes fuel availability and pricing if Nepal could import fuel from multiple sources.

“Competition among exporters can instantly trigger competition in price, efficiency in supply logistics, enhance quality of supply and introduce wide array of efficient product line to serve the needs of different consumer groups,” said an official at NOC.

Given the potential that exporters are seeing in Nepal´s market, they even predicted that Nepal can effectively lure international players to tie up with any credible private players here to enter into imports and retailing business.

Unfortunately, the government has continued to push petroleum sector reforms on the backburner. Leave alone supply of quality fuel, it suggests consumers to be happy if they get as much fuel as they need.
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REBEL MAOIST LEADER DEMANDS CC DISSOLUTION TO END PARTY DISPUTE
Kathmandu, 22 March : In a clear manifestation of deepening intra-party crisis, the hard-line faction of the UCPN (Maoist) has turned down Chairman Pushpa Kamal Dahal´s request to resolve the dispute over the party´s policy at a central committee (CC)
meeting, Republica reports.

"There is no point in holding a CC meeting without settling other important issues," Maoist leader Netra Bikram Chand quoted Senior Vice-chairman Mohan Baidya, who leads the radical camp in the party, as telling Dahal during a meeting on Wednesday.

As per the decisions of the two-day meeting of the leaders from the party establishment, Dahal had decided to request Baidya to settle the dispute in a CC meeting, but Baidya rejected the proposal outright.

At the meeting at Dahal´s residence in Lazimpat, Baidya and Chand had criticized Dahal for not implementing the decisions of the last CC meeting to dissolve the government led by Baburam Bhattarai and formulate mass mobilization programs to formulate a "pro-people" constitution.

"I am not sure how things will move ahead. We are still discussing the issues," Chand said, adding that the chairman should first implement the decisions of the last CC meeting.

The dispute between the hardliners and the moderates has reached a peak in the UCPN (Maoist) with both the factions holding separate meetings.

With the constitution drafting deadline approaching fast, Dahal is hard-pressed to make compromises on peace and constitution drafting process. And that has soured the relations between Dahal and Baidya, who is against surrendering to parliamentary forces at the cost of the party´s ideological goals.

The two day meeting of the party establishment had decided to hold a formal CC meeting to take decisions on the peace and constitution drafting process even if the hardliners don´t participate. The hardliners had also held a separate meeting a few days back and announced public protests to topple the government.
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INRELATED INTERVIEW, CHAND CHARGES DAHAL FOR VIOLATION RULES
Maoist Standing Committee member Netra Bikram Chand is the right-hand man of Senior Vice-chairman Mohan Baidya. He talked to Republica´s Kiran Pun on the ongoing tussle within the party. Excerpts:

How do you view the separate gathering of the central committee (CC) members from the party establishment?

It can be viewed from two different angles. First, there is nothing wrong in holding such a meeting; we have the official policy to let the dissenting groups hold such meetings. But the flip side is that they have decided to call another CC meeting without implementing the decisions of the last CC meeting. It will be meaningless. Besides, any one faction alone doesn´t have the right to call a CC meeting; there must be consensus among all the factions. So the recent CC meeting has violated the party´s norms and principles.

The meeting has decided that the party stands no chance to stay united without your faction [led by Senior Vice-chairman Mohan Baidya] switching over to the line of peace and constitution. What is your response?

The terms ´peace´ and ´constitution´ are being used with malafide intent to damage our reputation. We have construed it as an attempt to force the lower class people to wage a war. What is “peace and constitution”, anyway? Who said we are against peace and constitution? We are concerned about the contents of the constitution and lasting peace. Peace and constitution should not serve the interests of the upper class alone. And we have justly raised the issues as per the party´s decisions. It is unfortunate that the party establishment is blaming us the way the NC and UML are blaming the chairman (Pushpa Kamal Dahal) and our whole party.

So, will you not participate in the forthcoming CC meeting?

As per the party statute, party general secretary (Ram Bahadur Thapa) alone has the authority to call a CC meeting. No particular faction has the right to do so. The decision of a faction to call a CC meeting is not valid.

Chairman Dahal reportedly told the CC members close to him that the line your faction has been floating will be appropriate only if you go back to war. What do you say?

It is strange that he said such a thing. I think it is meaningless and only a subjective interpretation of what we have been saying. Other parties have also been saying such things and we are used to hearing such things. We are only demanding the implementation of decisions taken by the last CC meeting.

Your faction claims that Dahal has been cheating you time and again. But why do you trust him time and again?

It is unfortunate that our understanding with him has not been implemented this time as well. We want the decisions to be implemented and we are pressing him for that.

Will the party remain united in future?

It will depend on how the intra-party discussions move ahead. Things will fall in line if the party decisions are implemented.
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