LIFE NORMAL IN CAPITAL; BUT CLOSURES CONTINUE IN TERAI Kathmandu, 19 May: Life returned to normal Saturday in the capital after a series ofstrikes during the week. But closures continued in the terai were nearly half a dozen vehicles were vandalized. The broader Madesh front of Upendra Yadaav, chairman of MJFN, and Tharu community closed down thesouthern region bordering India. nnnn US CALLS FOR COMPROMISE FOR CONSTITUTION Kathmandu, 19 May US State Department spokesperson Victoria Nuland has said all parties have demonstrated a willingness to make the difficult compromises while progress was made in constitution drafting. A statement issued said compromise was necessary to reconcile the concerns of Nepal’s different communities and advance the interests of the nation as a whole. “In the coming days, we urge all the political parties and interest groups to move forward in this spirit of compromise, expressing their views peacefully and respecting the rights of others,” the statement said. The US, said the statement, was confident that the parties would continue to make progress and successfully complete work on a constitution that safeguards rights of all citizens reaffirming national commitment to creating a representative and democratic Nepal. A basic law has to be promulgated by 27 May nnnn BANK PROFITS DROP 16 PERCENT Kathmandu, 19 May: The net profit of commercial banks dipped 16.01 percent and at least two banks posted net loss in the first nine months of the current financial year, as the process of recovering debt absorbed by the now stagnant real estate sector moved ahead at a tardy pace, Rupak D Sharma writes in Republica. . The unaudited financial reports published by 32 commercial banks till Friday showed category ´A´ financial institutions generated a net profit of Rs 9.14 billion in the nine-month period till April 12 compared with Rs 10.88 billion in the same period last fiscal year. The reports of top five private banks in terms of assets show mixed results. For instance, Nabil posted a profit of Rs 1.12 billion, up 19 percent, while Standard Chartered and Nepal SBI scooped up Rs 850 million and Rs 319 million in profit, a hike of 1.62 percent and 0.65 percent, respectively. Profits of two other top five banks - Himalayan and Nepal Investment - however, dropped 14.34 percent and 16.53 percent to Rs 570.22 million and Rs 801 million respectively. The worst performers in the nine-month period were Kist Bank, which reported a net loss of Rs 153.73 million, and Century Bank, which was Rs 36.20 million in red. “Profits of most of the banks shrunk in the review period and some even posted losses as they had to allocate bigger amount on loan loss provisioning as borrowers, especially those exposed to the real estate sector, failed to repay debts on time,” a renowned banker told Republica on condition of anonymity. The country´s real estate sector has absorbed around Rs 100 billion in bank loans so far, according to Nepal Rastra Bank. Any problem in recovery of this debt means banks have to provision up to 100 percent of the amount extended as loans, unless credits extended by the banks are insured. In the nine-month period, commercial banks allocated around Rs 5 billion for loan loss provisioning, from around Rs 4 billion in the same period last fiscal year, with Agricultural Development Bank Limited putting aside the highest amount (Rs 1.64 billion) for the purpose. Other banks such as Nabil assigned Rs 516.58 million and Standard Chartered Rs 144.40 million for provisioning. Along with hike in provisioning amount, the portion of bad debts also went up at commercial banks. On average, the proportion of non-performing loans (NPL) of banks to the total credit went up 10.28 percent to hit 2.82 percent. This means 2.82 percent of total loan extended by commercial banks has turned into bad debt - a term which is used to explain loans, whose installments have not been paid for more than a year. Some of the banks that saw the portion of NPL skyrocket in the third quarter were Sanima, NMB, Kist, Citizens and Kumari. Sanima Bank´s portion of bad debt, for instance, shot up 1,640 percent to 0.87 percent, while proportion of NPL at NMB Bank went up 889 percent to 2.77 percent. Likewise, Kist Bank reported NPL of 4.81 percent, up 651 percent, Citizens recorded bad debt proportion of 3.1 percent, up 588 percent, and Kumari Bank saw its NPL rise 312 percent to 4.46 percent. “The hike in portion of non-performing loans suggests additional money went into provisioning that ate into banks´ profitability,” the banker said. The profits of many banks also fell as they reported drop in interest income due to lethal combination of liquidity surplus and credit crunch. Citizens Bank is one such institution. Although the bank´s provisioning for possible losses also went up by over 100 percent, the bank said it was also hit hard by 14.29 percent drop in interest income. This happened after it attracted more money in forms of deposits but failed to give away this cash in form of loans to borrowers. “Because of this we spent too much amount paying interest on deposits parked in our bank,” Rajan Singh Bhandari, CEO of the bank, told Republica. Since banks make most of their income by borrowing money from customers at a cheaper rate and then distributing it in forms of loans at a higher rate, failure to draw borrowers can eat away their profits. nnnn ________________________________________ SAUDI PRINCESS AT EVEREST BASE CAMP FOR FIGHT AGAINST CANCER Kathmandu, 19 May: With the objective to raise awareness on breast cancer, team of 11 women led by Saudi Arabian Princess Reema Bander Al-Saud have trekked to Everest Base Camp, Republica reports. After completing the trek, Princess Reema said the expedition was first of its kind by the Saudi Arabian women and would attract attention globally, thereby facilitating dissemination of message on healthy lifestyle and measures to support early detection and timely treatment of cancer. “We are raising fund through t-shirts for our objective and we believe our expedition has helped in raising awareness,” Princess Reema, who is also founding member of Zahra Breast Cancer Association, told the press. According to a statement, every eighth women in Saudi Arabia are detected with breast cancer. nnnn ________________________________________ NEARLY 300 OF 601 JANAJATIS, MADESHI LAWMAKERS DEMAND IDENTIY-BASED FEDERATION Kathmandu, 19 May: 300 Janajati and Madhesi lawmakers belonging to the UCPN (Maoist), Nepali Congress, CPN-UML, Madhes-based parties and smaller parties in the Constituent Assembly have demanded the country be federated as suggested by the State Restructuring Commission majority or the CA State Restructuring Committee, The Kathmandu Post reports. The CA members on Friday launched a signature campaign to create pressure for identity-based federalism. According to Sadbhawana Party Co-chairman Laxman Lal Karna, both the Madhesi and Janjati lawmakers would like to ensure a two-thirds support for settling contentious issues of constitution-writing, especially to ensure identity-based federation. “We are preparing to hand over the signatures to the Dispute Resolution Subcommittee headed by Pushpa Kamal Dahal and Speaker Subas Nembang,” Karna said. UML lawmaker Prithivi Subba Gurung, who heads the Adibasi Janajati caucus in parliament, said the country should be federated on the basis of either the 14-state model suggested by the CA’s thematic committee or the 10-province model suggested by a majority of SRC members. “The federal set-up should ensure identity. And the issue of naming and delineation of states should be settled before constitution promulgation,” he said. According to Gurung, 192 lawmakers have signed the memorandum, which will be submitted to top political leaders and the CA chairman on Saturday. Madhesi and Janajati lawmakers have been opposing the 11-state model agreed among the three largest parties on Tuesday, claiming that the proposal was anti-federal and that it diluted the agenda of identity. Both the groups have prioritised identity-based federalism and creation of a maximum of two provinces in the southern plains. According to Karna, the Madhesi lawmakers are in favour of the SRC’s 10-state model. He informed that the Janjati lawmakers suggested endorsing the CA committee’s 14-state proposal. He said that Madhesi parties were open to the suggestion. A meeting of the Madhesi and Janajati lawmakers on Friday also demanded that representation in state organs, including parliament, be based on population. The meeting also demanded that the idea of priority, among others, should be ensured for the “suppressed” communities. Meanwhile, the Loktantrik Madhesi Sangathan of the CPN-UML has demanded that a maximum of two provinces be carved out in the Tarai. nnnn NO MONEY FOR ROAD WIDENING DRIVE Kathmandu, 19 May: Budget crunch has put the brakes on the much-talked road widening drive that was in full swing until a month ago, The Himalayan Times reports. The road expansion campaign, which had earned accolades from several quarters for it was aimed at giving relief to commuters who are usually stuck in traffic gridlock, has been suspended since April 13. The chief of the Kathmandu Valley Town Development Enforcement Committee Er Bhaikaji Tiwari, who was until April 13 quite a busy man, for more than a month now has been forced to twiddle his thumbs. After former Kathmandu mayor Keshav Sthapit took over as the commissioner of the Kathmandu Valley Development Authority, a high-power government mechanism tasked with ‘beautifying’ the Capital city, the campaign to demolish illegally built structures has come to a halt. Interestingly, the government was yet to release budget for KVTDEC which was authorised to carry out the road expansion drive. Tiwari said the government was yet to provide Rs 96.5 million the government had promised. “I am discouraged,” said Tiwari. On the other hand, officials at KVTDEC have not been paid their salary for the month of Baisakh. Like Tiwari, other 200 officials these days are sitting idle. Around 32.2 km of 400-km stretch of Kathmandu roads was expanded during the drive, and expansion of another 26.5 km of road was under way. While budget crunch has halted the campaign, the newly appointed Commissioner Sthapit seems to have different views on the whole issue. On the day Sthapit assumed office, he had taken exception to the way the roads were being expanded and had termed the entire demolition drive ‘inappropriate’. When asked what plan he has come up with, Sthapit said he was busy with ‘internal preparations’ and added that he was expecting budget disbursement and a new office by Sunday. The road expansion campaign has now hit a snag, but what is worrisome is heaps of debris collected during the demolition drive are making general public bathe in dust. Moreover, with the monsoon just round the corner, the problems are going to rain on pedestrians and commuters alike. The prime minister, it is learnt, had told authorities to clear the debris by mid-May in view of rainy season. But Chief at Kathmandu Valley Roads Expansion Project Shyam Kharel said it was impossible to do so before the monsoon as his office was crippled by frequent strikes and fuel shortage. Nnnn BANDH WILL HIKE FOOD PRICES Kathmandu, 19 May: The series of recent bandhs in the country is likely to disrupt food supply in the affected regions, thereby raising food prices in the coming Months, The Himalayan Times reports. “As a result of the rise in fuel prices, transport costs have increased by more than 5 per cent per tonne, and in addition, the continuous bandhs will push the prices further up in the region where imported foods play a significant role in determining prices in the market,” according to the joint report published by UN World Food Programme (WFP), Ministry of Agriculture and Co-operatives (MoAC), Federation of Nepalese Chambers of Commerce and Industries, and Consumer Interest Protection Forum. However, the higher production of winter crops as compared to last year can be expected to improve the food security situation in the country, says the report. The index of the food and beverage group increased by 4.2 per cent during the first eight months of the current fiscal year, according to the macroeconomic report published by Nepal Rastra Bank. Food price inflation stood at 17.3 per cent as compared to the corresponding period of the previous year. The index of non-food and services group increased by 9.4 per cent during the review period that stood at 5.3 per cent last year. The moderated food price inflation has even pulled the overall inflation to the target level of seven per cent. However, continued fuel price hikes and supply side disruptions have put price stability in danger. In the markets regularly monitored by MoAC and WFP, retail prices of most food commodities remained stable over the past one month, according to the report. Compared to January 2012, most prices showed a declining trend with a few exceptions of red potato and soyabean oil, in April. In April 2012, there were more than 10 bandhs organised by various political parties and organisations at both the local and national level. These bandhs affected supply situation –– far-western region has been affected the worst because of continuous strikes. In the review period, the price index of vegetables went up by 5.1 per cent in the eight months while it had increased by 73.1 per cent during the same period last year. Likewise, the price index of cereal grains decreased by 2.4 per cent during the review period as compared to an increase of 13.4 per cent in the same period of the previous year. The price index of milk products rose by the highest rate of 17.4 per cent during the review period as compared to an increase of 10.5 per cent in the same period of the last fiscal year. Nnnn IPPs GENERATING 12 PERCENT POWER Kathmandu, 19 May: Independent power producers (IPPs) have produced just 12 percent of the electricity pledged while signing power purchase agreements (PPA) with the Nepal Electricity Authority (NEA). As a majority of the hydropower projects that signed PPAs with the NEA are still under construction, there has been a limited supply of power from IPPs, according to the NEA, The Kathmandu Post reports. The NEA has signed PPAs with 100 hydropower projects with a pledged output of 1,491 MW. Only 50 of the projects have been producing and selling electricity which amounts to 181 MW, said the NEA. "Though we have signed PPAs for the required level of power for the country, a majority of the projects haven't come online," said Sher Singh Bhat, head of the Power Trade Department of NEA. Most of the PPAs were signed during the last two to three years and the IPPs have not completed the projects. According Bhat, the NEA singed around 45 percent of the PPAs in the last two to three years. Subarna Das Shrestha, president of the Independent Power Producers of Nepal (IPPAN), said that it was natural for power generation from the private sector to be low as most PPAs were signed in recent years. "As it takes a long time to start construction with the project required to do its financial closure, find a contractor, receive a generation license and get permission for cutting down trees, among others, it is natural to see low generation of power at the moment," he said. According to him, projects generating 150-180 MW are under construction while projects with a combined capacity of 300 MW are just doing their financial closure and preparing to start construction. The PPA rate was not attractive for independent power producers to invest in the sector as it had not been revised for a long time. With the country facing longer load-shedding hours, the NEA increased the PPA rate by 20 percent in June 2011 for projects whose capacity is less than 25 MW. IPPs presently get Rs 8.40 per unit during the summer and Rs 4.80 per unit during the rainy season. Earlier, the rate was Rs 7 and Rs 4 respectively. IPPs had long been demanding a hike in the PPA rate and their demands intensified as a liquidity crisis in the banking system last year increased interest rates forcing many projects to put construction on hold. More than two dozen projects demanded that they be declared sick industries and provided the support that the government gives them. After the PPA rate was hiked, IPPs have responded to the decision positively with the NEA signing PPAs for a combined output of 361.55 MW with 16 IPPs in the first nine months of the current fiscal year. The state-owned power utility body had signed PPAs for 261 MW of electricity with 11 IPPs during the same period last year. Of the 16 projects that signed agreements this year, 13 are below 25 MW capacity. The Rasuwa Gadhi Hydro Power Project is the largest at 111 MW, followed by the Middle Bhote Koshi (102 MW). Chilime Hydropower Company has signed an agreement for a combined 255.5 MW for the Middle Bhote Koshi, Rasuwa Gadhi and Sanjen projects. According to NEA officials, most of the projects with whom the NEA signed PPAs are conducting studies and technical analyses and preparing for construction. The Electricity Act 1992 opened the way for the private sector to invest in power generation. However, due to fears of losing their investment and lack of technical knowledge, private sector investors stayed away from investing in the hydropower sector initially. Nnnn