The government has started work to construct a special economic zone (Sez) in Panchkhal, Kavrepalanchok district and recently finalised its detailed project report.

A budget of Rs4 billion has been allocated for the proposed industrial zone which is designed to facilitate the production of goods that can be exported to China.

The proposed Sez in Panchkhal is one of seven industrial zones which the government has planned to set up in each of the seven provinces. These facilities will also be built in Biratnagar, Simara, Gorkha, Bhairahawa, Jumla and Dhangadhi.

The government has aimed to promote the manufacture of export oriented goods by building these zones. While the Sez in Bhairahawa has already been brought into operation, construction work on a garment processing zone as part of the Sez in Simara has started.

Sez Development Committee Executive Director Chandika Prasad Bhatta said they had begun the process of building the Panchkhal Sez. According to him, the proposed construction site is located 3 km from the bus park at Panchkhal. The Sez will be able to accommodate around 80 production units. “There will be 80 plots in the zone,” Bhatta added.

China has been expressing interest in constructing a Sez in Nepal. During a 2016 visit to China, the then prime minister KP Sharma Oli had asked the northern neighbour to invest in the construction of a Sez. Bhatta said the government had planned to request China to build the Sez in Panchkhal.

The Sez is expected to provide hassle-free production services to the country’s manufacturing and export industries. The Legislative Parliament in August 2016 had approved the Sez Act which has barred workers in the Sez to carry out any sort of banda, protest or revolt that could cause financial loss to the production businesses there. The Sez is also expected to reduce the cost of production by providing the necessary facilities and one-stop service to factories. Meanwhile, lack of adequate power supply has hindered the Bhairahawa Sez from going into full-fledged operation. “Although a number of firms have taken approval to set up production units inside the Sez, they are reluctant to start operations due to this reason,” Bhatta said. Currently, a three-phase line being provided by Nepal Electricity Authority (NEA) has been supplying electricity to the Sez while a 10 MW dedicated power supply would be required to operate the factories on all 69 plots.

The NEA has been working to upgrade the transmission line and substation to be able to supply adequate power to the Sez with support from the Asian Development Bank. Shree Ram Pokharel, chief of the NEA’s Butwal Grid Division, said they would be upgrading the Butwal-Bhairahawa 132 kVA double-circuit transmission line. “We have planned to install a 33/11 kV substation at Dharadhagi in Bhairahawa to supply power to the Sez,” Pokharel said. Upgrading the transmission line and building a new substation is expected to take at least one and a half years.