Investment Board Nepal (IBN) has signed a project investment agreement with Huaxin Cement Narayani to establish a $140 million cement plant in Nepal. As per the deal signed in Beijing by Maha Prasad Adhikari, CEO of IBN, and Xu Gang, vice-president of Huaxin Cement Co, in the presence of Prime Minister KP Sharma Oli, the joint venture company will build a factory in Dhading with a daily production capacity of 3,000 tonnes.

IBN initialed an accord with the Chinese joint venture company in December 2017 which had to be endorsed by the respective board of directors before the final agreement was signed. After getting the board’s go-ahead, IBN decided to sign the pact during the prime minister’s official visit to China.

A foreign investor wishing to develop private projects in Nepal needs to sign a project investment agreement with IBN. According to IBN, it is a ‘marketing document’ to show that Nepal has a conducive climate for foreign direct investment (FDI) and attract capital by providing facilities to potential foreign investors.

The agreement will also remind the government and the foreign venture of their obligations, and protect the interest of the foreign investor in Nepal. The pact will also assure that the foreign venture, despite the huge foreign investment, will be treated as a domestic company in Nepal.

Likewise, IBN is required to assist investors to get different types of approvals from various government agencies while establishing the factory. According to the agreement, the board will also link the project site with a transmission line and access road.

The board will help the concerned government agency to construct a 132 kV transmission line to supply 18 MW of electricity besides an access road connecting the project site with Prithvi Highway, as per the agreement.

The Chinese venture obtained the FDI approval from IBN in December 2015. The company was registered at the Company Registrar Office and the Department of Industry recently, making it eligible to bring funds to make payments to IBN to start negotiations.

According to regulations, investors have to pay a pre-negotiation and agreement execution fee of Rs100,000, or 0.2 percent of the project cost, whichever is higher. The company has already paid Rs29.65 million to IBN.

Huaxin Cement Narayani has already acquired a limestone mine, the key raw material needed to manufacture cement, at Panikharkha in Dhading. The factory will produce 3,000 tonnes of cement daily and create 1,000 jobs.

This is the second project investment agreement IBN has signed with a private company. Last September, the board signed the first such deal with Hongshi Shivam Cement. Hongshi Shivam’s $359.2 million plant located at Sardi in Nawalparasi district has started trial production. It plans to start commercial production within a month.