The Finance Ministry and Investment Board Nepal (IBN) are preparing laws that may conflict with each other, giving a fine example of lack of coordination between government agencies. While IBN is working to amend the Investment Board Act, the Finance Ministry has prepared a draft Public Private Partnership (PPP) Act to regulate the board’s operation.

The draft PPP Act envisions the establishment of two wings at IBN — PPP Centre and Investment Center — each to be led by a director who will report to the CEO.

The role of the PPP Centre as per the new act is to identify projects, manage public financing, control and oversee PPP projects, develop PPP framework, advise and support agencies to implement PPP projects, act as a knowledge centre and, in some cases, also work as a project bank.

Similarly, the Investment Centre will promote Nepal as an investment destination besides providing investment approvals. The act also includes the existing provisions in the Investment Board Act.

As a majority of the infrastructure projects implemented by IBN are being developed under the PPP model, the Finance Ministry believes that the PPP Act should supersede the existing Investment Board Act, according a highly placed source at the ministry. The new act is being created to implement PPP projects via a one-door policy as envisioned by this fiscal year’s budget statement, the source added.

Currently, the Finance Ministry is preparing to hold consultations with key stakeholders before sending the act to the Cabinet for its approval so that it can be tabled in Parliament.

Amid these developments, a recent meeting of the IBN board of directors vice-chaired by Finance Minister Yubraj Khatiwada decided to amend the Investment Board Act to smoothen the board’s operation in the future.

This is not the first time that IBN and the Finance Ministry have engaged in actions contradicting each other. Presenting the federal budget for this fiscal year on May 29, Finance Minister Khatiwada said that construction work on the West Seti Hydropower Project would be started by mobilising internal resources.

However, in the first week of June, IBN refuted the government’s claim saying that there had been no decision to scrap the pact signed with China Three Gorges Corporation (CTGC), the potential developer of the 750 MW reservoir-type project.

Highly-placed government sources said the IBN statement came as a damage control move after the Chinese side expressed concern over the budget statement. Nevertheless, it was a clear example of how lack of coordination creates confusion among state agencies and international investors.