The Cabinet recently approved a bill governing public-private partnership and foreign direct investment projects that gives Investment Board Nepal new powers to approve schemes worth more than Rs6 billion. Currently, only investments of more than Rs10 billion come under the board’s purview as per the Investment Board Act which regulates its operation and functioning.

Apart from dealing with public-private partnership and foreign direct investment projects, the proposed legislation, which will supersede the Investment Board Act, will also determine how Investment Board Nepal is operated.

“We are in the process of tabling the new bill in Parliament,” said Ramesh Dhakal, secretary at the Prime Minister’s Office. “After the bill becomes law, Investment Board Nepal will handle investment proposals of more than Rs6 billion while the related ministries of the federal and provincial governments and local bodies will deal with investment proposals of less than that amount.”

The Finance Ministry had sent a draft bill that proposed allowing local bodies and provincial governments to approve investment proposals worth up to Rs2 billion and Rs4 billion respectively, but the Cabinet removed these provisions before approving it. According to Dhakal, local bodies and provincial governments will be allowed to approve investments by other laws.

According to sources at the Prime Minister’s Office and the Finance Ministry, Parliament is expected to pass the new legislation well before the Nepal Investment Summit slated for the last week of March. The government plans to present the new piece of legislation as a major legal reform to the foreign investors participating in the event in order to win their confidence to increase foreign direct investment in Nepal.

The new law, according to the Finance Ministry source, envisions establishing two wings at Investment Board Nepal—Public-Private Partnership Centre and Investment Centre. The role of the Public-Private Partnership Centre is to identify projects, manage public financing, control and oversee public-private partnership projects, develop a public-private partnership framework, advise and support agencies to implement public-private partnership projects, act as a knowledge centre and, in some cases, also work as a project bank. The Investment Centre will promote Nepal as an investment destination besides providing investment approvals.

As a majority of the infrastructure projects implemented by Investment Board Nepal are being developed under the public-private partnership model, the government wants to introduce the new law to replace the existing Investment Board Act, according to the source.