NRA seeks renegotiation of Indian creditThe National Reconstruction Authority has written to the Finance Ministry, asking it to take initiatives for converting the $750 million Indian line of credit for post-earthquake reconstruction to an unconditional loan arguing that the amount would not be utilised fully within the NRA’s tenure.
The National Reconstruction Authority has written to the Finance Ministry, asking it to take initiatives for converting the $750 million Indian line of credit for post-earthquake reconstruction to an unconditional loan arguing that the amount would not be utilised fully within the NRA’s tenure.
Ahead of Indian Prime Minister Narendra Modi’s visit to Nepal on Friday, the NRA wrote to the ministry to renegotiate the terms of the aid. NRA officials are of the view that the long procedure of preparing the detailed project report and getting approval from several Nepali and Indian agencies would be time consuming, making it impossible for the NRA to fully utilise the amount pledged for reconstruction. The NRA’s tenure ends in December 2020.
Of the total $1 billion pledged by India, $250 million is grant. “We’ve written to the ministry to renegotiate the terms, enabling the NRA to utilise the loan as it suits us,” a senior NRA official said.
Under the Line of Credit signed between the Nepal government and the Export-Import Bank of India (Exim Bank) on September 16, 2016, there should be 75 percent Indian components including plant, machinery, equipment and services while it is 50 percent Indian components in civil works. Only Indian contractors participate in the bidding process as it passes multiple agencies including Nepal’s Finance Ministry, Foreign Ministry, Indian Embassy, Indian Foreign Ministry and Exim Bank to get approval for a certain reconstruction project.
“We communicated to the ministry about the difficulty in utilising the Indian loan under the current provision of agreement because of the long time it takes to get approval for reconstruction project,” said NRA Spokesman Yam Lal Bhusal. Currently, the NRA has identified projects including rebuilding of Hariharbhawan, a library at Balmiki Vidyapeeth and about half a dozen buildings of Tribhuvan Universality in Kirtipur with Indian aid.
“We have submitted a detailed project report of Hariharbhawan and the Balmiki Vidyapeeth library to the Indian Embassy,” said an NRA official. “We are awaiting the DPR of TU buildings which will be reconstructed under a single package.” Additional projects were yet to be identified.
An NRA official said they would not be able to spend more than $100 million of the credit in the given terms. A Finance Ministry official confirmed receipt of the letter, saying that they had held initial discussion on the matter.