News Digest: Economy & Development (July 08 – 14, 2021)

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Nepal and India sign LoE to RSA-

Nepal and India have signed a Letter of Exchange (LoE) to the India-Nepal Rail Services Agreement (RSA) 2004. The signing which was done via a virtual meeting has updated several portions of the India-Nepal RSA to bring it in line with the latest operational and infrastructure status of Indian and Nepalese Railways. The LoE is anticipated to allow all authorized cargo train operators, including public and private container trains operators, automobile freight train operators, special freight train operators, and any other operator authorized by Indian Railways to utilize the Indian railway network to carry Nepal’s container and other freight services. The freight can be both bilateral between India and Nepal or third country via Indian seas ports. Similarly, wagons owned by Nepal Railway Company will also be authorized to carry Nepal-bound freight (inbound and outbound on Kolkata/Haldia to Biratnagar/Birjung routes) over Indian Railways network as per Indian Railways standards and procedures.

Exorbitant price hike in daily consumables-

Consumers are facing a sharp increase in market price of consumable goods since the offset of the nation-wide prohibitory orders. Nepal Oil Corporation (NOC) has been increasing the price of petroleum products in every 15 days as a price adjustment mechanism to the list sent by the Indian Oil Corporation (IOC). Currently price of petrol, kerosene, cooking gas, and domestic aviation fuel stand at NPR 129 per litre, NPR 112 per litre, NPR 1,425 per cylinder, and NPR 84 per litre, respectively. Similarly, price of daily consumables including vegetables like potatoes, cauliflower, green chilies, turnips, and coriander has skyrocketed. The Kalimati Fruits and Vegetables Market Development Committee has revealed that the price of vegetables has increased by 40 percent to 350 percent in the last 3 weeks. Likewise, Nepal Retail Trade Association has revealed soaring prices of rice, sugar, oil and lentils. The Department of Industry, Commerce, Supply and Consumer Protection has hinted at road blockades due to landslides and the heavy monsoon rains as the reason for price hike of daily consumables. Unstable weather, disruptions in supply chain, and increasing demand has also been factored in for the recent price hike.

Uncertainty over budget implementation-

The exit of Prime Minister KP Sharma Oli has cast uncertainty over the implementation of the national budget presented by the Oli-led government on May 29. Bishnu Poudel (the then Finance Minister) had announced a NPR 1.647 trillion budget through an ordinance. However, with the formation of a new government under Prime Minister Sher Bahadur Deuba (on July 13 three, days before budget implementation), questions have risen over whether to bring in a full-fledged budget or sort out the legal hassles in the implementation of the current one.

MoU signed to develop Lower Arun Hydroelectricity-

Investment Board of Nepal (IBN) has signed a memorandum of understanding (MoU) with India’s state owned SJVN Ltd to develop the 679-megawatt Lower Arun Hydroelectricity Project. The project, deemed as a green project and signed through international competitive bidding is anticipated to significantly reduce carbon offsets in the country. With a total building cost of USD 1,300, the project is scheduled to complete by 2025 and is expected to generate 2,625 gigawatt hours of electricity annually.

Stock market-

Nepal Stock Exchange Ltd (NEPSE) increased by 16.34 points to reach 2871.30 index points on the third trading day of the week, July 13. A total of 12.34 million shares of 223 companies were traded resulting in a turnover of NPR 5.54 billion during the same day. Similarly, Norvik International Hospital has been transformed into a public company. The decision was taken to increase the capital and capacity of the hospital and expand its services beyond the Valley by issuing primary ordinary shares to general investors. With this, Norvick Hospital has become the first company in the medical field to issue shares to the public; brining in 20 to 30 percent of its capital through public investment. Likewise, Terathum Hydropwer Company is preparing to issue 1,200,000 units of initial public offerings (IPO) with NIBL Ace Capital Ltd as its issue manager.

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