'This alternative development finance fund is sought to mobilize and manage resources from outside the government's treasury'
What you should know
Deputy Prime Minister and Minister of Finance Bishnu Prasad Paudel has said that since the aspirations of the citizens for development and prosperity cannot be fulfilled by spending from the government's account alone, new laws are needed to find alternative sources and gain profits from them.
Finance Minister Poudel said that this bill is needed to advance development work outside of the government's account during the discussion on the 'Bill, 2082 to make arrangements regarding the mobilization of alternative development finance' in Monday's meeting of the Finance Committee under the House of Representatives.
'This alternative development finance fund is sought to mobilize and manage resources from outside the government's treasury . After the establishment of this fund as a law, we will select profitable projects and build and manage them," Finance Minister Paudel said. Its main purpose is profit.'
The finance committee has added to the bill that it can invest in agriculture, forest production and mining and mineral sector from the alternative development finance fund. According to the bill, alternative sources of finance can be used for the construction of power generation, transmission and distribution projects, roads, railways, airports, tunnels, industrial development infrastructure (special economic zones, industrial parks, dry ports or information technology parks).
Similarly, it is said that such funds will be mobilized for the construction and operation of structures such as urban development infrastructure, cable cars, ropeways, and podways. The fund can also invest in national priority projects under public-private partnership implemented by the private sector.
However, it is mentioned in the bill that the project with a cost estimate of less than one billion cannot be invested from the fund. The Finance Committee has also maintained this provision. Similarly, the fund will not invest in a project that cannot give immediate returns, a project that cannot provide collateral for a loan or guarantee, a project that demands a loan by keeping a bond or debenture as collateral or a guarantee, a project that is executed by a natural person .
Similarly, the bill also stipulates that investments cannot be made in projects implemented by firms, companies or organizations that are basic share holders, partners, directors or members of the fund's incumbent director or chief executive officer or at least three years before such officer is reinstated .
The government has introduced this bill saying that in addition to traditional investment, alternative finance is necessary to implement essential infrastructure projects for the country's prosperity, sustainable development and productivity growth. It is mentioned in the bill that alternative finance can be mobilized through various financial or monetary instruments including various types of bonds, letters of guarantee, and equity funds. According to the
bill, the authorized capital of the fund will be one billion and the paid-up capital will be 25 billion. The proposal to invest 51 percent of the Nepalese government's share equal to 12 billion 75 crores has been made in the bill. Government of Nepal, international financial institutions or foreign banks or financial institutions, employee provident fund, citizen investment fund, social security fund, insurance company can invest in the fund. The Finance Committee has added a provision in the bill that the state government and local level can also purchase shares of the fund.
