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The Confederation of Nepalese Industries (CNI), with a focus on infrastructure and energy development, has successfully concluded its flagship initiative, the “CNI Budget Watch” program. Launched three years ago with the objective of making a constructive contribution toward effective implementation of the government budget, the initiative saw the third Budget Watch program of the current fiscal year organized on Monday, February 8.

Organized in collaboration with the Nepal Economic Journalists’ Association (SEJON), the program featured a brief presentation by SEJON President Bhagwat Bhattarai on a study report assessing the progress of government budget implementation up to the second quarter (six months) of the current fiscal year. SEJON has been preparing such study reports by reviewing the quarterly progress of issues included in the “Budget Watch” booklet, which CNI publishes by compiling a total of 74 points related to economic sectors covered in the budget of the current fiscal year. According to the report, by the end of the second quarter, nine points had been fully implemented, 45 showed partial progress, and 20 remained at zero progress.

By the end of the second quarter, the government’s capital expenditure stood at only 12 percent, the weakest performance in the past decade except for the earthquake year and the year immediately following it. SEJON’s study report pointed out that the government’s spending performance has been disappointing largely due to weak implementation of budget-announced projects under key ministries with the highest capital expenditure - namely physical infrastructure, energy, and urban development. Of the 14 points related to energy, infrastructure, and urban development included under Budget Watch, only three have been fully implemented, eight show partial progress, and three remain at zero progress.

Chief guest of the program, Keshav Kumar Sharma, Secretary at the Ministry of Physical Infrastructure and Transport, stated that achieving a fundamental improvement in budget implementation would require changes to Nepal’s budget formulation framework itself. Noting that budget implementation faces challenges every year, he emphasized the need for structural reform in the way budgets are prepared.

Secretary Sharma also expressed the view that projects entered into the project bank should be included only after completing necessary pre-preparations. He pointed out that projects are often placed in the project bank without adequate preparation, leading to implementation problems even after they are included in the budget.

On the occasion, Ganesh Karki, President of the Independent Power Producers’ Association of Nepal (IPPAN), said that although the current fiscal year’s budget stated that the “take-and-pay” provision for energy producers had been removed, this change has not been reflected in written form. He also noted that the budget mentioned entering into power purchase agreements (PPAs) in the solar energy sector and that some initial steps have been taken.

President Karki further stated that although the Electricity Regulatory Commission issued the Electricity Transmission and Distribution Open Access Directive, 2082, with the objective of implementing open access in the electricity system, there is still a lack of clarity regarding how it will be implemented in practice.

Chair of CNI’s Infrastructure Committee and infrastructure expert Ram Krishna Khatiwada emphasized that, to attract the private sector to the development of major infrastructure projects other than energy, the government itself must invest at the outset. “For every one rupee spent by the government, the private sector is spending four rupees. But unless the government spends first, the private sector is not encouraged to invest,” he said.

CNI President Birendra Raj Pandey remarked that incorporating private-sector suggestions during budget formulation generates optimism, but slow implementation at the execution stage leads to disappointment. “Many policy-level suggestions from the private sector are included in the budget, which excites us, but when it comes to implementation, it has remained extremely weak. This disappoints us,” he said.

The event was also attended by CNI Vice President Rohit Gupta, Director General Dr. Ghanshyam Ojha, and others.

Urjasanchar