A “development law” intended to remove obstacles to infrastructure projects


The government had set 660 milestones to be achieved during the last fiscal year 2020-2021 by development projects implemented by various ministries and agencies.

But, according to the prime minister’s office, only 233 or 35.3 percent of milestones were reached that year, suggesting a poor state of implementation of development projects. These were the objectives set for the physical infrastructure, energy, urban development, drinking water, communication and reconstruction projects.

For national priority projects, the government sets certain priorities each year to be respected and these are considered crucial to ensure the completion of the projects.

Even of the targets achieved, just over half arrived on time.

But up to 40.3 percent of those milestones were met after the deadline expired while 5.2 percent were met before the deadline, according to the Annual report 2020-21 of the Prime Minister’s Office.

This conclusion of the report, which was prepared on the basis of the unified monitoring system of the Prime Minister’s Office, underlined the persistent slowness in the implementation of development projects. In order to remedy the delay in the implementation of development projects, the government is preparing to introduce a new “development law”.

On December 3, Finance Minister Janardan Sharma said the government was working on a “development law” to help speed up development projects by addressing the challenges of land acquisition and environmental clearance, between others.

“Courts issue stay orders when anyone challenges the process of implementing projects large and small,” he said last Wednesday at the Silver Jubilee ceremony of the Nepal Economic Journalists Society. (Sejon).

“It takes years to acquire land and carry out an environmental impact study. There is therefore a need for a separate “law of development”.

Officials said the government plans to introduce laws to facilitate the implementation of large-scale transformational development projects.

In March 2019, the government tabled a bill on accelerating the implementation of the priority project at the national level in the House of Representatives, providing that the law would apply to projects estimated to cost more than 25 billion rupees each.

The proposed law would also be applicable for two- or four-lane roads with a length of at least 50 km, four-lane roads, roads with a tunnel of at least 2 km, international airports, hydroelectric projects. with a capacity of at least 200 MW, railways of at least 100 km in length or railways with an underground tunnel of 5 km, irrigation projects with an irrigation capacity of at least 20,000 hectares and drinking water projects with a pumping capacity of 100 million liters of water per day, and any infrastructure project requiring the use of state of the art technology.

The bill opened the door to the implementation of projects under different modalities, including the design and construction contract; engineering, procurement and construction contract; and engineering procurement, among others.

With the aim of facilitating the acquisition of land for projects, the bill contains a new provision which states that landowners must accept compensation or the price of land decided by more than 50 percent of landowners whose plots must be acquired by the project concerned. The implementation of the project will not be affected simply because a few landowners do not agree with the compensation offered to them, the bill says.

Minister Sharma did not say whether he was talking about the same bill or other laws the ministry was considering bringing forward. Ritesh Shakya, spokesperson for the finance ministry, however, said the government was discussing an amendment to the same 2019 bill and presenting it to parliament.

“As discussions are still in their infancy, nothing has been clear about the amendment,” Shakya said.

The government’s move comes at a time when its capital spending has remained low even after the budget presentation date was brought forward to Jestha 15 [around May-end] in the constitution promulgated in 2015 to give the government time to prepare for the new fiscal year, which begins in mid-July.

According to the Ministry of Finance, capital spending in the last fiscal year was 64.7 percentt, an improvement from 46.3% in fiscal year 2019-2020.

Even though government agencies over the past two years have blamed the Covid-19 pandemic for the disruption of development activities, government capital spending, even in the years leading up to the pandemic, was unsatisfactory.

For example, in fiscal year 2017-18, the government was able to spend only 66.9% of the allocated investment budget and spending in fiscal year 2018-19 represented 76.9% of the allocation total, according to the wpaper hite on the economy published by the Minister of Finance in August.

But experts also hold divergent views on the need for separate laws to speed up development projects.

Chandan Sapkota, an economist, said a separate law is needed to help accelerate the implementation of “national pride projects” and transformational and strategic projects.

“There have been discussions about introducing such a law targeting large projects for more than five years but nothing has been done yet,” he said, adding that there should also be an institutional mechanism to enforce the law.

Currently, the implementation of most national pride projects is progressing steadily. But the government has also introduced laws to help speed up such projects in addition to setting the budget submission date in the constitution itself.

For example, the government introduced the Financial Procedures and Fiscal Responsibility Act of 2019, which aims to hold government officials accountable for bad spending, and it also allowed the government to withdraw the budget from underperforming projects. Preparations are also underway to introduce a new law on public procurement. But economist Keshav Acharya says that only the introduction of new development laws would not solve the problems encountered in the execution of development projects.

“There is also a risk of duplication of the law and the new law contradicting other existing laws, which can lead to other problems,” he said. “My recommendation is that the government pass a single but infallible law to govern the infrastructure projects sector.”

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