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Tag: Nepal Infrastructure Summit

OP-EDs and Columns

Nepal Needs to Invest in Climate-Resilient Infrastructure

– ANUSHA Basnet

The opinion piece originally appeared in the 2022 November Issue of New Business Age Magazine. Please read the original article here.

As a developing country in the global south, Nepal is one of the most vulnerable countries to climate change. Various reports have shown that it is often the lower-income countries that are at greater risk due to climate change as they have a lower capacity to adapt to the changes. While Nepal only contributes 0.027% of global greenhouse emissions, it is positioned high on the list of countries most vulnerable to the impact of climate change.

According to a report from the Asian Development Bank (ADB), Nepal could lose up to 2.2% of its annual GDP by 2050 due to the impact of climate change. The country has already begun to see the devastating effects of climate change like decreasing agricultural output, change in crop rotation, change in rainfall patterns leading to an increase in frequency of natural disasters including droughts, floods and landslides resulting in great loss of lives and properties. As a result, the government has been acting to ensure that the negative effects of climate change are minimised. The country is part of the Paris Climate Agreement and the government has been working to meet the Sustainable Development Goals by 2030. Investing in climate-resilient infrastructures is a major step that can be taken by the government to tackle this problem. Multilateral agencies such as the World Bank and the ADB have also been providing financial backing to the country for adaptation to climate change.

Climate-resilient infrastructure includes infrastructure that has been designed and built to prepare and adapt to the changing climate conditions. With climate-resilient infrastructure, the danger of risks emanating from climate-related disasters is reduced. It is important to note that building climate-resilient infrastructures will not completely stop the impact of climate change, but it will greatly mitigate the risks posed by climate change. In terms of impact from climate change, the rise in average temperature causing heat waves, the change in rainfall patterns leading to droughts, floods, and rainfall, and the threats of glacier lake outbursts are the few major threats that Nepal currently faces. The current and future infrastructures being built in the country should take these factors into account and build infrastructure that can minimise the damage caused by these threats. It is especially important for climate resiliency to be taken into account while developing new infrastructure projects because the government has been increasing investment in the infrastructure sector with an aim to accelerate the economic growth of the country.

Major infrastructure projects such as Nagdhunga tunnel, Sikta Irrigation Project and West Seti hydropower project are all under construction or are slated to start construction soon. If climate change effects are not taken into account for these projects, then the investment made into these projects may end up going to waste. Thus, factors such as the increase in temperature, the water level at river sources, and glacial movements should all be taken into account before starting these mega projects.

Climate resilience also includes the maintenance of the existing infrastructure so that they are less vulnerable to the impacts of climate change. Floods and landslides have been causing extensive damage to different infrastructure in the country. While rebuilding these damaged infrastructure, climate resilience should be taken into account. Some things that can be done include building proper drainage systems to decrease the impact of flooding, rebuilding roads that can withstand higher temperatures, and rebuilding residential buildings with adequate ventilation to combat the effects of rising temperatures. Building infrastructures that can support the growing population of urban areas including roads, proper drainage systems, and waste management systems was a major topic of discussion at the recently held Nepal Infrastructure Summit 2022.

As rising temperatures and subsequent droughts will increase the demand for water for irrigation and drinking purposes, reservoirs should be built to address these problems. The government should also increase the monitoring of the current infrastructure systems so that required maintenance can be done on time. The government and the private sector are also eyeing green hydrogen as an alternative to petroleum products and chemical fertilisers.

Multilateral partners have been providing support to Nepal for building infrastructures that are climate resilient. Recently, Nepal and the World Bank signed a concessional financing agreement for $100 million for Green, Resilient, and Inclusive Development (GRID) with an aim to support the sustainable and productive use of natural capital and resilience of urban and rural areas. Two further instalments of funds are slated to be available through this agreement. Asian Development Bank has also provided financial support to the government for tackling climate change. Last month, the bank provided $70 million in loans to improve livelihood and climate resilience of 30,000 horticulture farmers across five provinces. During his visit to Nepal in March 2022, ADB’s Director General for South Asia Kenichi Yokoyama mentioned that the bank would maintain financial support amounting to $500- 600 million per year for the next three years for supporting the government’s aim of achieving sustainable growth.

Although the government has taken steps to create climate-resilient infrastructure in the country much is yet to be done especially in regards to management of the climate resiliency of the existing infrastructure. In addition to focusing on the climate-resiliency of newer infrastructure projects, the government needs to create solution-oriented policies that can minimise the negative impact of climate change on existing infrastructure. Further, instead of just taking loans from the development partners, the government needs to find other sources of funding as the burden of paying the debt is ultimately passed on to citizens impacted by climate change.

The concept of climate reparations could be applied here. The concept is a call for money to be paid by Global North to Global South to address the historical and current contributions made by Global North to cause climate change. Thus, the Nepal government could evoke this concept to request the development partners to provide grants instead of loans to combat the negative impact of climate change. Mobilising domestic funding through implementation of green financing can also be another option of raising funds.

Research Commentaries

NRC0012 – Enabling Factors for Public-Private Partnership in Infrastructure in Nepal

Enabling Factors for Public-Private Partnership in Infrastructure in Nepal

Nirnaya Bhatta


The fanfare with which the Third Nepal Infrastructure Summit was organized during 11-12 September indicates a realization that public infrastructural goods unequivocally contribute to national development. Public-private partnership is gradually being considered as the modality of choice to implement large infrastructure projects in Nepal, as evidenced by the recently passed Public Private Partnership and Investment Act, 2018. Although, it is essential to understand the state of the enabling conditions that in are in place currently that could either contribute or hinder effective public-private partnership in infrastructure in Nepal. The EIU Infrascope Index that measures a country’s capacity to implement PPPs in infrastructure is a good reference point in this regard. This RC draws lessons from common literature on the subject that Nepal could consider in terms of improving its enabling environment to implement PPPs in infrastructure.

PPP in Infrastructure in Nepal

There is an increasing consensus across political parties, the civil service, the private sector and the donor agencies that Nepal needs to urgently make strides in its infrastructure development. Further, to operationalize implementation of infrastructure projects, for the right reasons, Public-private partnership (PPP) is gradually being considered as the right modality to achieve these ends. After all, developing nations such as Brazil, China, India, Malaysia and Indonesia, to name a few, have managed to upgrade national infrastructure through the effective applications of PPP arrangements.

Any development in promoting PPPs in infrastructure in Nepal must be lauded. Consider the direct relationship between investments spending and raise in gross domestic product (GDP). For instance, “the International Monetary Fund estimates that an increase of 1% in investment spending raises gross domestic product (GDP) by approximately 0.4% in the same year and by 1.5% in 4 years after the increase” (IMF, 2014).

The increased importance given to PPP in Nepal is further attested by its importance underlined during the Nepal Infrastructure Summit held last week, which comes after a month of the first India Nepal Logistics Summit. Further, the Federal Parliament passed the Public Private Partnership and Investment Act, 2018, which only demonstrates there is a growing realization among major policy stakeholders that Nepal needs better infrastructure as a start to also support the tourism, education as well as industrialization.

It is useful to closely look at the enabling as well as disabling conditions in Nepal that would affect implementation of PPPs in infrastructure. For instance, how willing is the private sector in Nepal and foreign investors to invest in Nepali infrastructure? And more important, how capacitated is the Nepali public sector to bring relevant parties on board? Considering the low number of PPPs in infrastructure in Nepal, as compared to most of Asia, it does seem like Nepal still needs to get some fundamental factors in place. Although, the new PPPI, 2018 Act that seeks to establish a PPP Unit within the Investment Board, Nepal, is exclusively mandated to oversee PPP infrastructural undertakings.

Infrastructure Ranking of Developing Asian Economies, 2017–2018

Source: World Economic Forum. 2017. Global Competitiveness Report 2017–2018

Why PPP in infrastructure?

The World Bank defines PPP as “a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance” (World Bank, 2018). There may not be a better way to cover the infrastructure gap than public and private sector working alongside each other. PPPs “have been an effective conduit to channel private capital and funds to address a broader development agenda” (Deep, Kim, & Lee, 2019).

The increasing preference of availing PPP is easily understood, as “Lee et al. (2018) projected that doubling PPP investment from 0.5% of GDP in 2015 to 1% generate additional 0.1 percentage points to GDP growth per capita across Asia and the Pacific” (Deep, Kim, & Lee, 2019).

Further, while the public sector has the capacity to be the guarantor and can mobilize the state apparatus, the private sector provides readily available capital, operational efficiency, innovation in project implementation, and managerial and technical skills. Most importantly, the public sector could afford to consider the welfare implications of projects proposed under PPP.

The Infrascope Index provides an immediate reference point for evaluation:

The Economist Intelligence Unit (EIU) provides a very handy and insightful tool known as the Infrascope Index which Nepali policy makers can immediately consider using as a guide to improve the countries enabling environment. The Infrascope index is a benchmarking tool that assesses a country’s implementation capacity to execute key infrastructure sectors through PPP in transport, electricity, water and solid waste management. Hence, it allows policy makers to quickly identify major hindrances “unlock the power of PPPs and support the broader development agenda”.

Unfortunately, Nepal is not included in the index as of now. Although, on the bright side, the index exclusively studies countries where the American agency Millennium Challenge Corporation (MCC) works in. As Nepal is one of the beneficiaries of MCC, it is likely that Nepal will be considered in this index after MCC’s projects start the construction of “313-kilometre-long 400 kVA high-voltage transmission lines and three high-capacity substations, including building 1,039 transmission line towers across the alignment, and build different road projects with a total length of 305 kilometres.” (The Himalayan Times, 2019)

Does Nepal’s public sector have the capacity to effectively implement PPPs?

While it is useful to explore if the public sector of Nepal is adequately competent to implement effective PPPs, it is also fair to question whether the private sector is. An excellent report by Asian Development Bank, that compares PPP in infrastructure across Asian economies states that, “Among major factors supporting PPP implementation, the following features are critical: coherent policy, public sector capacity to manage PPP appropriately, public sector willingness to have mutual relation with private partners, and leadership” (Deep, Kim, & Lee, 2019). The challenges to apply PPP in a large scale pertains to it is a complex system; requires specific and sufficient knowledge of financing structure, risks allocation, contract management, and disputes resolution; and the transaction process usually takes a long time to conclude” (Zen, 2018).

In Nepal, investments in the infrastructure sector are often misunderstood to mean merely construction. The actual work continues after construction has concluded, including how the infrastructure is managed and maintained, and identifying different collaborative mechanisms that would engage the private and public sector together. This points to the extraordinary role that the public sector needs to play as the private sector could not be expected to take primarily take the role of a custodian.

As per the index, the following indicators can be used to evaluate Nepal’s readiness and capacity to implement PPPs in infrastructure into five components:

  • Enabling laws and regulations
  • The institutional framework
  • Operational maturity
  • Investment and business climate
  • Financing facilities for infrastructure projects

Policy Implications

Considering that the public and private sector have usually functioned in silos in Nepal, an environment of mitigating suspicion between the two needs to be created. While the public sector needs to regard the private sector as an equal partner in any PPP-based project; the private sector needs to take advantage of the fact that the public sector can indeed leverage massive resources, not limited to economic, but also the state apparatus to implement projects run under PPP. Huge profits can thus be generated.

Finally, the public sector should be under no delusion that PPPs will get off the ground by merely passing legal instruments and organizing glamorous summits. Traditionally, the public sector has been reactive in terms of putting relevant policies in place to address any issue, so when it comes to PPPs, it should be at the vanguard of initiating and ensuring all stakeholders are brought together. After all, the mandate to ensure welfare of a country is with the public sector, and not necessarily with the private sector that is not compelled to consider welfare implications.


  1. Deep, A., Kim, J., & Lee, M. (2019). Realizing The Potential Of Public–Private Partnerships To Advance Asia’s Infrastructure Development. Manila: Adb.
  2. IMF. (2014). World Economic Outlook: October 2914: Legacies, Clouds, Uncertainties. Washington, DC.
  3. The Himalayan Times. (2019, August 08). MCA-Nepal projects to start from June 2020. Retrieved from The Himalayan Times: https://thehimalayantimes.com/business/mca-nepal-projects-to-start-from-june-2020/
  4. World Bank. (2018, 02 06). What are Public Private Partnerships? Retrieved from Wolrd Bank PPP LRC: https://ppp.worldbank.org/public-private-partnership/overview/what-are-public-private-partnerships