Thursday, April 4, 2013
NEA board decison on FDI - Good Work!!
Dear all I would like to supplement to what Leela Mani jee has articulated. · No country needs FDI just for sake of having “it.” Rational policy of a country will ensure that FDI is used to help the economy, not to the detriment of the economy. NEA bearing foreign exchange risk entails loss to economy and we should not forget that as NEA is a fully government owned enterprise any loss it suffers adversely impacts Nepal’s economy. · Investors/entrepreneurs are there to take risk. It is surprising that foreign investors don’t want to take risk. But foreign investors in other sectors are taking foreign exchange risk. Why foreign investors in hydropower sector want to be pampered? · Real foreign investors in hydropower sector know that if NEA fails, they will become exposed to “payment” risk. Therefore, foreign investors who want to drive NEA aground are not the investors in the real sense of the term. Therefore, NEA trying to learn lesson from the painful experience of Khimti and Bhote Koshi (even to me personally) doesn’t amount to attempt to scuttle foreign investment. With best regards, Sincerely, Ratna Sansar Shrestha, fca Senior Water Resource Analyst www.RatnaSansar.com From: LeelaMani Paudyal [mailto:firstname.lastname@example.org] Sent: Thursday, April 4, 2013 16:42 To: Ratna Sansar Shrestha; Dipak Gyawali; SPAdhikari; Dwarika Nath Dhungel; Madan Dahal; madhukar; Mohan Lohani Subject: Re: Good Work!! Dear mr lohani and all It is not my intention to scuttle FDI. On the contrary, I am actively engaged in promoting FDI in Nepal. I firmly believe that FDI can enhance employment opportunities and augment growth so as to boost prosperity and not poverty in Nepal. In order to achieve the targeted growth of eight to nine percent per annum, Nepal requires about 700 to 800 billion rupees of additional investment annually in the form of FDI. With the belief that such investments could come mainly in the areas of hydro power, infrastructure, tourism and agri-processing, we have been preparing 50 bankable projects to attract foreign investments. However, what NEA has done this time around is to ask the Government to assist in the absorption of any foreign currency risk. As it sells its services in the domestic market and in local currency, NEA is uniquely exposed to risks that come along when dealing with foreign currencies. There are some hedging mechanisms, insurance schemes and local currency bond mechanisms that help manage foreign currency risks by distributing it among investors, traders and consumers. However, in the case of NEA, it is overtly exposed to bearing the risks all by itself. As we all know, business is about taking reasonable and informed risks for expected rate of return. In every fair deal, there is always some limited risks assigned to expected returns. I must admit that NEA has been receiving an unfair deal in this regard under the current policies of the Government of Nepal. I wish to underline that fact that (during my tenure as the Chair of its Board) more than five dozen decisions were made in the interest of NEA and thereby in the interest of our country. These decisions were made not under any external pressure or to oblige any personal or petty interests or with malice towards anyone or to discourage FDI. These decisions were made with the sole aim of taking NEA forward to meet its declared goals of serving Nepal and Nepalis. I take pride in the fact that we were bold enough to open up and promote private investment in transmission line for the first time in Nepal’s history so that NEA can sign the PPA comfortably if developers build transmission lines to along with power. There are hosts of issues that need to be discussed and not possible to share in this very first write up. Thank you all for your moral support that helps me stand up right. Hope to receive similar support in the days to come as well. with warm regards leela mani paudyal