Nepal Infrastructure Summit 2024 Building a Sustainable and Connected Future.pdf

Nepal Infrastructure Summit 2024 Building a Sustainable and Connected Future.

The Nepal Infrastructure Summit 2024, held in Kathmandu, brought together key stakeholders from government, private sectors, and international organizations to discuss strategies for advancing Nepal’s infrastructure landscape. The event focused on sustainable development, regional integration, and private sector engagement, setting the stage for a greener and more connected future.

https://ictframe.com/fifth-edition-of-nepal-infrastructure-summit/

https://ictframe.com/government-faces-hurdles-in-attracting/

https://ictframe.com/nepals-prosperity-in-sustainable-infrastructure/

https://ictframe.com/green-infrastructure-investment-in-nepal/

https://ictframe.com/south-asias-trade-growth-hampered/

1. Valedictory Notes

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Plenary 1: Sustainability

3. Key Takeaways
Nepal faces significant challenges in building green, resilient infrastructure, particularly in key sectors like hydropower and tourism, which are vulnerable
to environmental impacts. The risk of creating a "concrete jungle" persists if sustainable practices are not prioritized.
Climate change, especially the melting of Himalayan glaciers, poses a serious threat to Nepal's hydropower sector and the broader economy. This
underscores the need for infrastructure that can withstand the impacts of climate change across sectors like energy, agriculture, and tourism.
Past infrastructure developments in some of the developed countries, while successful, have led to issues like carbon emissions and traffic congestion.
Nepal needs to avoid these pitfalls by incorporating lessons from global experiences and focusing on the integration of IT and internet infrastructure in
its growth plans.
To meet its net-zero emissions target by 2045, Nepal must harness its rich renewable energy potential, especially solar and forest resources.
Investments in smart grids, energy storage, and other green technologies will be crucial to achieving this goal.
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Incorporating nature-based solutions (NBS) like urban parks, wetlands, and rain gardens into infrastructure projects can address issues like disaster
risk, climate resilience, and biodiversity loss. NBS can also improve public health and sustainability in urban settings.
To overcome financing gaps for sustainable projects, Nepal needs to leverage PPPs, explore green bonds, viability gap funding and tap into funding
from multilateral development banks (MDBs). Achieving sustainable development goals will require significant private sector involvement and innovative
financing mechanisms.
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Plenary 2: Regional Infrastructure and
Integration

5. Key Takeaways
Nepal's infrastructure investment gap is a major obstacle to regional connectivity, particularly in physical and digital networks. Improving cross-border
transportation, integrated checkpoints, and railway links with India and Bangladesh is essential to boost trade and integration.
Inconsistent trade regulations and outdated warehousing infrastructure are key barriers to efficient regional trade. Nepal must develop a cohesive
logistics policy, modernize customs processes, and align regulations with neighboring countries to improve trade facilitation.
The country's electricity export capacity is set to increase dramatically, with cross-border transmission lines expanding from 2,000 MW to 14,000-
15,000 MW in the next 5-6 years. This will enhance energy trade with both India and Bangladesh.
The rise of low-cost airlines has significantly improved regional connectivity, and strategic investments in aviation infrastructure could further position
Nepal as a key transit hub, driving tourism and economic growth.
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Developing a multi-modal transport system, including inland waterways, will reduce costs, improve environmental sustainability, and address logistical
challenges. Enhancing warehousing infrastructure and harmonizing trade regulations are crucial steps for seamless trade.
Expanding digital connectivity, including mobile banking and QR code payments, will strengthen cross-border financial integration with India and boost
trade efficiency. Digital technology solutions are also vital for streamlining cross-border trade and energy cooperation.
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Plenary 3: Private Sector
Engagement

7. Key Takeaways
Nepal currently invests only 4-5% of its GDP in infrastructure, leaving a significant gap. To meet the estimated USD 77 billion requirement by 2030,
there is a pressing need for increased private sector participation.
While the private sector has seen success in energy projects through PPP models (such as Khimti and Bhotekoshi), it remains underutilized in sectors
like road transport, urban development, and aviation. The effectiveness of PPPs in the energy sector is largely due to the assurance of Return on
Investment (ROI) and profitability through Power Purchase Agreements (PPAs), which has driven private sector involvement.
The country faces issues such as excessive bureaucracy, political instability, and corruption, which hinder efficient infrastructure development. This has
led to delays and inefficiencies in key projects like Terai Madhesh Fast Track and Narayanghat-Butwal Road.
Effective risk allocation and streamlined approval processes are critical for attracting private investment. Current procurement practices and
bureaucratic hurdles are seen as barriers to private sector engagement.
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Reforms in policy and governance are essential to creating a more favorable environment for PPPs. This includes enhancing the legal and regulatory
frameworks, improving transparency, and ensuring a stable investment climate to build investor confidence and catalyze private sector involvement. 05

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Plenary 4: Fiscal, Monetary, and Regulatory
Policies

9. Key Takeaways
Nepal is currently facing challenges with declining revenue collection and increasing recurrent expenditures, leading to higher domestic and foreign
borrowing needs. High remittance inflows are often not effectively utilized in productive sectors or job creation.
The financial system, though well-capitalized, faces constraints with stringent asset classification rules and collateral-based lending, limiting project-
based financing opportunities.
Land acquisition remains a significant challenge due to fragmented holdings and high costs, which hampers infrastructure development and increases
project expenses. There is also a lack of coordination among government departments and institutions, causing inefficiencies in project execution and
regulatory approvals.
NRB has tried to enhance financial stability and development support through monetary policy by lowering interest rates, introducing SWAP regulations,
easing foreign currency repatriation, and automating company registration. It is also promoting green finance through green finance taxonomy and
developing policies to boost infrastructure investment.
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Further participation of private sector in infrastructure can be achieved by refining policies, improving land acquisition processes, and adopting
innovative financing approaches such as blended and green finance. Mobilizing domestic institutional funds and creating a regional infrastructure
blueprint with neighboring countries are also key strategies.

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Parallel Session 1: Energy
and Water Resources

11. Nepal's energy sector is at an exciting stage, with 65% of energy still coming from agro and forest resources, 25% from imported fossil fuels, and only
5% from hydropower, despite significant investments.
Water resources management faces similar issues, with only 5% of Nepal's available water withdrawn annually and only 25% of the population having
fresh water access. Despite the availability of data from precipitation stations, the country lacks a coordinated water resources management plan and
policy framework.
Key challenges in the energy sector include inadequate transmission infrastructure, financial constraints such as lengthy IPO processes, limited market
access, and competition with neighboring countries offering better incentives for foreign investment. The capacity of consumers to pay for electricity is
also limited.
Immediate actions should include clear legislation for energy and water sectors, prioritizing infrastructure development, especially in transmission and
water resources, and creating markets both domestically and through cross-border trade. For water management, there is a need for custodianship of
water bodies, better institutional coordination, and legally enforceable responsibilities.
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Key Takeaways
Opportunities for investment lie in high-value energy projects like solar PVs, hydrogen derivatives, and seasonal storage projects, while water
infrastructure requires the government to prioritize large-scale irrigation and hydropower projects and integrate water resources into future planning
efforts.
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Nepal currently generates around 3000 MW of electricity, with the private sector contributing 80% of this production. Per capita electricity consumption
is 380 kWh, targeted to increase to 700 kWh. The potential electricity demand by 2050 is projected to reach 44,812 MW, signaling vast opportunities for
hydropower development –around USD 46 billion.
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Parallel Session 2: Urban Development and
Affordable Housing

13. Key Takeaways
Nepal's urbanization is rapidly expanding, but it faces significant challenges such as inadequate housing for marginalized populations, infrastructure
deficits, and unplanned urban growth, particularly in areas like Kathmandu and Pokhara. The government is looking to address these issues through
housing schemes, amendments to the apartment act, and leveraging private sector involvement.
Real estate and housing contribute significantly to the economy, but rising land prices have shifted the cost balance, limiting housing accessibility. There
is an opportunity to improve financing models, such as Build-Operate-Transfer (BOT) and PPP by offering incentives such as tax breaks, risk-sharing
mechanisms, and guarantees to attract private investment. Strengthening regulatory frameworks, enhancing transparency, and ensuring proper
stakeholder collaboration will reduce investment risks, while prioritizing socially inclusive projects can address urban growth deficits.
Urbanization in Nepal has been linked to slower economic growth, with significant gaps in investment and infrastructure development. An estimated $60
billion in investment is needed to address climate-related infrastructure challenges, with a focus on reducing urban disparities and fostering new urban
growth through enhanced infrastructure, green development, and urban retrofitting.
To drive sustainable urban growth, collaboration among stakeholders, effective communication, and governance improvements at the municipal level are
critical. Opportunities to increase revenue generation and attract investment at the local level should be explored, with a focus on catalyzing partnerships
to ensure timely and efficient project delivery.
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ParallelSession 3:Construction
IndustryPerspective

15. The construction industry in Nepal plays a significant role in the economy, contributing 6-12% of GDP and a substantial portion of gross capital formation.
However, it faces challenges such as time delays, cost overruns, poor quality, and contractual disputes, exacerbated by low skilled manpower and
inefficient resource mobilization.
To address these challenges, Nepal needs to improve domestic capacity by implementing incentive structures and focusing on technology transfer.
Learning from historical examples like Japan’s technology transfer during its first railway project, there is a need to shift focus from merely financing to
enhancing domestic firms' capabilities. The integration of technology, such as online work plans and approval systems, smart building technologies,
automation, and AI for predictive analysis, can improve efficiency and project management.
Key issues include inadequate planning, limited domestic capacity, and an ineffective government strategy that fails to promote technology transfer and
domestic firm capabilities. The industry suffers from a narrow focus on financing rather than addressing core capacity constraints.
Moving forward, the government should drive investment in large-scale infrastructure projects, provide policy and regulatory support, and create an
enabling environment. Collaboration with the private sector and tech industry can foster innovation and efficiency. Emphasizing domestic resource
utilization and developing a credible, transparent government framework will also be crucial for sustainable development in the construction industry.
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Key Takeaways

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Parallel Session 4: Transport Infrastructure

17. Nepal's transport infrastructure, mostly includes road networks, 55 airports (3 international) and a minimal rail network, offers substantial potential for
economic growth, regional connectivity, and job creation. However, challenges persist due to frequent changes in infrastructure priorities, financial
planning issues, and investment and regulatory gaps.
To tackle these issues, Nepal should introduce a new, integrated transport policy and multi-modal transport plan, focus on paving 6,000 km of unpaved
roads by 2030, and explore innovative financing options like viability gap funding and hybrid annuity models. Enhancing procurement processes and
developing sector-specific investment plans are also crucial.
Key issues in Nepal’s transport involve inadequate road maintenance, with only 6% of the budget allocated compared to the recommended 12-15%, as
well as problems with road functionality and safety, leading to inefficiencies and high accident rates. Incomplete projects and inefficient procurement
processes also contribute to the difficulties.
The private sector should be engaged more effectively in infrastructure development and public transportation improvements. This includes better
coordination, adoption of new technologies, and ensuring project viability. The government may need to provide guarantees or subsidies to attract private
investment and ensure project success and safety.
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Key Takeaways

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Parallel Session 5: Waste Management

19. Nepal's waste management sector faces challenges with outdated regulations, including the Solid Waste Management Act 2011 and its 2013 rules,
which do not accommodate the current federal structure. While the SWM policy 2022 exists, it lacks a supporting act for effective implementation. The
sector struggles with inefficiencies, such as a low recycling rate and a rise in organic and plastic waste, with 4,900 tons of municipal solid waste
generated daily and plastic waste increasing by 12-17% over the past decade.
The adoption of advanced technologies is essential to improve waste management. Implementing technologies such as gasification, solar-powered
trash compactors, and enhanced recycling processes can significantly increase efficiency. Additionally, scaling up co-composting and biogas plants will
address organic waste and reduce environmental impact.
To address these issues, it is crucial for Nepal to update the Solid Waste Management Act and associated regulations to align with the federal system
and current waste management needs. This will ensure that regulations are effective and applicable to the modern waste management landscape.
Adopting a lifecycle perspective on products, utilizing technology for waste tracking, and exploring innovative waste processing solutions will support
better waste management practices and create green jobs. The government should encourage better waste practices among citizens and support
technological advancements to enhance the effectiveness of waste management strategies.
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Key Takeaways

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Parallel Session 6: Creating Opportunities for
Women in Infrastructure Space

21. Women's involvement in Nepal’s infrastructure sector is growing but remains underrepresented in key roles and decision-making positions. Many
women work informally in agriculture and other sectors, which are not always captured in official statistics.
To improve women's participation, there is a need for better training and education, along with policies that promote gender inclusivity in infrastructure
projects. Leveraging resources from banks and NGOs to support women-led projects can provide crucial support. Professional societies should be
involved in updating technical knowledge and networking opportunities for women.
Women face significant barriers in the infrastructure sector, including inadequate representation in leadership roles, hostile work environments, and
limited access to technical training and education. Social disparities, wage gaps, and harassment further hinder their progress, while career breaks for
family reasons impact their long-term career advancement.
Creating more opportunities for women, encouraging their involvement in decision-making processes, and implementing targeted policies and funding
for women-led initiatives are essential. Additionally, improving workplace conditions, addressing harassment, and supporting women returning from
career breaks will contribute to a more inclusive and equitable infrastructure sector.
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Key Takeaways

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Parallel Session 7: Role of Provincial and
Local Government

23. Provincial and local governments in Nepal now manage over 50% of functions previously overseen by the federal government before federalism.
However, their financial and institutional capacities are limited, with more than 80% of finances still centralized at the federal level.
PLGs face inadequate fiscal transfer, with provincial expenditures accounting for less than 10% of the federal government’s total expenditure. Capacity
gaps, a lack of institutional structures, and the federal government’s encroachment on smaller local projects hamper their progress. Coordination issues
between federal and provincial governments, along with a centralist mindset, exacerbate these challenges.
Provincial governments have made progress, with 61% of their total expenditure allocated to capital investments, focusing on infrastructure like roads and
bridges. They have developed periodic plans, established provincial development councils, and enacted key laws, including local governance acts and
civil service laws, to support infrastructure development.
Strengthening the fiscal independence of PLGs through a clearer framework that defines their exclusive and shared rights is crucial. This includes
completing the unbundling of responsibilities, adopting a bottom-up planning and budgeting approach, and improving coherence between functions,
funding, and personnel to empower provincial and local governments effectively.
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Key Takeaways

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Parallel Session 8: Digital, ICT, and
Technology Integration

25. Nepal's digital infrastructure has grown significantly since the introduction of the internet in 1994. The IT sector is booming with advancements in e-
governance, e-commerce, and financial services, along with increasing private sector involvement. Internet coverage has expanded to 119% of the
population, while the IT sector export value reached $15.4 million in 2022.
To address these challenges, there is a need for solutions that are both technically and socially adaptable to local contexts. Integrating AI into
infrastructure projects can lower costs, predict project design issues, and optimize planning and construction phases. Expanding digital literacy and
improving cybersecurity are also critical.t
Despite progress, Nepal faces challenges in digital infrastructure, including gaps in cybersecurity, digital literacy, and the need for socially viable
technology solutions. The country ranks 94th globally in cybersecurity (GCI score of 44.95), and infrastructure sectors need more advanced integration of
AI and technology to reduce costs and streamline processes.
Nepal should focus on collaborating with research institutions domestically and internationally to advance AI and technology integration. Streamlining
government services through portals and apps, enhancing credit scoring systems, and preventing data leakage will improve service delivery. Moreover,
providing more technology support to the government institutions will help optimize decision-making and ensure efficient public service delivery.
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Key Takeaways

26. Thank you