The low disbursement rate indicates that it will take another nine years for the country to receive the undisbursed US$ 1.25 billion which is about 6 percent of GDP.
Speaking at the Nepal Country Portfolio Review Workshop in Kathmandu on Thursday, Hun Kim, Director General of ADB's South Asian Regional Department, said it would require about nine years spend the committed amount.
Failure in spending commitments made by donor agencies in the given timeframe means the country missed the opportunity to making meaningful contribution for accelerating economic growth. Very slow project preparation coupled with poor project execution have left fund committed by the country's second largest development partner to remain unspent.
ADB has 33 ongoing investment projects for which a total of $1.73 billion in loans and grants is available, according to a press release issued by ADB on Thursday. Of this, $955 million, or 55 percent, is still to be awarded contracts and $1.25 million, or 72 percent, is still to be disbursed. This is much higher than the ADB average of 47 percent of funds still to be awarded contracts and 66 percent still to be disbursed.
"Nepal needs to prepare bugger size projects of highways and airports to absorb the fund," Kim said, adding that they cannot keep imbalanced ratio of commitments and disbursement otherwise. He also suggested preparing a set of such projects, allowing development partners to choose the best ones.
For a project to be ready for implementation important works like feasibility study, detailed project reports, finalizing tender documents and land acquisition, among others, have to be completed. But there has not been serious effort in this regard from the government side. Though energy sector is in government's priority, energy projects are suffering from low readiness and delayed startups. The case of water and other urban infrastructure projects is no different.
Commitments for the energy sector stands at $444 million. However, contracted amount and disbursed amount in only $100 million and $61million, respectively.
ADB Country Director Kenichi Yokoyama noted the recent delegation of procurement authority to Nepal Electricity Authority (NEA) management by NEA board as a major breakthrough in improving energy sector performance.
Transport sector has been well managed in terms of project readiness, according to ADB. The Manila-based multilateral donor has also noted satisfactory progress in expansion Gautam Buddha International Airport Project and Tanahu Hydropower Project.
Meanwhile, ADB has expressed concern on zero progress in spending of amount extended for post-quake reconstruction over the past nine months.
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