LoC conditions

Govt fails to channelize Indian assistance to distribute housing grants

Published On: August 31, 2017 09:05 PM NPT By: Sagar Ghimire  | @sagarghi

KATHMANDU, Aug 31: The government plan to utilize part of the Indian Line of Credit (LoC) of US$ 750 million, or nearly Rs 75 billion, announced in April 2015 faces roadblock as a condition of the LoC requires Nepal to utilize India's content, consultant and contractor services in project funded by such assistance.

As the condition is practically difficult to be implemented in rebuilding of private houses, the National Reconstruction Authority (NRA) is now preparing to utilize it in other sector of reconstruction like health, education and cultural sites, among others.

The government had earlier planned to utilize $300 million of the LoC in housing grant and had allocated nearly $170 million, or Rs 17 billion, in the current fiscal year for distributing the cash grant to individuals who lost their houses in the 2015 earthquakes. “

"We had an internal plan to utilize that fund on housing grant. However, it looks practically difficult to utilize the assistance. Now, we plan to use it in other sectors like education where there is funding g”p," said Bhishma Kumar Bhusal, the NRA's deputy spokesperson, told Republica. 
The Indian government is providing Nepal LoC of $750 million. The government had planned to utilize $300 million on housing grant, $100 million each on reconstruction in education sector, government building and cultural heritage, and $50 million each on disaster preparedness and health sector reconstruction.

Now, the fund that we had planned to spend on housing grant will be utilized in reconstruction in other sectors, officials say.

NRA gears up for realization of LoC

National Reconstruction Authority (NRA) has started the process utilization the $750 million LoC that India had announced in June 2015 during the International Conference on Nepal's Reconstruction (ICNR) held immediately after the April 2015 earthquakes. 

The agreement for the LoC was signed in September last year during the state visit of the then Prime Minister Pushpa Kamal Dahal to India. 

However, the disbursement and execution of such credit commitment is yet to begin. 
The NRA and the Embassy of India in Kathmandu jointly organized a training on LoC for Nepali officials. The two-day training concluded on Thursday.

Speaking at a press briefing organized by the NRA, the Chief General Manager of Export Import Bank of India, Nadeem Panjetan, said that the training was aimed at explaining the concerned officials on how the LoC is used, how contractors are selected and how the projects are implemented. 

EXIM Bank of India is the Indian government's export financing arm.

Panjetan said that the consultants, contents and contractors should be hired from India if the expenses for such services should be borne from the LoC fund. According to Panjetan, up to 1 percent of the LoC can be utilized as the consultant costs.  

This implies that the Indian consultants should be hired to prepare the detailed project reports of any LoC-financed project.

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