NA welfare fund profit declines despite growing investment

Published On: August 17, 2016 09:30 AM NPT By: Kamal Pariyar

NA studying investments in hydropower projects
KATHMANDU, Aug 17: Despite increase in investment by Nepal Army's Welfare Fund in various sectors, the profit declined in the fiscal year 2072/073 due various factors including fluctuation in bank interest rates, the devastating earthquake of April 2015 and Indian blockade.

In the fiscal year 2071/072, the NA had made Rs 3.46 billion profit through investment in various business ventures but by the end of fiscal year 2072/073 the profit was just Rs 2.71 billion, according to NA's Welfare Fund.

Brigadier General Gaurab Tandul, director at NA's Welfare Planning Directorate, said, "It is obvious to have differences in the profit rates as profit depends on economic and political situation of the country."

Despite decrease in profit as compared to last fiscal year, NA Welfare Fund has assets worth Rs 37.47 billion. Army's asset in the last fiscal year was Rs 34.04 billion, according to the NA.

"The Welfare Fund's major sources of income include financial contribution made by NA personnel participating in the United Nations peacekeeping missions; interests from various banks and financial institutions; income from foreign currency exchange; fees and proceeds from academic institutions, medical services and oxygen plants,” Brigadier General Tandul said during a press conference organized at NA's Headquarters on Tuesday.

Every year, the Welfare Fund is adding Rs 3 billion to its coffers from various sources, including profit, but the increment rate has remained consistent despite accumulating assets over the years, raising serious questions over transparency in the management of the fund.

According to NA Welfare Fund, it has Rs 10 million as pension funds, Rs 247 million investment on Sunachari Emulsion Plant, Rs 175 million investment while purchasing land in Chitwan, Rs 43 million on Oxygen plant. Similarly, it has invested Rs 2.14 billion on NA's Institute of Health and Science (NAIHS), Rs 422 million on purchase of land and building homes in Ichangunarayan, Rs 286 million on NA's Welfare Board, Rs 23 million on drinking water plants, Rs 1.03 billion on veteran and civil hospital and Rs 26 million on JP Academy.

In an attempt to minimize the risk of losing their investment, Brigadier General Tandul also clarified that 99 percent of the Welfare Fund's assets and investments are operated by 'A' grade banks.

 After Nepal Rastra Bank (NRB) froze all the current and fixed assets of the dissolved and troubled financial institutions that had failed to return the money deposited by the NA Welfare Fund, it has opted not to invest on 'B' and 'C' grade banking institutions. But NA is yet to accumulate over Rs 370 million from those B and C grade banks and financial institutions.   

The welfare fund has also been operating vocational training institutes affiliated to CTEVT which provide training in fashion designing, computer, driving and cooking. It is also involved in expansion of micro-finance projects, construction of Tri-Chandra Military Hospital (veterans and civil), establishment of nursing and medical colleges and veterans homes for helpless veterans targeting both incumbent and retired NA personnel of all ranks.

NA studying investment in hydropower projects
Despite some legal barriers, the Nepalese Army (NA) has been studying the possibility of investing in hydropower projects for the first time.

Last fiscal year's budget had incorporated the plan of mobilizing army in hydropower sector but not as promoters of the projects. "The ministry of Defense has been mulling to allow NA's investment in hydropower projects but not as promoters and by maintaining its professionalism," Defense Ministry Spokesperson Shiva Prasad Simkhada said during the program.

NA said that it will first study various aspects of projects regarding modality of the Madikhola Hydropower Project and Manang Hydropower Project.

Different lawmakers and stakeholders have been urging government to resolve the problem of energy crisis by utilizing NA's Welfare Fund. 

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