ADB PORTFOLIO REVIEW Slow Performance

After some progress in the last years, Asian Development Bank now expresses worries over the low performance in government spending

Nov. 12, 2017, 8:33 a.m. Published in Magazine Issue: VOL.11, No.08, November 10-2017 (Kartik 24, 2074)

As the high level officials of Asian Development Bank (ADB) have expressed worries over the slow performance of ADB projects in Nepal, finance secretary Shanker Prasad Adhikari has directed the concerned officials to improve their work.

Addressing Nepal’s Tripartite Portfolio Review Meeting, secretary Adhikari stressed the need to accelerate the economic growth in the coming years. At the event attended by ADB’s new Country Director for Nepal, Mukhtor Khamudhanov, government and ADB officials shared their views and evaluated the performance of Nepal on various projects.

“TPRM is an important and effective event to improve the performance of ADB supported projects and portfolio. ADB’s portfolio in Nepal is growing; and as of end September 2017, the active net portfolio stands at almost $2.3 billion for 35 investment projects,” said Diwesh Sharan, DDG, ADB, South Asia Regional Department.

“I am observing 2017 performance is again facing systematic problems —(i)  transfer of key staff project officials, (ii) delays in approval process of land acquisition and environmental clearances and (iii) weak implementation. By end of September, only 49% of the targeted annual contract award of $533 million and 52% of the disbursement of $339 million has been achieved. Focused and collective efforts from government and ADB are required to achieve the annual target,” said Sharan.

“I would specially like to highlight the slow progress of few flagships projects – Tribhuvan International Airport, Gautam Buddha Airport, Melamchi Water Supply and its associated Kathmandu Valley Water Supply Projects. Close monitoring of progress and decisive actions are needed for the civil aviation projects, to improve and accelerate implementation to ensure targets and results can be achieved for these flagship projects.”

“The main objective of this meeting is to review ongoing projects facing issues affecting implementation progress and collectively agree on actions to resolve them.”

Chairing the meeting Joint Secretary, International Economic Cooperation Coordination Division, Ministry of Finance, Baikuntha Aryal said that all the concerned officials need to work seriously to achieve the target.

For instance, only about 25 percent of work of Gautam Buddha Airport has completed even though the project completion date is only two months away.

Work in the Rs 5.5 billion worth airport upgradation project has remained standstill since February.  Gautam Buddha Airport is one of the government projects that are sure to miss the completion deadline.

Speaking at a review meeting of the ADB-financed projects in Kathmandu, the head of Portfolio Management of Nepal Resident Mission, Sarosh Khan, tried to find some logical commitments from the project officials which, she said, will pave the way for moving ahead for contract extension. 

Sharma claimed in the meeting that the Chinese contractor has deployed a new management team as well as arranged needful resources to settle payment dispute with its sub-contractor. “The project has now faced a new challenge -- lack of quarries to extract construction materials as both the central government and newly elected local bodies claim that they are the authority to issue permission for extraction of aggregates,” Sharma briefed the meeting.

Similarly, Tribhuvan International Airport, Melamchi Water Supply Project and its associated Kathmandu Valley Water Supply Project have also not made progress as projected.

The process of retendering the contract of TIA upgradation is underway after the termination of contract with the Spanish contractor in December last year. Similarly, the work of Italian contractor of Melamchi Water Supply Project to bring Melamchi waters to the capital city is also not at the satisfactory level. The project has missed several deadlines due to delay in tunneling works.

The  investment portfolio of ADB in Nepal is growing. Its active net portfolio stands at about Rs 2.3 billion and the number of projects is 35. Only 49 percent of targeted annual contract award of US$ 533 million has been achieved while only 52 percent of $339 million targeted amount has been disbursed in this year ending December-end, according to the ADB.

Of the total investment portfolio of $2,348 million, urban development and water projects hold the highest portfolio of $760 million (32 percent) followed by energy projects of $602 million (26 Percent) and transport $459 million (20 percent). Reconstruction, education, and agriculture and natural resources hold 9, 6 and 5 percent of the total portfolio, respectively.

Out of 35 projects, 10 projects have been categorized as 'winding' which means they have entered into maturity without any progresses made. A total of 22 projects are in implementation phases, while three are in the inception level. 

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