Govt stops direct investment by Indian Embassy
The Finance Ministry has stopped direct Indian investment on small development projects through the Indian Embassy in Nepal. The ministry has already written to the Indian Embassy that the agreement that allows the latter to select projects in Nepal and invest up to Rs 50 million on a single project will not be renewed soon.
The embassy had written to the ministry on August 5 for renewal of the agreement about small development projects before it was to expire. The ministry in response has written that the agreement cannot be signed for now as legislation about how to receive foreign investment at district and local levels has not been made after the country went into federalism.
The embassy used to coordinate with district development committees while investing on such projects selected by it. The ministry's letter adds that district development committees have already been dissolved, and the mechanism through which to spend such investment and how to coordinate with the local government have yet to be decided.
"We have told them that the both sides need to talk about the mechanism for spending in the changed context, and sign a new agreement if needed accordingly," Chief at the International Economic Cooperation Division under the ministry Baikuntha Aryal told Setopati.
The agreement, first signed in 2003 when Surya Bahadur Thapa was prime minister, allowing direct investment of embassy on small projects has to be renewed every three years. It has already been renewed four times. The agreement initially had set a limit of Rs 30 million for direct investment but the ceiling was raised to Rs 50 million when it was renewed by the Baburam Bhattarai government.
The agreement has been opposed right from the beginning stating it undermines Nepal's sovereignty. The then foreign minister in the Bhattarai government Narayan Kaji Shrestha had even talked with Indian team about annulment of the agreement.
India has invested billions on over 500 small projects including schools, health posts, rural roads and others under the agreement.