Government brought hedging regulations, facilities for projects above Rs 2 billion

According to the new arrangement, in the case of reservoir or semi-reservoir projects with a capacity of 100 megawatts or more, the government will bear a share equal to five percent and commercial organizations will bear a share equal to 40 percent. Similarly, for power projects with a capacity of 220 kilovolts longer than 30 km, the government will bear 20 percent and commercial organizations will bear a share equal to 35 percent.

For metro or monorail longer than ten kilometers, the government will have to pay 5 percent and commercial organizations will have to pay 30 percent. For toll roads, flyovers, underpasses, etc., the government will have to pay 10 percent and commercial organizations will have to pay 30 percent.

For international and regional international airport construction and expansion projects, the government will have to bear 20 percent and commercial organizations will have to bear 30 percent. Similarly, for health, agriculture, education, tourism, information technology, industrial infrastructure and urban development projects above two billion, the government will have to bear hedging equal to 10 percent and commercial organizations to 20 percent. For other projects decided and determined by the government, hedging of 20 percent at most will have to be done according to the decision.

In accordance with prevailing laws, infrastructure development banks or commercial banks with full or partial government investment licensed by Nepal Rastra Bank must submit a proposal to the Ministry along with their business plan. It has been arranged that the ministry will designate a bank as a hedging organization based on the evaluation of the business plan and the efficiency of the respective proposer. It has been arranged that the hedging organization can determine the maximum period of hedging facility based on the total amount of foreign loan to be invested in the project, the period for which such loan must be repaid according to the foreign loan agreement and its interest rate, and also the period in case of debt instruments.

The foreign currency accumulated in the account of the hedging organization shall be fixed by the hedging organization at the exchange rate at which it has been converted into Nepali currency according to the same rules so that there is no change or decrease in the exchange rate. Arrangements have been made to provide hedging facilities to the project or its investors by the hedging organization so that the amount according to the agreement will be paid back at the fixed exchange rate.

The hedging organization must collect all types of funds and income received while operating the service in accordance with this regulation in one fund. Payment will have to be made from the same fund. A hedging institution shall enter into an agreement with a banking or non-banking institution with the prior approval of the Ministry to accept loans for performing hedging activities, They can cooperate or collaborate.

The government claims that the regulation, published by the Ministry of Finance through the Gazette on Thursday, will bring in a significant amount of investment in the field of infrastructure investment.