R&D_NewsBrief_14thJul

R&D Economic Research & Business Development

Date: July 14, 2010

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Government officials, economists and industrialists have urged the government to address economic, monetary and development issues through special arrangements after the government failed to present the general budget 2010-11 in time. Finance Minister Surendra Pandey has presented a Rs 110.2billion Special Budget on July 12.

The business community and economists have pointed out that delay in presenting a full-fledged budget will hinder the country‟s economic growth and private sectors‟ investment plans. At an interaction on „Delay in Budget and its Impact in Country‟s Economy‟, organised jointly by Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Society of Economic Journalists of Nepal (SEJON) on Tuesday, economists said that disturbances in regular budget presentation cycle would ultimately hamstring the overall economy.

The current fiscal year (FY) saw the completion of only two hydro projects in the country. According to the Economic Survey released by the government, only Patikhola (0.996 MW) and Seti Second (0.979 MW) were completed in this year.

Deposit Insurance and Credit Guarantee Corporation on Tuesday enacted Deposit Guarantee Bylaw, paving way for the implementation of deposit insurance scheme -- which will guarantee small depositors their money back even if the bank and financial institutions (BFIs) go bust.

The number of subscribers to Ncell‟s GSM mobile service went up by 0.6 million during the first quarter of 2010 bringing the total number of TeliaSonera subscribers in Nepal to 2.4 million.

Five star hotels in Kathmandu Valley have raise banquet prices by as much as 50 percent. Compared to past few years, they have raised prices by 30 to 50 percent this year.

Kantipur Television (KTV) Managing Director Kailash Sirohiya on Tuesday said KTV was planning to broadcast its programmes in the United States.

Addressing a programme organised to mark the seventh anniversary of KTV on the premises of the Kantipur Publications in Tinkune, Sirohiya said the KTV was effortful to widen its broadcast range. “We aim to make our signal available in every part of the world,” he added.

The Nepal Stock Exchange (NEPSE) registered a gain for the second consecutive day rising 3.03 points to settle at 464.65 points on Tuesday. An increase in the sub-indices of hydropower companies, commercial banks and

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development banks lifted the secondary market. Hydropower companies led the gainers with a growth of 24.81 points followed by commercial banks and development banks posting gains of 3.87 points and 2.71 points respectively.

The parliament today set July 21 as date to elect a new prime minister, prompting intense backroom negotiations among the three major parties -the UCPN-Maoist, the Nepali Congress and the CPN-UML. A meeting of 22 smaller parties Tuesday passed a 'condemnation note' against the major three - Unified CPN (Maoist), Nepali Congress (NC) and CPNUML - for their failure to reach a consensus in the process of forming the new government within the two deadlines given by the president.

Nepali Congress leader Shekhar Koirala has claimed that the new government will be lead by his party's vice president and parliamentary leader Ram Chandra Poudel. Speaking at the Reporters Club Tuesday, Koirala said the NC is taking initiative to form the new government under its leadership and that Poudel will be the Prime Minister.

CPN-UML Deputy chairman Bamdev Gautam today said Chairman JhalaNath Khanal was likely to lead the next governmentment. "UML might lead the next government with the participation of all the three parties," Gautam told party cadres here. "But the next government must win the confidence of all the CA members. If not so, then at least twothird members must be in favour of the next government."

The United Nations (UN) has defended the involvement of UNMIN in preparing a plan for integration and rehabilitation, saying the political mission is working within its mandate.

The Public Accounts Committee (PAC) of the Legislature-Parliament has intensified investigation into the decision of the Ministry of Foreign Affairs (MoFA) to award the multi-billion contract of printing and supplying the Machine Readable Passport (MRP) to French firm—Oberthur Technologies.

The parliamentary panel has asked the MoFA to furnish all the dossiers related to the global bidding process within five days.

After eight months of circumstantial investigations, the Nepal Army (NA) has given a clean chit to Major Niranjan Basnet, who was sent back from a UN peacekeeping mission in Chad last December for his alleged involvement in human rights violation in the Maina Sunar case.

The government has sent invitations to 51 mountainous countries for a meeting on climate change scheduled to be held in Kathmandu on October 4 and 5. The Cabinet, on June 23, decided to host a ministerial level meeting in Nepal. Prime Minister Madhav Kumar Nepal had announced the meeting at the Copenhagen summit on climate change held in December 2009.

The fate of alleged international serial killer Charles Gurumukh Sobhraj, who has been behind bars for almost seven years on a murder charge, will be 2

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decided tomorrow. The Supreme Court Justices Ram Kumar Prasad Shah and Gauri Dhakal will pronounce the verdict tomorrow.

Spain and Italy have suspended inter-country adoption from Nepal, joining other countries which have taken similar steps accusing Nepal´s adoption system of being non-transparent and unaccountable.

Nepal Police has started groundwork to request Interpol to issue Red Corner Notice against four persons involved in the abduction of Dr Bhaktaman Shrestha, Executive Director of BP Koirala Memorial Cancer Hospital, Chitwan. The notice seeks arrest of wanted persons, with a view to extradition.

The four kidnappers, including Bhimsen Pandit and Rohit Paliwal Agrawal are at large. Police, however, have apprehended three associates — Badri Prasad Dhungana, Sunil Shrestha and Nabin Chhetri.

POLICY: `Financial issues should be tackled through monitory policy' Government officials, economists and industrialists have urged the government to address economic, monetary and development issues through special arrangements after the government failed to present the general budget 2010-11 in time. Finance Minister Surendra Pandey has presented a Rs 110.2-billion Special Budget on July 12.

The Special Budget is silent on economic issues that the country have been facing in the recent years. It will affect the whole economy if the country does not take immediate remedial measures, said Jagadish Chandra Pokhrel, vice-chairman of the National Planning Commission (NPC) in an interaction, jointly organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Society of Economic Journalist Nepal (Sejon) today. Kush Kumar Joshi, president of FNCCI, said that budget delay has kept investors in a dilemma.

There will be no new investments until a full-fledged budget is presented, he said.

Industrial sector has been suffering from power shortage, labour dispute and strikes, he said.

However, he said the drawbacks could be overcome through special arrangements.

“We should identify the areas which did not get due attention and address them through short-term and long-term measures,” he said. creating panic among the people is not a solution, he said.

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Former Governor of the Nepal Rastra Bank (NRB), Dipendra Bahdur Chhetry, advised the government to address financial issues through monitory policy. Some lapses of the Special Budget can be made good by good monitory policy, he said.

Well-designed monitory policy can reduce liquidity crunch and promote industry through effective reforms in the banking and financial sectors, he said.

Prof Dr Bishwambhar Pyakurel expressed grief over the people suffering due to irresponsible behaviour of politicians.

The economy will have a wide-ranging impacts of the delay in the general budget, he said. “If the government does‟t invest, how can we expect investments from the private sector,” he said. Finance Secretary Rameshwor Khanal echoed the same. This budget can‟t bring the economy back on track, he said. Major problems of the economy will remain silent until the next full-fledged budget.

In general, it will further destabilise the economy if alternative corrective measures are not taken in time, he said.

Dr Chiranjivi Nepal termed the current economic situation as the result of political impropriety. “If the political parties will not be responsible, the economy will collapse,” he said.

Liquidity crunch will deepen, investment environment will not improve, and the government can‟t mobilise resources, if the situation continues for long, he warned.

Presenting a paper on the weaknesses of the Special Budget and its implications on the economy, Pradeepman Baidhya, president, Tax and Revenue Committee at FNCCI, said the liquidity crunch will be aggravated and the industrial sector will not escape from flight of investment.

THT July 14, 2010 ‘A peanut is not a meal’ JUL 13 - The business community and economists have pointed out that delay in presenting a full-fledged budget will hinder the country‟s economic growth and private sectors‟ investment plans.

At an interaction on „Delay in Budget and its Impact in Country‟s Economy‟, organised jointly by Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Society of Economic Journalists of Nepal (SEJON) on Tuesday, economists said that disturbances in regular budget presentation cycle would ultimately hamstring the overall economy.

At a time when country was looking for a full-fledged budget to address bottlenecks in the economy, the government‟s special budget will widen existing trade deficit, constrain revenue mobilisation and hit private sector confidence, said economists.

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R&D Economic Research & Business Development They pointed out that the political leadership had failed to realise the country‟s economic agenda and priorities.

“Investors are in a dilemma whether to invest or not as there is no concrete programme and policy of the government in the special budget,” said Kush Kumar Joshi, president of the FNCCI. Joshi said that trade deficit would further widen in the next fiscal year.

“The private sector has demanded stimulus packages to address the growing trade deficit issue, industrial insecurity and load-shedding, all in vain,” added Joshi.

Economist Biswombhar Pyakurel described the advance budget as too meagre. He said that the public distribution system had become a joke. “No political parties is serious about the country‟s economic agenda,. This will adversely impact the country‟s economy in the long run,” he added. This is the second time in three years that a full-fledged budget has been delayed.

Economist Dilli Raj Khanal said that if the political class fails to address the country‟s economic agenda, a crisis would erupt. “There is need for political consensus to address the deepening problem,” said Khanal. Economist Chiranjivi Nepal said that as the country is witnessing a huge balance of payment deficit and decline in foreign currency reserves, delay in full-fledged budget would worsen the economic crisis. “It is unfortunate that no political party is serious about economic issues,” he lamented.

Finance secretary Rameshwor Khanal said that investment would decrease if the economy does not stay stable. “Delay in budget announcement will discourage both domestic and international investors, and without investment we cannot have economic growth,” he said.

He said that the targeted economic growth for the next fiscal could be affected. “The government plan to provide incentives and facilities to production and agriculture sector for import substitution and accomplishing the three-year plans will also be affected,” he said. http://www.ekantipur.com/the-kathmandu-post/2010/07/13/business/a-peanut-is-nota-meal/210442/

Current FY sees completion of just two hydro projects 13 July 2010The current fiscal year (FY) saw the completion of only two hydro projects in the country.

According to the Economic Survey released by the government, only Patikhola (0.996 MW) and Seti Second (0.979 MW) were completed in this year.

The supply of electricity is not in tandem with its fast increasing demand, thus the country has long been reeling under the yoke of power outage.

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During the last FY, the number of customers had risen by 10 percent to reach 1,677,000 while in this FY the number of the same increased by 12 percent to surge to 1,879,000.

If the supply continues to fall short of the demand, the country will be bound to face the load-shedding of more than 16 hours a day.

As per the Nepal Electricity Authority (NEA), the supply of power is 70 percent less in the peak period of the demand.

The two hydropower projects completed this year belong to the private sector.

The survey poignantly states that not a single project was commenced by the government in this year. Similarly, no project under construction saw the light of the day during the period.

The coming FY will see the completion as well as power generation from projects like Hewa (5.4 MW), Siuri (5 MW), Aankhukhola (7 MW), Maikhola (2.4 MW) and Lower Piluwa (0.99 MW). All these hydro ventures are being undertaken by the private sector.

In this FY, the consumption of electricity by the industrial sector, households, commercial sector and other areas is expected to stand at 38.10 percent, 41.70 percent, 6.66 percent and 13.44 percent respectively.

Meanwhile, the government is all set to develop the country's oldest Farping Power Plant (FPP) into a 'Hydroelectricity Museum' and promote it as a tourist spot. Installed in 1911 at Farping of Kathmandu, this project coined the Nepalese history of electricity generation with a rated capacity of 500 kW. NEA last month celebrated the 100th year of power generation in Nepal keeping in view the first energy produced from FPP. nepalnews.com

BUSINESS & ECONOMY: Deposit Guarantee Bylaw comes into operation July 14: Deposit Insurance and Credit Guarantee Corporation on Tuesday enacted Deposit Guarantee Bylaw, paving way for the implementation of deposit insurance scheme -- which will guarantee small depositors their money back even if the bank and financial institutions (BFIs) go bust.

Going by the bylaw, Nepali BFIs can now insure their savings and fixed deposits up to Rs 200,000 at the corporation from July 17. Such facility can be bought for the deposits of natural persons only; meaning the corporation will not insure deposits of BFIs institutional clients like business firms and legal entities.

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If the client BFI went bankrupt and liquidated, the corporation should safely refund money of the depositors within 90 days of the submission of depositors´ list by the liquidator.

“The service, which will start from the coming fiscal year, will completely safeguard the deposits of the people maintaining savings and fixed accounts of as much as Rs 200,000 at BFIs. We believe this will up people´s confidence on the banking system,” said an official at Ministry of Finance.

However, depositors must know that all banks and financial institutions still might not pledge such guarantee because the government has not made deposit insurance compulsory.

“Since joining the scheme is voluntary, the customers opening the accounts must categorically ask the bank whether or not it has covered their deposits from possible risks,” the source said.

To get the service, the BFIs will need to pay service charge of 20 paisa per every Rs 100 worth of insured deposit sum to the corporation. Only the BFIs that are not declared as troubled institution can participate in the scheme.

The corporation will also monitor the BFIs credit portfolio and performances regularly. But, if the BFIs failed to maintain the capital fund as instructed by the Nepal Rastra Bank, they will need to pay 10 paisa extra for every Rs100 worth of insured deposit.

“We have made a conscious effort not to add cost to the BFIs. Hence, the rate has been fixed at nominal level,” said a source.

The corporation has also endorsed a plan to raise its paid-up capital to Rs 1 billion in order to build its capacity to shoulder the new liability. It has also sought additional Rs 1 billion from the government as seed money to build the compensation fund.

Under its recapitalization plan, the corporation is increasing its paid-up capital to Rs 250 million within the next one month. For the purpose, it has called special general meeting on Wednesday.

It is further mulling over injecting additional Rs 350 million from its internal source and has also invited stake investment from BFIs to increase the capital to Rs 1 billion.

Apart from this, the corporation is also hopeful of getting assistance from the World Bank and Asian Development Bank, as the multinational donors have indicated of pledging the support in case Nepal introduced the mechanism of safeguarding deposits of laymen. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=20996

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2.4m Ncell users across the nation JUL 14 - The number of subscribers to Ncell‟s GSM mobile service went up by 0.6 million during the first quarter of 2010 bringing the total number of TeliaSonera subscribers in Nepal to 2.4 million.

All the Eurasian markets including Nepal of TeliaSonera have registered an increase.

Growth was strongest in Uzbekistan with a rise of 2 million subscriptions to 5.1 million. Kazakhstan posted a growth of 0.3 million subscriptions.

The total number of subscriptions in the Eurasian consolidated operations increased by 0.7 million subscriptions, according to a financial report of TeliaSonera based on the first quarter.

Business area Eurasia countries comprise Nepal, Uzbekistan, Kazakhstan, Azerbaijan, Tajikistan, Georgia and Moldova. The business area is also responsible for developing TeliaSonera‟s shareholding in Russian MegaFon (44 percent) and Turkish Turkcell (38 percent). The main strategy is to create shareholder value by increasing mobile penetration and introducing value added services in each respective country, states the financial report. “Ncell subscription has increased because of better network with better service and value added services,” said Sanju Koirala, corporate communication manager of Ncell. “Customer trust has increased after our rebranding.”

TeliaSonera had re-branded its operations in Nepal and Tajikistan to Ncell and Tcell respectively in March 2010. The re-branding marks the companies‟ entrance into a new phase of dynamic development and will allow new segments in the market to be targeted.

Following the re-branding from Mero Mobile to Ncell, the multinational company has come up with a number of attractive schemes for ordinary customers and corporate clients to expand its market.

The closed user group (CUG) targeted at the corporate segment, reduction in the price of GPRS, introduction of lower international long distance call rates and the recent launching of the cheapest handsets with Ncell SIM cards are some examples of Ncell‟s promotional moves.

“We have received a very good response from the handset scheme,” said Koirala. She added that Ncell would be coming up with more attractive offers for its customers in the upcoming fiscal year. Operation of 3G mobile service, launch of Blackberry and customized package service for corporate clients are also in the pipeline. http://www.ekantipur.com/2010/07/14/business/2.4m-ncell-users-across-thenation/318425/

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Star hotels raise banquet prices July 13: Five star hotels in Kathmandu Valley have raise banquet prices by as much as 50 percent. Compared to past few years, they have raised prices by 30 to 50 percent this year.

Hotels say they had to raise prices due to rise in prices of food, oil, vegetables and spices in the market as well as rise in salary and allowance of their staffers.

Interestingly, most of the star hotels fix prices after comparing prices fixed by other hotels.

Raju Bikram Shah, senior general manager of Hotel Shangri-La at Lazimpat, said the hotel had increased banquet price by 40 percent due to rise in prices of commodities in the market.

The hotel at present is serving dinner at Rs 1,200 per plate (excluding VAT and service charge) per plate. The price was just Rs 850 per plate a year before.

"The price a bit expensive because of hygienic food and quality service that we provide," Shah said, adding, "The price would have been cheaper had we been a banquet hall."

Shangri-La has the capacity to serve as much as 1,800 persons at a time. The dinner includes Indian, Chinese as well as continental food and also live cooking and live pasta counters. For cocktail party of about 80 persons, the hotel charges Rs 850 per person (excluding taxes).

The hotel also provides catering service if there is a demand. It has been charging $7 per person for breakfast, $16 for lunch and $18-20 for dinner for guests staying in the hotel.

Another five-star hotel in the town, Hotel Yak & Yeti has been serving dinner for parties in the range of Rs 1,050 to Rs 1,350 (excluding taxes) per person. The hotel has increased the price for its ´Standard Banquet Dinner´ by 20 percent as compared to the last year´s price.

"Our dinner includes five different snacks, different varieties of meat and other food," said Prahlad Raj Kunwar, general manager of the hotel. Kunwar further added that Hotel Yak & Yeti is popular for banquets due to its central location, capacity to serve about 1,000 persons at a time and excellent parking arrangements.

The hotel boasts of the largest banquet hall in the Valley.

The hotel charges Rs 800 for breakfast, Rs 1,000 for lunch and Rs 1,050 for dinner for its residential guests. Kunwar further informed that the hotel had even sold dinner at Rs 5,000 per plate.

Radisson Hotel has also raised its banquet prices by 50 percent. "We have raised the prices to Rs 1,200 per plate (excluding taxes) from Rs 800 of last year," said Kabir Jung Gurung, food and beverage manager at the hotel. Gurung, however, added that price depends on the menu.

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The hotel is capable of serving about 1,000 persons at a time. It serves breakfast for Rs 500 and lunch and dinner for Rs 1,000 per person for its residential guests.

Another popular five-star hotel - Soaltee Crowne Plaza - has been providing banquet service at Rs 1,400 to Rs 1,500 per plate. Sources at the hotel say such dinner is served at VIP parties. "We charge Rs 1,200 per person for cocktail dinner," the source said, adding, "We have served dinner for Rs 2,200 to Rs 2,800 per plate depending on the menu."

The hotel serves breakfast at $12, lunch at $14 and dinner at $18 for residential guests. The banquet hall of the hotel is already booked for the coming three months.

Hotel de l´ Annapurna at Durbar Marg has also raised its banquet price from Rs 900 to Rs 1,200 per plate (excluding taxes). "We raise banquet prices as the prices of edible commodities and other raw materials have skyrocketed in recent years," said Dorjee Sherpa, general manager of the hotel, said.

The hotel offers breakfast, lunch and dinner package at Rs 8,000 per person for its residential guests. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=20993

KTV marks 7th anniversary; plans to air in US JUL 13 -Kantipur Television (KTV) Managing Director Kailash Sirohiya on Tuesday said that KTV is planning to broadcast its programmes in the US. Speaking at a programme organised to mark the seventh anniversary of KTV at Kantipur Publications premises at Tinkune, Capital today, Sirohiya said that the KTV is planning to air its programme in the US as part of its effort to extend its broadcast.

“We are aiming to extend our broadcast in every part of the world including the US,” said Sirohiya.

He informed that the KTV has been changing its programmes and news style in line with the times. KTV will bring changes in its programmes according to the viewers‟ desire and for their benefit said Sirohiya adding, “KTV has been always been playing the role of a watchdog and we will give continuity to our job.”

While saying that KTV news will not be limited to just speeches and accidents, the managing director added, “KTV will focus on making its news investigative rather than confining itself to speeches and incidents. It will also try and cover the activities of television broadcasting areas.”

During the anniversary function, best employee of the KTV and the winner team of in-house friendly football tournament were awarded with certificates and prizes. http://www.ekantipur.com/2010/07/13/top-story/ktv-marks-7th-anniversary-plans-toair-in-us/318403/

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MARKET:

NEPSE up by 3.03 pts JUL 14 - The Nepal Stock Exchange (NEPSE) registered a gain for the second consecutive day rising 3.03 points to settle at 464.65 points on Tuesday.

An increase in the sub-indices of hydropower companies, commercial banks and development banks lifted the secondary market. Hydropower companies led the gainers with a growth of 24.81 points followed by commercial banks and development banks posting gains of 3.87 points and 2.71 points respectively.

The double-digit leap in the index of hydropower companies was propelled by an increase of Rs. 73 per share of Chilime Hydropower Company.

Meanwhile, insurance companies and finance companies lost 1.4 points and 0.81 point respectively. Share prices of 20 companies went up, 23 companies fell and 13 companies saw no change in their share prices. Among the 56 companies present on the trading floor, Prime Life Insurance Company posted the highest gain of Rs. 270 per share while Everest Bank preference shares suffered the most, shedding Rs. 30 per share. http://www.ekantipur.com/2010/07/14/business/nepse-up-by-3.03-pts/318427/

POLITICS: Parliament to elect PM on July 21 July 13 - The parliament today set July 21 as date to elect a new prime minister, prompting intense backroom negotiations among the three major parties — the UCPN-Maoist, the Nepali Congress and the CPN-UML. Constituent Assembly Chairman Subas Nembang today informed the House about the election schedule. As per the election schedule published by CA secretariat, nominations can be filed till July 20.

While political observers foresee a Maoist vs non-Maoist alliance emerging during the next few days, Maoist leaders privately confided that their party would not get to lead the new government. The first option for the largest party in parliament is to back a UML-led government. If that does not work UCPN-M could pitch for a new coalition headed by a Madhesi leader, informed sources said.

Maoists could back UML Chairman Jhalanath Khanal or Tarai Madhes Loktantrik Party President Mahantha Thakur as the prime minister, according to party sources.

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Nepali Congress, pressing for a government under its own leadership, appears to present parliamentary party leader Ramchandra Paudel for the next PM. The party remains opposed to a UML-led coalition succeeding the Nepal-led government.

UML is a divided house with the stronger faction supporting an NC-led government while Chairman Khanal himself has his eyes cast on the prime minister‟s chair, backed by UCPN-Maoist.

As the political situation looks extremely fluid since Nepal stepped down on June 30, it has been difficult for the political pundits to hazard any guess as to who becomes the prime minister or what kind of a coalition is likely to take shape.

Paudel‟s position seems to be stronger among the three prospective candidates, but there is also a chance that the Maoist bid to of get the PM from Madhesi party could sabotage Paudel‟s prospects.

“Although, the CPN-UML may discuss the Maoist offer, it will be difficult to forge consensus on the name of Khanal. Khanal‟s chances to get support from within the party are minimal, as he has no moral ground to claim the post with the UML parliamentary party already deciding not to lead a majority government,” said a UML leader. “Khanal cannot stake claim to lead new government when there is no change in situation after Nepal stepped down.”

Even as Paudel, Khanal and Thakur appear to be the front-runners, there is plenty of room for last minute surprises, according to party sources. http://www.thehimalayantimes.com/fullNews.php?headline=Parliament+to+elect+PM +on+July+21&NewsID=249638

22 parties take big three to task for failing to reach consensus 13 July 2010: A meeting of 22 smaller parties Tuesday passed a 'condemnation note' against the major three - Unified CPN (Maoist), Nepali Congress (NC) and CPNUML - for their failure to reach a consensus in the process of forming the new government within the two deadlines given by the president.

According to Keshab Mainali, chairman of Chure Bhawar Rastriya Ekta Party, the 22 parties passed condemnation proposal against major three parties for not being able to narrow down their differences for the sake of consensus.

"We agreed that the major three parties are responsible for creating the present political turmoil by lingering the remaining tasks of peace process and constitution writing," he explained, emerging out of meeting.

Today's 22-party meeting held at the parliamentary party office of Terai Madhesh Loktantrik Party (TMLP) in Singha Durbar also concluded that major parties were

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taking statute drafting for granted and that they were involving in a nasty tug of war over the leadership of the new government.

According to Mainali, the fringe parties also decided to urge NC, UML and UCPN-M to continue efforts for consensus to install a new government at the earliest possible time. nepalnews.com

Gautam projects Khanal as consensus prime minister CPN-UML Deputy chairman Bamdev Gautam today said Chairman JhalaNath Khanal was likely to lead the next government. ment.

"UML might lead the next government with the participation of all the three parties," Gautam told party cadres here.

"But the next government must win the confidence of all the CA members. If not so, then at least twothird members must be in favour of the next government."

Gautam was of the view that the next will be a consensus government even though the deadline set by President Dr Ram Baran Yadav to form a consensus government had already expired.

The President's extended deadline to form a consensus government expired on Monday. Gautam ruled out possibility of the Unified CPNMaoist or Nepali Congress leading the next government.

However, he said the Maoists were crucial part of the ongoing peace process and that the parties shouldnot try to shy away from them.

"The new constitution cannot be drafted by sidelining the Maoists, as two-thirds of CA members will be required to endorse the new constitution," Gautam told party cadres.

THT July 14, 2010 'Ram Chandra Poudel will lead new govt' 13 July 2010: Nepali Congress leader Shekhar Koirala has claimed that the new government will be lead by his party's vice president and parliamentary leader Ram Chandra Poudel.

Speaking at the Reporters Club Tuesday, Koirala said the NC is taking initiative to form the new government under its leadership and that Poudel will be the Prime Minister.

"The new government will be formed under Poudel within a week," Koirala said, ruling out the possibility of a Maoist-led government.

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"Anybody winning confidence of the parties could become Prime Minister if the government were to be formed on the basis of consensus. But the current situation is different," Koirala said. Alluding to the claim of NC general secretary Kul Bahadur Gurung to the Prime Minister's post, he said nobody other than the leader of the parliamentary party could make such a claim.

Speaking at the same programme, UCPN (Maoist) secretary CP Gajurel said his party, too, had started homework for formation of the government.

"Our party's strength in the parliament is bigger than the NC and the UML combined.

How can they claim to form the government?" he questioned.

On a question regarding the reports of intra-party wrangling over the prime ministerial candidate of the party, Gajurel said, "We have kept the option open. We can name anybody --Prachanda or Baburam."

He also revealed that his party was engaged in negotiations with the UML in its bid to form the new government. nepalnews.com

GENERAL:

UN defends UNMIN's integration plan July 13: The United Nations (UN) has defended the involvement of UNMIN in preparing a plan for integration and rehabilitation, saying the political mission is working within its mandate. “…the mission is acting within its mandate and consistent with calls by the Security Council for the parties to take advantage of UNMIN´s expertise and readiness to support the peace process and facilitate the completion of its tasks,” said Farhan Haq, associate spokesperson for Secretary General Ban Ki-moon, during press briefing in New York on Monday.

The global body´s defense of its political mission in Nepal comes in response to Prime Minister Madhav Kumar Nepal´s public allegation that UNMIN breached its jurisdiction by preparing a 60-week plan for rehabilitation and integration of Maoist combatants.

On Monday, the government even lodged its official objection to UNMIN over the plan, saying that preparation of the plan does not fall under UNMIN´s jurisdiction.

The government has argued that only the Special Committee for Supervision, Integration and Rehabilitation of Maoist Combatants should make such plan under Article 146 of the Interim Constitution.

The spokesperson further said on the controversy over the plan, “The issue dealt with in the non-paper containing the timeline for integration and rehabilitation of Maoist

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combatants is based on consultations by UNMIN, which has been consulting with the main parties in Nepal for some time which have taken place with the full knowledge of the government; this is not something new.”

Haq further said that the ideas related to the plan are part of UNMIN´s discussion with the political parties and intended to facilitate forward planning of the implementation of integration and rehabilitation of former Maoist combatants once political decisions are made by the parties.

“The completion of UNMIN´s arms monitoring mandate, in large part, is contingent on the parties agreeing on a plan to address the future of the Maoist army personnel,” the spokesperson said. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=20972

PAC tightens MoFA screws JUL 13 - The Public Accounts Committee (PAC) of the Legislature-Parliament has intensified investigation into the decision of the Ministry of Foreign Affairs (MoFA) to award the multi-billion contract of printing and supplying the Machine Readable Passport (MRP) to French firm—Oberthur Technologies. The parliamentary panel has asked the MoFA to furnish all the dossiers related to the global bidding process within five days.

PAC held a meeting with senior MoFA officials, including Foreign Secretary Madan Kumar Bhattarai, Chief of Protocol Muktinath Bhatta on second consecutive day following the controversy about the “alleged procedural wrong” while awarding the contract to the French firm.

PAC intensified discussions on the issue after the parliamentary committee received complaints that reported the printer proposed by the French company was of substandard quality. The PAC members claimed that they have received complaints about the French company Oberthur, which is planning to provide substandard passport copy and that Nepal‟s security concerns were not met properly while awarding the contract.

They also mentioned that PAC was not satisfied with the clarification furnished by the foreign secretary and his colleagues, so it has sought all the dossiers related to the deal.

PAC has directed the MoFA to submit all the documents related to the tender process for MRP printing, rate of the proposed bidding process, experiences of the bidding company, all the requirements set by Public Procurement Act and Regulations, within the next five days.

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PAC has also directed the MoFA to submit legal paperwork, its decision, and opinion in writing within five days.

PAC issued the directives following discussion with senior officials in Singha Durbar on Tuesday.

Among the four applicants, the lowest bidder-Oberthur-was picked for the contract as per the rules and procedures. http://www.ekantipur.com/the-kathmandu-post/2010/07/13/nation/pac-tightens-mofascrews/210417/

Army gives Basnet clean chit, claims UN violated norms July 14: After eight months of circumstantial investigations, the Nepal Army (NA) has given a clean chit to Major Niranjan Basnet, who was sent back from a UN peacekeeping mission in Chad last December for his alleged involvement in human rights violation in the Maina Sunar case.

The Army Court Of Inquiry has concluded that Basnet is “innocent” and that he was returned by the UN “against all international norms and regulations.”

It has been learnt that a decision to this effect was endorsed by the Defense Ministry recently. NA had sent a letter to the ministry two months back defending Niranjan and requesting that his case be withdrawn immediately.

NA has defended Basnet on the basis of the Military Act 1959 and the then Terrorists and Disruptive Activities (Control and Punishment) Ordinance 2002 (TADA).

After several rounds of questioning, the three-member Court of Inquiry found that Basnet was returned from the UN mission in a humiliating manner, accompanied by escorts, something only done in cases of breach of discipline.

NA has also written to the UN, objecting to Basnet´s return without prior consultations and in blatant oversight of a military court verdict given in the Sunar case in 2005.

Asked to comment, Major General BA Kumar Sharma, chief of the NA Legal Department, said, “Even going by the definition of the Military Act itself, it is clear that the Army was acting against a common enemy then and functioning under TADA,” adding, “Therefore there is no case against Basnet.”

NA has defended Basnet´s case as per Section 61 of the 1959 Act and Section 2.1 of TADA, which states that a suspect can be taken into custody for interrogation. In addition, the army has cited Article 24 (1) of the 1959 Act which states that offenses involving army personnel when TADA is in force cannot be treated in a civilian court.

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It has also quoted the Interim Constitution Section 24 (6) on fundamental rights, according to which a person cannot be subjected to double jeopardy, or tried twice for the same offense.

“The verdicts of our military courts are recognized internationally, so the UN has flouted all norms in sending Basnet back,” a highly-placed NA source told myrepublica.com. The source added, “This is also an attempt to discredit our institution as Basnet´s case is a closed chapter.”

Basnet was patrol commander in Kavre district in February 2004, when Sunar was brought to the barracks for questioning on suspicion of her being a Maoist informant.

She died in custody.

A General Court Martial in September 2005 found that three other officers -- Bobby Khatri (Basnet´s commanding officer) and Captains Amrit Pun and Sunil Adhikari -were guilty of various offenses. But Basnet was acquitted as he had only handed over Sunar to higher officials. Basnet served with the UN Mission in Sierra Leone (UNAMSIL) in 2006 before returning to an assignment in Nepal. He was sent back from the UN mission for Chad and the Central African Republic (MINURCAT) in December last year.

Kavre District Court had ordered Basnet´s suspension in September last year on the basis of a case filed by Sunar´s mother. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=20995

Nepal invites 51 Mountain countries for meet 2010-07-14: The government has sent invitations to 51 mountainous countries for a meeting on climate change scheduled to be held in Kathmandu on October 4 and 5.

The Cabinet, on June 23, decided to host a ministerial level meeting in Nepal. Prime Minister Madhav Kumar Nepal had announced the meeting at the Copenhagen summit on climate change held in December 2009.

Countries having mountains higher than 4,000 metres are included in this group. “Of the invitees, 30 are developing countries, 11 are least developed and 10 are developed countries,” said Batu Krishna Uprety, chief, Climate Change Division, Ministry of Environment.

The meeting, scheduled for the last week of September, was postponed to October because the United Nations Millennium Development Goal meeting coincided with the event.

According to a source at the ministry, there were a few rounds of talks with donor agencies working on climate change issues and they have shown interest in supporting the initiative. “They agreed to the ministry‟s proposal of US$ 1,100,000 support to organise the meeting,” said the source.

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The ministry is holding the next round of meeting with concerned ministries and donor agencies regarding fund commitment.

“Faster melting of ice in the Himalayas and other mountains across the world due to global warming — a major cause for climate change — has made mountainous countries more vulnerable. It is time to sit together and discuss how to raise the issue globally. Nepal has taken the initiative as it is one of the most vulnerable countries,” added Uprety.

International Centre for Integrated Mountain Development (ICIMOD) is technically assisting the ministry. DFID, Embassy of Denmark in Nepal, European Union, World Bank, Asian Development Bank and UNDP are also supporting it.

This is the largest meeting ever in history on the government‟s initiative. http://www.thehimalayantimes.com/fullNews.php?headline=Nepal+invites+51+Moun tain+countries+for+meet+&NewsID=249649

SC to decide Sobhraj's fate today 2010-07-14: The fate of alleged international serial killer Charles Gurumukh Sobhraj, who has been behind bars for almost seven years on a murder charge, will be decided tomorrow.

The Supreme Court Justices Ram Kumar Prasad Shah and Gauri Dhakal will pronounce the verdict tomorrow. “Since this is a sensitive case, the full text of judgment will be issued immediately after the pronouncement of the verdict,” an SC source told The Himalayan Times on condition of anonymity. Sobhraj‟s lawyer Prof Rajit Bhakta Pradhananga said the verdict in the sensational 1975 murder of US backpacker Connie Joe Bronzich would be a precedent in Nepal‟s criminal legal system, be it conviction or acquittal.

Last year Justices Shah and Dhakal began examining Kathmandu District Court and Patan Appellate Court verdicts based on which the 65-year-old French national was convicted for killing Bronzich. The government authorities, however, are yet to decide whether or not Sobhraj will face charges in another murder case that has been pending in the Bhaktapur District Court, involving the killing of Canadian national Laurent Armond Carriere.

Sobhraj had moved the SC in 2006, challenging the lower courts‟ conviction. The government, on the other hand, moved the apex court against the lower courts verdict giving clean chit to Sobhraj in the fake passport case. SC, however, transferred the fake passport case to the Patan Appellate Court.

“We hope that Sobhraj will be released,” Ram Bandhu Sharma, Sobhraj‟s legal counsel told THT. Sobhraj‟s lawyers have argued that police had faked all documents, including a hotel bill for food and beverages, in 2003 and implicated him in a fabricated case.

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The government attorneys, however, claimed that Sobhraj killed a Dutch tourist, Henricus Bintanja, in 1975 in Bangkok, and used his passport to fly to Nepal. Here he allegedly befriended Bronzich for a stash of valuable gems she had bought in India and stabbed her to death. Bronzich‟s body was found near the Manahara river bridge in Kathmandu.

The KDC had slapped 20-year jail term on Sobhraj and later the Patan Appellate Court upheld the conviction based on circumstantial evidence — the bag of the deceased found in Sobhraj‟s room, Sobhraj‟s telephone number mentioned in her note book, modus operandi, his statement to the Indian authorities, witness accounts when Sobhraj visited Nepal in 1975, description of his Nepal activities mentioned in a book titled The Life and Crimes of Charles Sobhraj and the report of DSP Chandra Bir Rai. The May 2009 decision of the Patan Appellate Court convicting Sobhraj in fake passport case has weakened Sobhraj‟s case. Another setback for Sobhraj is that prominent lawyers Badri Bahadur Karki, Basanta Ram Bhandari and Raja Ram Dhakal have left his defence team. http://www.thehimalayantimes.com/fullNews.php?headline=SC+to+decide+Sobhraj's +fate+today&NewsID=249639

Spain, Italy suspend adoption from Nepal July 14: Spain and Italy have suspended inter-country adoption from Nepal, joining other countries which have taken similar steps accusing Nepal´s adoption system of being non-transparent and unaccountable.

According to a member of the adoption group -- a loose forum of western countries to discuss adoption related issues -- Spain and Italy are the latest in the league that has decided to not adopt children from Nepal.

Nepal´s adoption system has been questioned by the western countries following publication of a report by The Hague Conference on Private International Law, an intergovernmental organization in February this year.

The report based on an investigation by a group of lawyers accused Nepal´s adoption system of widespread abuse. It also called for suspension of adoption from Nepal until the system is reformed.

Following the publication of the Hague report in February, eight western countries have suspended adoption officially and unofficially from Nepal. They include Canada, Denmark, Germany, France, Norway, Sweden, Switzerland and the United Kingdom.

Nepal-based embassies of the EU countries and the United States have already asked Nepal government to ensure transparency in adoption system and keep child rights protection mechanism in place.

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In addition, the United States in March had issues an alert notice to prospective adoptive US parents, expressing concern over Nepal´s adoption system and the accuracy of the information in children´s official files.

Secretary at the Ministry of Women, Children and Social Welfare Mahendra Shrestha said that the ministry is will talk to the US embassy officials in this regard.

Meanwhile, The Hague Conference has once again questioned transparency and accountability of Nepal´s adoption system even as Nepali mission in Brussels last month had claimed that there have been reforms in the adoption system following the enforcement of a 2008 regulation. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=20997

Cops to seek Red Corner Notice 2010-07-14: Nepal Police has started groundwork to request Interpol to issue Red Notice against four persons involved in the abduction of Dr Bhaktaman Shrestha, Executive Director of BP Koirala Memorial Cancer Hospital, Chitwan.

The Red Notice seeks arrest of wanted persons, with a view to extradition.

Four kidnappers, including key perpetrators Bhimsen Pandit and Rohit Paliwal Agrawal are at large. Police, however, have apprehended three associates — Badri Prasad Dhungana, Sunil Shrestha and Nabin Chhetri — involved in the hostage drama.

Superintendent of Police Yadav Raj Khanal said Nepal Police decided to go for Red Notice after the masterminds fled the country to evade justice. “As Dr Bhaktaman was picked up from Chitwan, the District Police Office there will first file charges against them and request Interpol Nepal Office at Nepal Police Headquarters to communicate with Interpol Headquarters, in Leon, France in this regard,” he informed. “The application will include 22 points clarifying why the Red Notice should be issued.”

An Interpol notice or International Notice is issued by Interpol to share information between its members. “Interpol will only issue notices to help police track down wanted criminals after verifying that all the conditions for processing the information have been fulfilled,” informed SP Khanal.

Dr Bhaktaman was abducted on May 18 and taken hostage for 19 days. He was blindfolded and kept captive in three separate houses in Chandol, Samakhusi and Budhanilkantha for 17 days, leaving the police clueless.

He was set free on June 5 after the kidnappers secured ransom of 3.5 kg gold from the victim‟s family in Kanpur, India. A senior police official informed that Pandit and Agrawal had reportedly fled to India, while their two associates — Luppa Tamang and Gautam Yonjan Lama had gone underground in Nepal. “Most probably, we will request Interpol to issue Red Notice for the arrest of Pandit and Agrawal in the first

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