Assignment II

Submitted by:
Avinash Hada
MBA FALL 2015

Submitted to:
Mr. Gokarna Awasthi
10th July, 2017
 Agriculture
Production, Import and Export, Current Status

Agriculture has been the major economic backbone of the country. Despite the innovation in
science and technology, impact on agriculture in the economy has been less than that of industry
and services but the volume of agricultural production is being significantly increasing year to
year over the period of time. Agriculture has contributed around 28.9% of the total economy in
the fiscal year 2073/74 as compared to 31.1% in the last fiscal year 2072/73. About 2/3rd of
population has been involved in agriculture profession. Because agriculture is fully dependent
upon the season and rainfalls, there has been no any satisfactory development in the increment of
agriculture sector in the last 10 years.

Comparing the production total food production of Nepal (rice, maize, millet, wheat, barley,
buckwheat) between the fiscal year 2072/73 and fiscal year 2073/74, there has been increase in
about 13% and the total production has been estimated to around 97, 41,000 metric tons. The
production in the last fiscal year 2072/73 was only 86, 14,000 metric tons.

Paddy is the major food crop among all food crops in Nepal. As per preliminary estimate, paddy
production is expected to increase by 21.6% (52 lakhs 30 thousand metric tons) compared to
fiscal year 2072/73 (42 lakhs 99 thousand metric tons). Maize is the 2nd most major crop of
Nepal which is expected to increase by 3.97% as compared to fiscal year 2072/73.

In fiscal year 2073/74, the total number of cattle in Nepal is expected to increase by 0.89 percent
as compared to that of previous year.
Nepals cereal and livestock export are expected to increase by 28.8 percent. For alcoholic
products the exports are expected to decrease by 51.04 percent (17 crores).

Budget, Special Provisions in budget and Subsidy

For agriculture and livestock sector programs Rs. 30.40 billion has been allocated. Agricultural
production will be enhanced through the proper distribution of factors of production by
identifying location-specific competitive and comparative advantageous products.
Agriculture is responsible for providing inputs of raw materials to develop industries.
Hence focus has been shifted towards increasing agricultural products and the campaign
named Prime Minister Agricultural Adhunikaran has been launched.
Various agricultural programs has been launched such as producing agricultural products
and to do this, agricultural products producing blocks will be established in each of the
district comprising of 100 hector land.
The provision of 5 percent subsidy in the interest of agriculture and livestock loan has
continued. Similarly, continuity to all the subsidies and facilities including the fertilizer
and improved seeds has also been continued. All sorts of subsidies provided to
agriculture will be managed through farmers' own bank account.
The presence of middle man will be discouraged in order to ensure the fair price and
market access of the products of the framers by establishing appropriate value chain.
 Large scale cold store and storage centers will be constructed by Public, Private and
Cooperative sectors by maintaining provincial balance. Market access of farmers will be
increased by constructing infrastructure of agricultural product market.
Advanced breeding center will be established in potential places so as to increase the
production for the improvement cow breeding.
Agricultural and Livestock will be developed towards commercialization in order to
attract youth in agriculture sector.
Agricultural insurance service will be expanded throughout the country by integrating the
available insurance services at present.
Branding of Nepalese agricultural products will be initiated to export in the world market
by expanding the organic farming.

Challenges and Threats

Agriculture is not an entrepreneurship: It is still a means of livelihood. Nearly 67 percent

of the population engaged in agriculture.
Farm sizes are small, land is fragmented and no land management.
Basic modern technology inputs like seeds, fertilizer, breeds and feeds are in short supply
Reliable irrigation facility is not available
Lack of agricultural infrastructures such as agricultural roads, storage facilities and agro-
markets
Farmers incur higher cost of production than in India. As a result, products are not
competitive in national and international markets. There is no easy access to the market.
Interest on agricultural credit is high and credit is not available on time.
Pasture lands are limited due to community forests.
Agriculture research is not getting high priority in government funding.
Modern technologies are not adequately transferred to the farmers fields
Fertilizer prices are higher in Nepal than in India. There is no adequate import and supply
of chemical fertilizers. Fertilizers and pesticides are not easily available in remote areas.
Lack of manpower
Agricultural subsidies available to Indian farmers in fertilizers, pesticides, seeds,
irrigation make it difficult for Nepali farmers to compete in the market.
Nepal over past three decades has gradually shifted from a position of being a net
exporter to net importer of food grains.

Opportunities

25 percent of the insurance premium is paid by the government.

Agricultural loan is provided only at 5 percent.
Demand of quality food will be much stronger as the middle income group grows-the
agro-industry sector is expected to expand further.
From last year budget government has announced zone, superzone and pocket zone. At
least 10 hectares of land is needed to identify it as pocket area; 100 hectares to be
considered a block; 500 hectares to be termed as zone, while a super zone makes up
 of 1,000 hectares of land mass. The government will offer quality seeds, seedlings and
fishlings, additional grants for chemical fertilisers, irrigation facilities and agriculture
extension services for farmers in the identified pocket areas. The fiscal budget has
allocated Rs 5.78 billion for the grant distribution and agriculture extension services in
the pocket areas, blocks, zones and super zones. A super zone for rice has been
established in Baniyani, Jhapa in Province 1, a super zone for fish in Bara in Province 2,
and super zones for potato and vegetables have been established in Kavre and Kaski
districts respectively.
Duty free access in the second largest market of the world (India) as we dont have to pay
any fee to export agricultural products to India.
Introducing modern technology and management system
Opportunity to establish joint ventures with foreign companies
Governments priority area
Diversified agro climate and resource base

Suggestions

Access to finance should be provided.

Accessibility to more fertilizers seeds and breeds.
Irrigation facilities should be in adequate.
Government should provide subsidy on different layers of production.
Access to market to sell products should be provided.
Develop agricultural infrastructures such as agricultural roads, storage facilities and agro-
markets
Training to farmers
Modern technologies and equipment should be made available
Making rural credit available especially to women
Diversifying crop patterns and introducing high value crops
 Manufacturing Industry
Current Status

The contribution of manufacturing to GDP in fiscal year 2064/65 was 7.34 which have decreased
to 5.67 in current fiscal year 2073/2074. In fiscal year 2072/73 the contribution of manufacturing
industry to GDP decreased to 5.72 percent. The growth of this sector for the last ten year is
averaged at 2.05 percentages.

Growth of the manufacturing sector is estimated to increase by 9.7 percentages for the fiscal year
2073/74 comparing to its rate during the fiscal year 2072/73.

During the last fiscal year, the devastating earthquake and the unofficial border blockade was the
reason behind 8 percentage decline in this sector whereas, during this fiscal year, due to the
sufficient inflow of the petroleum, less obstruction from bands and the strikes created normalcy
in the industrial sector thereby resulting a increasing effects in the manufacturing sector.

In the first eight months of fiscal year 2073/74 altogether 6834 industries have been registered at
ministry of industrial department. In analyzing all industries manufacturing industries have the
highest number of industries with 2713 industries (39.7%), service industries number is 1907
(27.9%), tourism industry with total of 1406 (20.6%), agriculture industry with 413 numbers
(6.1%) and energy with 283 industries (4.1%).

In the first eight months of fiscal year 2073/74 industries that has been registered the highest
capital investment is in energy industries with 52.9%, manufacturing industry with 23.1%,
service industries with 10.7%, tourism industries with 8%, agriculture industries with 1.6% and
minerals with only 0.3%.

Because of the unfavorable working climate prevailed in the country, many of the workforce are
forced to leave the country for abroad employment. In these scenarios, establishment of industry
plays a huge role in creating positive working climate and ultimately positive economic growth.

Budget 2073/74 Provisions

For industry, commerce and supply sector programs Rs. 10.96 billion has been allocated. The
major highlights are:

Establishment of employment generating and export oriented industries will be promoted.

Investment promotion programs will be organized abroad.
Grant will be provided to selected industries promoted by young entrepreneur for the
necessary technological and market promotion. Youth entrepreneurship program will be
continued. Activities such as awareness, skill development, appropriate technology, easy
access to loan with subsidized interest rate and market development will be conducted
under the small and cottage industry promotion program.
 Special Economic Zone will be brought into operation. Studies will be conducted to
establish additional industrial zones. Access road, electricity transmission lines and other
infrastructures will be developed for cement, iron and copper industries and mines.
Concessional loan will be provided for the citizen who are under poverty line to develop
entrepreneurship upon the recommendation of local level body.
Bhagat Sarbajit Dalit Development will be continued with enhanced effectiveness.
Environment friendly industries will be further promoted.

Foreign Direct Investment on Manufacturing Industries

Foreign Direct Investment (FDI) is one of the factors for growing trade, investment and
economic growth for the countries. The integration of global economies is enhanced by flow of
FDI across the globe. Multinational companies (MNCs) are the vehicle of FDI through which
they transfer capital and technologies from one geography to geography. Primarily, MNCs go
cross boarder operations with the view of market seeking, raw materials explorations and low
operations costs. MNCs are important for developing economies because they invest in the green
fields which help to improve the infrastructure of the economy. The main importance of FDI on
economic growth is that FDI are embedded with the new technologies which become the pivotal
driver for economic transformation of developing and under developed economies. The local
firms learn new technologies from the MNCs in one hand; they try to improve the managerial
and technological aspects of the operations on the other hand. In the recent years, every country
has the policy to attract more FDI in their economic policies. Nepals neighboring countries both
China and India have achieved higher economic growth rate along with the massive inflow of
FDI (table below). Not only India and China, other neighboring countries recorded higher level
of economic grow in the recent years.

Looking at the data of past 10 years, in fiscal year 2063/64 there were 188 firms operated with
FDI with NRS 3 arba 18 crores and 60 lakhs. In fiscal year 2071/72 there were 370 firms
operated with FDI which declined to 347 firms in fiscal year 2072/73. In the first 8 months of
fiscal year 2073/74 there are currently 213 firms operated with FDI with NRS 10 arba 15 crores
and 10 lakhs.

In the first 8 months of fiscal year 2073/74, there are around 3907 firms registered from 90
countries with FDI. These firms employ 224,286 employees. India has the highest share of FDI
with 39.12%, China is the second with 16.26% and China-Hongkong is the third with 13.06%.
The share of USA in FDI is 3.64% and UK is 2.56%.

In terms of number of industries operating in Nepal with FDI, China has the highest number of
industries with 1093 industries, India is second with 662 industries and third is USA with 344
industries.
Various laws have been enacted to develop the industries such FDI act 2071. Focus has been also
towards transfer of technologies and FDI.

Challenges or Reasons for decline in contribution of GDP as compared to 2005

According to the study done by World Bank in 2009 there are two main reasons:

1. The first reason is Political instability of Nepal. The frequent changes in government
have had severe impact on the development and formulation of industrial sector in the
country. In 26 years after declaration of democracy in the country, the present Sher
Bahadur Deuba led government is the 24th government of the country. This shows the
high level of political instability. The average life of government of Nepal since
declaration of democracy is hardly a year. So changing government and changing
priorities and policies along with political ideology is affecting industrial sector.
In addition to political instability, the trade union problem is another aspect that has
hindered the pace of industrial development. The trade unions are causing problems time
and again with unjustified demand related to wage and compensation. The Everest Hotel
is the recent example of such problems. Even though in surface massive earthquake
seems to be reason behind shutting of Everest Hotel but in reality labor union issues were
the major factor. Surya Nepal Pvt. Ltds Biratnagar based garment manufacturing unit
which ceased production due to problem of trade unions. The highly politicized unions
have caused organization huge cost in terms of strikes, inefficiency and disputes between
management and employees. Forced employment of party candidates by trade unions are
unlikely to improve productivity of manufacturing industries. Forced donations are other
problems caused by trade unions which add further to cost of doing business.

2. The second reason is electricity shortage in Nepal.

Other reasons for decline in contribution of GDP are:

During the last fiscal year, the devastating earthquake and the unofficial border blockade
was the reason behind decline in this sector whereas, during this fiscal year, due to the
sufficient inflow of the petroleum, less obstruction from bands and the strikes created
normalcy in the industrial sector thereby resulting a increasing effects in the
manufacturing sector.
Unfavorable environment for foreign investment
Lack of proper infrastructure. For eg: State of Mugling- Naraygadh sadak
Huge competition from India and China
Lack of security and Manpower.

Opportunities

Find out product with comparative advantage such as cement, noodles.

 Duty free access to 2nd largest market of the world i.e. India.
Duty charges applied to manufacturing products imported from India.
Nepal is 45th largest country in terms of population.
EU, USA, Australia and Canada has also provided duty free access. According to
Everything But Arms (EBA) provision of Europe, while exporting from Nepal to Europe
no duty charges are applied.
Similarly according to India-Nepal trade treaty 1996, no duty charges applied for
agricultural products for both counties while duty charges are applied to manufacturing
products imported from India.
According to Generalized System of Preferences of USA, 95% of Nepalese exportable
goods are getting duty free except for garment.
 Tourism

Current Status

Due to the lack of the information about the actual impact of tourism in total gdp has been
difficult to obtain. In the fiscal year 2072/73, the contribution of hotel and restaurant sector in
GDP is 2 percent whereas it is expected to be at 1.98 in the fiscal year 2073/2074. By 2025,
nation tourism project has set a vision with a target to bring 25 lakhs 21 thousand tourism and to
create an employment of 8 lakhs 98 thousand.

Looking at the statistics of last 10 years, in the year 2006 there was an inflow of 3,83,926 tourists
in the valley. Likewise in the year 2016, there were around inflow of 7,53,002 tourists arrival in
the country. The devastated earthquake of 2072,followed by the unofficial blockade in the border
of Nepal had created the negative impact in tourism activities in 2015 resulting in 32 percent
decrease in the tourist arrival during the same period. Thereafter, there is an improvement in the
tourist arrival. The number of tourist arrival during 2015 was 5,38,970 whereas it was increased
by 40 percent in 2016.

While analyzing the total number of tourist arrival by country during 2016,top five countries
with the largest number of tourist arrival have been India (15.7%), followed by china (13.8%),
Srilanka(7.6%), the USA(7%), and UK (6.1%).These tourist appeared to have contributed 50
percent of the total number of tourist arrival during this period. These figures during the same
period of earlier year were India (14%), china (12%), America (10%), Srilanka (8%) and
Thailand (6%).

In the year 2016, there was an inflow of 1,80,439 non-Indian tourists from the border area with
79% coming from Bhairawa-Sunauli border. Of the total number of tourist visiting Nepal during
2015 by purpose, 65% of them come for holiday/entertainment/travel purposes. In t his way, 11
percent of them came for the religious purposes, 8.83% for mountaineering/trekking purposes,
3.23 percent for trade, 2.83 percent for administrative or office trip, 1.7% for
meetings/conference and 7.4% for the other purposes.

Lumbini is regarded as the major tourist destination of Nepal. During 2015, a total of 7 lakhs 48
thousand 2 hundred 94 internal and external tourist had visited Lumbini. In 2016 the statistics
increased by 72% totaling 12 lakhs 85 thousand 6 hundred 80.Among these number the total of
10 lakhs 15 thousand 2 hundred 69 were Nepali, 1 lakhs 34 thousand 2 hundred 69 were Indians
while 1 lakhs 36 thousand 2 hundred 53 were from rest of the world.

Foreign exchange earnings from the tourism sector stood at Rs 41 billion 76 Crores 50 lakhs in
fiscal year 2072/2073.In the first eight months of the fiscal year 2073/74 foreign exchange
earnings from the tourism sector recorded at 36 billion 19 crores 90 lakhs. Such Earnings from
the tourism sector in the first eight months of the fiscal year 2073/74 stood at 66.8 percent of the
total foreign exchange earnings and 23.3% of foreign exchange earned from the exports of goods
of the total foreign exchange earned. In the fiscal year 2072/73 there were 3 casinos in operation
which rose to total of 5 during the first eight months of the fiscal year 2073/74.In this way, total
of 3 mini casinos and one online gambling are in operation.

Budget and Provisions

The budget has allocated Rs. 13.72 billion for three airports: Nijgadh Second International
Airport, Gautam Buddha Regional International Airport and Pokhara Regional International
Airport.

Government has given continuity to master plan implementation program for touristic rich places
to develop them as major tourist destinations and to prepare master plan where such plans are yet
to be developed. Government has given continuity to build trekking trails and development
program. Government has given continuity to wider Janakpur Region Development Program.

Tribhuvan International Airport will be upgraded as per international standard. Under this
program, runway and parking way will be extended with Koteshore section of Koteshore-
Suryabinayak road by converting this section into tunnel road.

In order to increase inflow of tourists in the country, various programs were launched such as
Nepal Visit Year in 1998. Similarly in the year 2002 and 2003 Destination Nepal, Pokhara
Visit Year in the year 2007 and Nepal Tourism Year in the year 2011 was enacted.

With the objectives of producing basic and skilled workforce for tourism sectors development,
Nepal academy of tourism and hotel management has been providing vocational and
employment oriented trainings and offering bachelors in hotel management tourism and tourism
management courses and providing masters degree program in hotel management. In the fiscal
year 2073/74, it has been able to produce 3 hundred and 33 and one thousand five hundred and
twenty eight workforces in educational courses and other trainings respectively. During the first
eight months of the fiscal year 2073/74, the total number of the workforce achieving training in
tourism sector from the institution has been rallied to 77 thousand seven hundred and 12.

Problems and Challenges

At present RA is facing many issues and has only limited destinations. Similarly the only
international airport is very improperly managed and is unable to handle large inflow of
guests.
Lack of infrastructural development: Nepal is beautiful country with various natural
sceneries, historical and religious sites, arts & architecture and social cultures. Nepal can
be the best tourism spot with the help of its unique features. But due to lack of
infrastructural development it is unable to utilize its features. If we are able to provide all
the infrastructural facilities we can attract a large number of tourists in our country.
 Lack of conservation of cultural and religious sites: Nepal is country rich in cultural and
religious sites which helps to attract large number of tourists. But due to lack of
conservation activities such sites are being deteriorated which hampers tourism
development.
Lack of international Airport
Lack of proper tourism centers: We do not have proper tourism centers to provide them
necessary information. Tourists do not want visit places without any information. So,
tourism centers should be established in order to increase number of tourists.
Lack of publicity: Nepal is the beautiful country with various natural, cultural and
historical sites. But without its publicity it has got no importance. Nepal is unknown to
many peoples in the world which affects tourism development.
Lack of facilities and safety for tourists: We are unable to provide better facilities and
security to the tourists which is defecting tourism development in our country. They
should be free from fear and provided with better facilities which helps to increase
number of tourists.
Internal Conflict: There is a high chance of internal conflicts in Nepal such as strike,
Banda, political movements etc. which damages the reputation of tourism development in
Nepal among the tourist community.
Lack of qualitative human resource
Growing Cut throat competition
Destination getting expensive due to service charge and VAT

Suggestions:

NTB is still limited in marketing the NTY2011 program with orthodox marketing
techniques of travel fairs promotion and limited web profile system which need to be
adapted with a more dynamic marketing tools like Search engine optimization, aggressive
social network marketing, effective documentaries and previews in international travel
channels, etc
The completion of 3 international airports should be expedited.
The number and capacity of domestic and international air services should be increased.
There should be a good provision of transport and communication in tourism areas.
Tourists should be provided with of the things necessary for the tourists in the markets,
banks, and security.
Provisions must be made to produce the things necessary for tourism industry in our own
country.
Nepal should be introduced to the world through advertisement for its art, culture and
natural beauty.
Cultural and religious places should be well maintained and conserved.
Investors should be encouraged for the development of tourism industry.
 Energy
Current Status

During the first eight months of the fiscal year 2073/74 electricity covered 4.1 percentage of the
total energy consumption while the occupancy of the electricity during the corresponding period
of the previous year was 3.7 percentages.

In the first eight months of the current fiscal year the total energy consumption has decline by
24.7 percent totaling 80257 tons oil equivalent (ToE), while such consumption during the
corresponding period of previous fiscal year was 10,970.

While looking at the statistics of the last eight months, the consumption rate of traditional,
commercial and renewable energy stood at 74.5 percent, 22 percent and 3.5 percent respectively.
Such ratio in previous fiscal year had remained at 55.3 percent, 42 percent and 2.7 percent
respectively.

If the production of the hydroelectricity goes on increasing we can minimize the part or
dominancy or demand of the coal, petroleum products and traditional resources. On doing this,
increasing trade deficit can be minimize in one hand and in the other hand the addressing of the
energy crisis could minimize the deforestation thereby creating a positive impact in the
environment.

So far in the last 100 years 961 MW of electricity has been produced in Nepal while the demand
is 1444 MW in current fiscal year. The production in dry season was 400 MW while 400 MW
has been imported from India.

There has been significant rise in production of electricity in fiscal year 2073/74 as compared to
last fiscal year. In the first 8 months of fiscal year 2072/73 total production was 18.5 MW while
in the first 8 months of this fiscal year the production has increased by 105.3 MW.

Currently there is no load shedding in Pokhara and Kathmandu while the load shedding has also
declined in other places. In the industrial sector the load shedding is around 4 hours while there
is no load shedding in houses. Currently there is 4 hours of load shedding in industrial sector of
Biratnagar while there is 6 hours of load shedding in industrial sector of Birgunj. In Bhairawa
industrial sector there is more than 6 hours of load shedding.

In the current fiscal year the consumption of electricity from various sectors are: housing
(45.4%), industries(36%), businesses(7.4%) and other sources(11.2%).

The demand for petroleum products has been continuously increasing. In the last fiscal year due
to unofficial blockade there was decline in monthly import of petroleum products by 16.5%
while for the current fiscal year the import has increased by 45%. As compared to 2071/72 the
import of petroleum products has increased by 21% for this fiscal year.
The demand for petrol, diesel, LPG and airlines fuel has been increasing while the demand for
kerosene fuel has been decreasing. In the first 8 months of 2073/74 the consumption pattern is as
follow: petrol (22.5%), diesel (67.5%), kerosene oil (1.1%) and ATF (9%).

In order to facilitate the storage of petroleum products the government has started to buy lands
for construction of storage in Jhapa, Sarlahi, Chitwan, Dhadhing, tanahun, Rupandehi and
Kailali. This storage can store petroleum products sufficient for the demand of 90 days.

Budget and Provisions

For energy programs Rs. 62.47 billion has been allocated. The major highlights are:

1. The government has launched the theme Nepal ko Pani Janata ko Lagani to eradicate
load shedding from the nation and planned to generate 17,000 megawatts electricity.
2. Construction of at least 500 Megawatt Hydro-electric projects will be started with the
investment of Civil Servant, Nepal Army, Nepal Police, Armed Police Force, Teacher
and other public servants.
3. Electricity leakage reduction and control program will be implemented as campaign. In
order to minimize electricity leakage and electricity related accidents, construction of
underground electricity distribution lines will be started in few urban areas of Kathmandu
valley. In order to strengthen electricity distribution system, smart meter and grid system
will be continued to implement. Technical loss of electricity will be minimized by
improving electricity distribution lines in Kathmandu valley.
4. Construction of all Reservoir and peaking projects including Nalsingh Gad, Veri-1,
Jagdulla, Utterganga, Noumure, Sunkoshi-2and 3, Dudhkoshi, tamor will be expedited
simultaneously.
5. The budget has allocated Rs 10 billion for Budi Gandaki Hydro Project and projected that
the Chameliya and Kulekhani III would be completed next year.
6. Dependency over petroleum product will be reduced through the necessary production
and distribution of electricity to meet the demand of household and industrial sector,
replacing cooking gas, and using electric transport.

Challenges and Problems

Lack of investment in Hydropower sector: Nepal is an underdeveloped country located

between China and India. Generation of energy form hydro resources needs huge
investment and Nepal does not have sufficient fund to invest in hydro power sector. Most
of the government budget is spent in fulfilling basic need of Nepalese citizens (i.e.
education, health, agriculture, infrastructure building).
Lack of appropriate Hydropower development policy: Though Nepal has progressed a lot
in the development of hydropower policy, it still lacks several issues. The first
hydropower development policy was formulated on 1992. The latest review of that policy
was done on 2001. Since 2001 there has been lots of change in Nepal. Currently Nepal is
 a federal country and has lots of changes in its political and economic environment. But
still the Hydropower development policy has not been changed with respect to the other
changes.
Unstable investment environment: Political Instability has been the defining feature of
Nepali during the last two decade. Nepal became the federal republic country in 2007
and is in transition phase of forming constitution. The prolonged dispute between
Nepalese political parties has made difficult to get the complete/stable constitution till
now and this is leading to the unsuitable political environment. Lack of good governance,
lack of strong investment policies and laws, weak bureaucratic system are the factors that
discourage investors to invest in Nepal.
Lack of a Coordinated Approach for Development and Management of Energy Sector:
Although there are at least five ministries that are directly related with development and
management of energy and related services, meanwhile some sub-sectors such as in
hydropower and rural energy sub-sectors have policies for development and management
of energy services, others lack specific policy provisions for development and
management of energy although they have policies developed in their respective sub-
sectors. For example, forestry sub-sector has a policy for management and conservation
of forests, but it lacks specific provisions for supply and management of bio-energy.
Absence of an organization for planning and coordination in the centre: There is absence
of a central organization that deals with the planning and coordination of the energy
sector. Currently, there is absence of a coordination mechanism between the ministries
directly related with the development and management of energy.
Monopoly of NOC in the Import of Petroleum Products: NOC enjoys monopoly in the
import of petroleum products. It has also given rise to inefficiency in operation as there
are no other trading entities for competition. Consumers are made to pay for the
inefficiency of NOC. Trading in petroleum products are not run on commercial
principles. Inability of the government to run NOC on commercial principles is partly due
to continuing political environment of the country. It has continued for long and there is
no reason to be assured of its efficient operation. Regulation of operation of NOC is
weak.
Low Priority/Weak R&D: There is lack of priority on research and development. There is
virtual absence of a policy that promotes research on technology for use of kitchen wastes
as a source of energy (through development of appropriate biomass gasifiers).
Unsustainable TE Supply System: The country has not currently pursed any dedicated
plantation of energy crops, either annual or perennial crops, grasses or trees solely for the
purpose of sustainable biomass supply for energy, neither in the agriculture nor in the
forestry sector.