AGP Executive Report

Aviation Incentives: Nepal extended fee waivers and discounts for international airlines using Pokhara and Gautam Buddha airports for two more years, pushing the scheme to mid-September 2028 as passenger turnout stays low. Digital Push: NAS IT Expo is set for November 21-22 to spotlight AI, cybersecurity, cloud and digital transformation, aiming to connect tech firms with investors and businesses. Energy & Hydropower: NEA approved Rs 1.571 million compensation for a Nawalparasi child who lost both hands in an 11kV shock, and has started RCOD extension for 218 hydropower projects under a new grouping policy. Energy Governance: Minister Biraj Bhakta Shrestha urged tighter coordination across federal, provincial and local governments for water and energy delivery. Agriculture Risk: Wildlife is destroying crops across Nepal, while bird flu hit 162 poultry farms; Rs 507.1 million compensation has been paid for culled birds. Construction Procurement: PPMO issued revised sample bidding documents for construction procurement under the Public Procurement amendment. Handicrafts & Jobs: FHAN backed a Handicraft Development Board under PPP, and PM Shah met organic agro and processing entrepreneurs to boost trade and exports. Markets: NEPSE fell 13.95 points (0.51%) in the latest session, with NCC Debenture 2086 leading losers.

Ayurveda Sector Push: Nepal held a high-level discussion on improving Ayurveda services, integrating them into the health system, and scaling Ayurvedic tourism, with plans to strengthen key hubs like Pokhara’s Gandaki Ayurveda Hospital and Kirtipur’s research and training centre. Energy & Industry Tech: Huawei launched FusionSolar 9.0 Smart PV and LUTERRA grid-forming storage in Nepal, aiming to stabilize the grid and boost solar reliability. Trade & Logistics: Nepal’s Biratnagar got its first direct commercial freight train from Kolkata under the amended rail transit framework, expected to cut transport costs and speed up imports for local industry. Food Prices: Egg prices rose after bird-flu-linked production fell, with large eggs up to Rs 500 per crate (30). Tourism Regulation Debate: Lawmakers proposed government control of hotel room rates in the Integrated Tourism Bill, while hoteliers warned it could distort the market amid excess hotel capacity. Consumer & Tax Moves: The government backed off mandatory customs MRP, while also rolling out a Taxpayer Incentive Gift Programme to reward invoice and payment compliance. Capital Market: NEPSE slipped 13.95 points to close at 2,712.54.

Cargo Rail Boosts Industrial Corridor: A freight cargo train has arrived at Biratnagar’s ICP, a milestone for the Morang-Sunsari Industrial Corridor and a long-awaited step to cut costly road transport—though officials warn regular service needs policy and cost reforms. Trade & Customs Pulse: Mechi Customs Office (Kakarbhitta) collected about NPR 17.67 billion in FY 2082/83, up ~11% year-on-year, but still short of its target—showing steady cross-border flow for tea, ginger, broom grass, petroleum and industrial imports. Garment Industry Push: PM Balendra Shah directed ministries to clear delays, form a Textile and Clothing Development Council, and restart closed factories; the plan also targets lab testing hurdles limiting US exports. Energy & Water Governance: The energy ministry is drafting a new Water Resources Policy for river conservation and shared action across all three tiers. Food & Agriculture Shock: Bird flu and H-9 outbreaks have hit Nepal’s poultry sector with estimated losses of around Rs 4 billion; egg prices are rising as production drops. Everest Tourism Rules Tighten: Lawmakers filed 263 amendments to the Tourism Bill, pushing stricter Everest climbing qualifications and tighter control on commercial expedition packages. Public Services Under Review: Government is reviewing Nepal’s public holiday policy, citing service delivery slowdowns from too many closures.

Macroeconomic Pulse vs. Domestic Strain: Nepal’s external outlook looks better with foreign exchange reserves at 37 kharba 55 arba 64 crore rupees (about 61.5% of GDP) and remittances up 38.2%, but internal indicators remain weak as investment stalls and consumption softens. Road & Urban Infrastructure: Chakrapath expansion is still dragging—Kalanki to Basundhara/Sukedhara areas are chaotic with mud, dust, weeds, and poor road safety despite an agreement reached earlier. Policy Clash in Government: Prime Minister Balendra Shah is holding private-sector meetings while Finance Minister Swarnim Wagle stays absent, fueling speculation over internal coordination. Tax & Compliance Push: Nepal withdrew the 3% equity tax on private education and health after backlash, while also launching a Taxpayer Incentive Gift Programme to reward invoice demand and boost e-payments. Digital Governance: Government unveiled sweeping digital reforms to make services faceless, intermediary-free, and time-bound via a national digital platform. Energy & Industry: MCC work advanced with 46 transmission towers completed for the New Butwal–border line; DoED issued survey licenses for 99 hydropower projects (3,211 MW) and survey permits for solar and transmission projects; 20 factories in industrial estates still lack power and water over unpaid dues. Trade & Jobs: Nepal and India discussed expanding cross-border electricity trade; IPPAN met India’s ambassador on long-term hydropower cooperation; South Korea seeks 7,200 Nepalis for 2026 under EPS. Textiles: PM Shah directed formation of a Textile and Clothing Development Council to revive the garment sector and support export growth. Agriculture & Food Security: FAO’s Hua Yang met Agriculture Minister Gita Chaudhary on food security, climate-smart farming, lab capacity, and export of high-value products. Governance & Land: A Land Problem Resolution Committee started relocating displaced squatters back to home districts. Finance Integrity: CIAA filed a money laundering case against former CAAN DG Pradeep Adhikari over alleged bribe-linked land transactions.

Rail & Trade Logistics: Nepal’s rail freight push got a boost as a cargo train carrying rapeseed (1,070 metric tons in 40 containers) arrived at Biratnagar Customs Yard from Kolkata, marking the resumption of third-country rail imports after nearly three years, following changes to the Nepal–India Transit Treaty. Fertilizer Supply: The agriculture ministry says chemical fertilizer supply is meeting peak paddy demand: 250 metric tons of DAP reached Biratnagar, with more DAP rakes and urea shipments in the pipeline. Digital Payments & Consumer Compliance: Digital payments keep spreading beyond banks, with QR and mobile instruments becoming everyday tools; meanwhile, the government launched a bill-collection lottery to curb tax evasion and improve compliance. Hydropower Pipeline: The Department of Electricity Development issued survey permits to 99 hydropower projects (3,211 MW) and permits for transmission lines, while also licensing generation for additional projects. Industry & Manufacturing: Nepal’s NAL and the health ministry signed an agreement to expand domestic drug production to 36 essential medicines in two years, supporting institutional procurement. Local Industry Push: PM Balen Shah is set to discuss ready-made garment industry problems, export promotion and job creation with the association. Agriculture Value Addition: Nepali pickles are finding overseas buyers, with exports rising across more than a dozen countries. Energy & Mining: Dhaubadi Iron Company moved ahead with mining scheme reporting for two iron ore blocks after lab testing of samples begins. Policy & Governance: The finance ministry says it is shifting from micro-management to policy and fiscal discipline in budget implementation. Disaster Response: Monsoon risk has prompted instructions for district officials to stay at duty stations for faster coordination.

Capital Markets & Regulation: PM Balendra Shah met market stakeholders and pledged to fix Nepal’s capital market downturn with faster, coordinated regulatory action, while Finance Minister Swarnim Wagle’s absence sparked political chatter. Budget Execution: Finance Minister Dr Wagle directed ministry secretaries to move quickly on implementing the 2083/84 budget. Hydropower Project Rules: NEA introduced a four-tier system to classify hydropower projects seeking RCOD extensions, aiming to improve transparency and speed decisions. Trade & Logistics: Nepal’s first regular cargo rail from Kolkata to Biratnagar is now operating under the Nepal-India transit arrangement, cutting time and logistics costs for eastern industrial raw materials and imports. Food & Agriculture: Paddy transplantation is nearing 70% nationwide as monsoon rains accelerate work; meanwhile, fertilizer supply continues with 1,250 metric tons of DAP arriving in Nepal. Consumer & Business Compliance: The Department of Commerce issued a directive to curb illegal trade on both physical and digital platforms, targeting unlabeled and adulterated goods. Education Services Oversight: Education consultancies protested new regulations, arguing they may hit legitimate operators while fraud roots remain unaddressed. Energy Policy Signals: India’s ethanol push for cooking fuel and blending is gaining momentum, with Nepal flagged as a potential destination for blended fuels. Market Watch: NEPSE climbed to a one-month high, with turnover rising to Rs 5.51 billion.

Energy & Hydropower: NEA is preparing to extend RCOD deadlines for hydropower projects under PPAs that haven’t started commercial generation, grouping projects by progress and PPA compliance to decide which qualify for extensions. Budget & Policy Execution: Finance Minister Swarnim Wagle has begun budget implementation discussions for FY 2083/84 with ministry secretaries, signaling the next push from planning to delivery. Agriculture & Food Systems: Nepal launched an agriculture-food system strengthening project with Chinese support, aiming to boost productivity, food sovereignty, and value-chain development, while Agriculture Minister Gita Chaudhary called for international cooperation for climate-smart farming. Power Reliability: Power outages disrupted FIFA World Cup final viewing across Nepal, sparking public anger and online backlash as electricity cuts hit during peak match moments. Capital Markets: NEPSE rose 1.55% on Monday, recovering after a strong prior session, with trading led by hydropower and agro-related stocks. Healthcare Costs: A 3% Health Equity Fee on private hospitals has taken full effect, drawing criticism from patients and providers over higher treatment bills. Trade & Investment Links: Nepal Chamber of Commerce met Spain’s chamber to strengthen economic cooperation, with an MoU planned and a Spanish business delegation eyed for early 2027. Fertilizer Supply: 1,250 metric tons of DAP fertilizer is set to arrive in Nepal, part of a larger shipment moving in phases. Public Health Watch: Health authorities report rising diarrhea and other infectious disease risks as monsoon intensifies. Industry & Manufacturing: Drug price adjustment is being proposed using India’s NPPA as a reference, with annual review planned for selected medicines. Agri Progress: Paddy plantation has reached about 70% nationwide thanks to improved monsoon rains.

Fertilizer Supply: Nepal’s Agriculture ministry says 1,250 metric tons of DAP fertilizer will reach the country on Monday, after 30,000 tons arrived at Kolkata port and the remaining bagging is underway. Hydropower Pipeline: NEA extended Power Purchase Agreement-linked RCOD deadlines for 8–10 long-stalled hydropower projects, using a new grouping process based on physical progress and PPA obligations. Electricity Pricing & Demand: Finance Minister Wagle’s “no end-consumer price increase” promise is being tested as 5% VAT on electricity for households over 50 units starts from Friday, while the energy ministry pushes Rs 80 billion for transmission and distribution upgrades to boost domestic consumption. Road & Transport Risks: Monsoon potholes are worsening accident risk along the East-West Highway, and the Kanchanpur–Kamala road project remains far behind schedule with only 7.2% completed after years of delays. Vehicle Pollution Checks: Kathmandu’s vehicle emission testing is being done by a single technician with limited facilities, raising concerns about health and coverage. Regional Trade & Security: BIMSTEC endorsed maritime law-enforcement guiding principles and HADR guidelines at its New Delhi meeting, with Nepal among participants. Investment Push in Madhes: Madhes Province plans an investment summit to raise its GDP contribution from about 13% by accelerating industrialization, production, tourism, and private investment. Governance & Finance Oversight: The House Finance Committee discussed amendments to the Nepal Rastra Bank Act with bankers and industry chambers. Local Industry Story: A Hetauda khuwa hub is creating jobs and income for youth and dairy-linked workers, showing how traditional food production can support livelihoods at home.

Power Infrastructure Push: Nepal’s energy ministry says it’s ramping up transmission and distribution upgrades to raise domestic electricity use, with Rs 80 billion earmarked to gradually replace LPG for cooking and support electric vehicles. Construction Finance Relief: Nepal Rastra Bank introduced loan rescheduling and restructuring for construction entrepreneurs, easing pressure where projects are completed or ongoing but payments from public authorities are pending. Waste Management Court Order: The Supreme Court issued a mandamus for Kathmandu Valley solid waste reforms, including a coordination committee and mandatory segregation of biodegradable and non-biodegradable waste at source. FDI Signals: Nepal received foreign investment commitments of about Rs 58 billion in FY 2025/26, down 11%, with 1,116 foreign-invested industries registered. Agriculture Inputs: Lahan’s fertilizer supplier says chemical fertilizer stocks are sufficient and supply will be timely for the season. Local Business Climate: Kathmandu Metropolitan City announced tax incentives and penalty waivers for FY 2026/27 to encourage timely payments, including discounts for settling property, business and rental taxes. Tourism & Services: Shivapuri-Nagarjun National Park tested e-ticketing for tourist entry, with phased rollout planned. Consumer Protection: Nepal’s Consumer Court reports settling over half its cases in its first year, including compensation rulings in aviation and hotel-related incidents. Urban Mobility Pressure: Kathmandu’s parking shortage is back in focus after a fatal self-immolation linked to a dispute with KMC security, renewing calls for better stopping and parking alternatives. Medicinal Herbs & Ayurveda: Health minister Mehta urged upgrading the National Ayurveda, Panchakarma and Yoga Centre into a “Centre for Excellence,” including stronger publicity and support for medicinal herb production.

Electricity & Industry Push: Nepal plans to expand and upgrade power infrastructure with Rs 80 billion investment to raise electricity consumption, aiming to gradually shift cooking from LPG and support EV growth. Construction Finance Relief: Nepal Rastra Bank introduced loan rescheduling and restructuring for construction entrepreneurs, including cases where projects are completed but payments from public bodies are pending. Waste Management Court Order: The Supreme Court issued a mandamus for Kathmandu Valley solid waste reforms, including a coordination committee and mandatory segregation at source. FDI Boost: The Department of Industry approved Rs 58 billion in foreign investment commitments for FY 2082/83, with manufacturing, agriculture, tourism, energy, and IT all receiving allocations. Public Procurement Reform: Government amended the Public Procurement Act/Regulations to improve quality infrastructure delivery and curb excessively low bidding. Transport Infrastructure Update: Nagdhunga-Sisnekhola tunnel is nearing trial operations with a modern RFID-based toll system, while Nagadhunga tunnel run/walk promoted public awareness. Tourism Services Digitized: Shivapuri-Nagarjun National Park successfully tested e-ticketing for entry gates, set to expand nationwide. Consumer Protection Crackdown: Department of Commerce warned against illegal, unlabeled, counterfeit footwear sales via both shops and digital platforms. Agriculture Cold-Chain Pressure: Farmers face double losses from poor cold storage and road obstructions, worsening monsoon-era wastage. Carpet Sector Plan: Nepal launched a five-year strategic action plan to revive the carpet industry and reverse export decline. Electricity Reliability: Power supply was restored in Birgunj’s Chhapkaiya after an underground cable fault and stalled overhead-line work.

Market Momentum: NEPSE logged its strongest weekly gain in months, rising 76.76 points (2.95%) to 2,677.54 as weekly turnover jumped 48.5% to Rs 29.19 billion and sector indices broadly ended higher, with Manufacturing & Processing and Non-Life Insurance leading. FDI & Industry Pipeline: The Department of Industry approved foreign investment commitments worth Rs 58 billion in FY 2082/83, with manufacturing, energy, agriculture, tourism and IT all seeing new commitments—though separate reporting notes overall FDI commitments fell short of the prior year. Energy Trade: Nepal-India energy talks in Pokhara advanced decisions to expand electricity export capacity and cross-border transmission, aiming to strengthen clean power flows and reduce Nepal’s trade deficit. Trade Access: A UK-focused programme highlighted tariff-free opportunities for Nepali exporters under the DCTS, focusing on eligibility and compliance. Footwear Push & Crackdown: PM Shah pledged support to promote domestic footwear exports and jobs, while the Department of Commerce warned against selling unlabeled, counterfeit, low-quality or smuggled footwear. Logistics Upgrade: Nepal launched its first rail cargo from Kolkata to Biratnagar, extending direct rail access for third-country imports under the Nepal-India Transit Treaty. Infrastructure & Transport: Nagdhunga Tunnel is set for trial operation ahead of a July 27 inauguration, while smart driving licence printing backlog of 2.7 million cards has been cleared. Weather Risk: DHM issued alerts for heavy to very heavy rainfall today, warning of floods, landslides and disruption to transport, agriculture and tourism. Tourism/Entertainment: Guna Cinema reopened with eight screens after redevelopment, boosting local film exhibition capacity. Medicines Security: Nepal plans to produce 36 essential medicines within two years via Nepal Drug Limited, starting with 11 currently produced. Agriculture & Forest Governance: Lawmakers urged linking forest policy to production and the economy, while the agriculture ministry flagged reforms including an Agriculture Act draft and forest guard recruitment. Regional Security: BIMSTEC national security chiefs met in New Delhi, agreeing on practical steps against terrorism, cyber and maritime threats.

Stock Market & Business Climate: NEPSE surged 79.74 points on the first trading day of FY 2026/27 to close at 2,677.54, with turnover around Rs 4.57 billion and Manufacturing/Processing leading gains. Industrial Policy—Footwear: PM Balendra Shah pledged support to promote Nepal-made footwear, including skill training, tighter tracking of raw-material imports, and action against smuggling and low-quality imports. Trade & Logistics: A first-ever Kolkata–Biratnagar rail cargo service began under the Nepal–India Transit Treaty, moving 40 containers from Kolkata Port to Biratnagar Customs Yard to boost eastern trade connectivity. Agriculture & Forest Governance: The Agriculture Minister flagged legal reforms (an Agriculture Act draft and new forest laws), while lawmakers pushed for linking forest policy to production and forest-based industries. Central Banking Reform Debate: Finance Minister Swarnim Wagle backed amendments to the Nepal Rastra Bank Act for autonomy and tech readiness, but the governor questioned key provisions. Energy Infrastructure Pressure: NEFEJ discussions highlighted bottlenecks in transmission, land acquisition, and forest-related procedures affecting hydropower and industrial electricity supply. Household Cost Impact: NEA started 5% VAT on electricity bills for households using over 50 units, raising costs for higher consumers. Public Health: Govt launched a 3-month dengue awareness drive with weekly “Clean Friday” actions and community “search and destroy” efforts. Tourism Investment: Hotel investment topped Rs 650 billion as global brands expand, including Marriott’s Ritz-Carlton and Westin projects.

Hydropower & Power Infrastructure: India’s Power Secretary Pankaj Agarwal inspected the under-construction 900MW Arun III hydropower project in Sankhuwasabha, urging quality, safety and environmental discipline to keep timelines on track. Energy Finance: Nepal Rastra Bank says it has eased and flexed policies for hydropower and energy infrastructure, including higher lending room for energy projects and energy-bond arrangements. Grid Bottlenecks: Business leaders warn electricity generation is outpacing transmission and distribution, leaving industries with unreliable supply and higher costs; calls also grew for forest-rule amendments and faster land/compensation processes for transmission lines. Policy & Markets: PM Balendra Shah urged NRB to adopt more business-friendly, flexible monetary policy to restore investor confidence; Finance Ministry opened public feedback on a Public Debt Management Act amendment draft. New Costs for Households: A 3% health equity fee starts for private healthcare services, while new fiscal-year taxes raise costs across private schools, private hospitals and electricity use. Tourism & Hotels: Marriott is set to debut in Nepal with Ritz-Carlton and Westin projects, with total hotel investment reported above Rs 650 billion. Trade & Customs: Rasuwa Customs yard damage from last year’s flood still hasn’t been fully repaired, affecting the integrated check post and clearance capacity. Labour & Migration: Nepal and Korea held a labour cooperation seminar focused on safer, transparent employment pathways. Exports & Industry: Nepal’s churpi (dog chew) gets a national export strategy after export volumes and earnings surged. Regional Security: BIMSTEC security chiefs, led by NSA Ajit Doval, pledged joint action on terrorism, cyber threats and maritime law enforcement. Agriculture: Farmers in Sunsari are shifting further toward chemical fertilisers as compost use declines; tea producers again flag weak support for quality labs, market access and export diversification.

BIMSTEC Security: NSA Ajit Doval chaired the 5th BIMSTEC National Security Advisers’ meeting in New Delhi, pushing stronger regional cooperation on counter-terrorism, cyber and maritime security, and disaster response, with new maritime HADR and law-enforcement coordination guidelines adopted. Nepal-India Power Trade: Nepal and India agreed to expand cross-border electricity capacity, including higher import-export limits and approved DPRs for new transmission lines, with targets stretching to 2028. Industrial Policy & Monitoring: Parliamentarians from RSP and Nepali Congress criticized industrial area management as overly formal, demanded surprise inspections, better worker health and safety, and tighter control of non-industrial activities in industrial zones. Finance & Markets: NEPSE ended FY 2025/26 with a 7.50-point rise on the last day, while NRB set an 80% loan-to-value ratio for large passenger EVs. Trade & Jobs: Industry Minister Gauri Kumari Yadav urged the US to extend trade preferences and activate TIFA talks; the Labour Ministry also consulted private firms on workplace training and stronger apprenticeship for domestic job creation. Hydrogen & Procurement: Government started preparations for hydrogen vehicle operations and amended public procurement rules to allow deadline extensions for stalled contracts with 50% physical progress. Money Laundering: FINTRAC filed a Rs 209 million money laundering case against former finance minister Bishnu Paudel linked to a discounted stake sale in Shree Ram Tobacco Industries. Labor Migration: Israel selected 836 Nepali caregivers via lottery for the first phase, with more opportunities expected and final medical/criminal checks underway. Environment & Health Costs: Study found microplastics in Tilicho Lake; a 3% health equity fee will raise costs for private healthcare services from July 1. Regional Politics: Sudurpaschim’s coalition crisis deepened as CM Shah dismissed UML ministers after budget disputes.

Wildlife Insurance Launch: Nepal Insurance Authority approved Wildlife Risk Insurance Policy starting July 17, priced at Rs 1,500, covering accidents/death, disability, medical costs, and losses to livestock and crops. Power Trade Boost: Nepal and India agreed in Pokhara to raise electricity exports to India to 1,650 MW and imports to 1,400 MW, with plans to expand cross-border transmission capacity. Grid & Transmission Upgrades: DPRs for Motihari–Nijgadh 400 kV and Chameliya–Jauljibi 220 kV lines were reviewed, and technical work will support higher transfer using HTLS conductors. Kathmandu Cable Cleanup: Government ordered agencies to remove unmanaged electricity, telecom and internet cables in Kathmandu Valley within a fixed deadline, with roles split across NTA, NEA, telecom firms and ISPs. Agriculture Market Pressure: Tomato farmers staged protests at Maitighar over low prices and demanded minimum support pricing, better subsidies, and stronger market management. Dairy Breeding Drive: Department of Livestock Services distributed 48,856 doses of Murrah buffalo semen to boost milk production via artificial insemination. LPG Supply Normalizes: Nepal Oil Corporation resumed nationwide full 14.2 kg LPG cylinder sales from July 15, ending the half-cylinder practice, with retail price set at Rs 2,060. Digital Economy Push: Education Ministry plans to link universities with the IT industry and set up career-focused events to grow tech talent. Capital Markets Roadmap: Nepal Securities Board unveiled a 10-year plan aiming for a larger, more digital market with new instruments and stronger investor growth. Electric Vehicle Finance: Nepal Rastra Bank raised loan-to-value limits for large electric public transport vehicles to 80%, easing upfront costs. Tourism Support: PM Shah met Hotel Association Nepal, promising stronger backing and urging hotels to register and comply with tax rules.

Tourism & Private Sector: PM Balendra Shah met Hotel Association Nepal and urged hoteliers to register, comply with law, and work via PPP, saying tourism promotion is moving fast and the sector can host 4 million visitors annually. Agriculture Prices: Tomato farmers in Kathmandu Valley protested low wholesale prices and alleged import-driven displacement, with Kalimati rates cited as too low to cover costs. Power Trade: Nepal and India agreed to raise cross-border electricity transfer—Nepal can export up to 1,650MW and import up to 1,400MW—under 400kV Dhalkebar–Muzaffarpur and Dhalkebar–Sitamarhi lines, reviewed in Pokhara. Digital Payments: Bank of Ceylon launched BOC Flex Tap & Pay, a contactless mobile wallet step for faster, secure payments. Capital Market Oversight: SEBON Chair vowed zero tolerance on illegal pre-IPO activities and promised tighter supervision and action against market manipulation. Public Procurement Reform: Nepal amended the Public Procurement Act to move away from awarding contracts purely to the lowest bidder, aiming to curb underquoting and improve project quality. LPG Supply & Safety: Parliament’s industry committee directed action against black marketing and artificial LPG shortages, including study on pipeline expansion and tighter cylinder quality monitoring. Urban Infrastructure: Kathmandu Valley authorities ordered a time-bound plan to remove tangled, unused telecom and TV cables from six hotspots to reduce safety risks.