Wednesday, December 30, 2009

Nepal Looks to Introduce Fortified Flour at Small Mills to Reduce Anemia

MANILA, PHILIPPINES - Nepal will enlist the help of small millers to boost the production of fortified cereal flour, which can help reduce anemia and other illnesses linked to vitamin and mineral deficiencies, particularly in poor, rural areas.

To support the government’s goal, the Japan Fund for Poverty Reduction (JFPR) — financed by the Government of Japan and administered by the Asian Development Bank — is providing a grant of $1.8 million for producing fortified flour at small, village-based milling centers, known as Chakki mills. The project is targeting the addition of iron, folic acid and vitamin A to milled wheat, maize and millet, benefiting around 200,000 people.

Anemia, caused by a lack of essential nutrients, is a major public health issue in Nepal, resulting in many maternal and perinatal deaths and development problems in children. Fortified flour, used to combat anemia, is now produced in large, commercial milling enterprises but this is only a small proportion of the total consumed, and cost, technology and other barriers have hindered its introduction at smaller mills.

The government, along with the Canadian non-government organization, Micronutrient Initiative, is now testing low-cost fortification systems at water and electric-powered Chakki mills and the JFPR-funded project will help accelerate and expand this process.

“Fortified flour can reduce national rates of vitamin and mineral deficiencies within one year of implementation," said Snimer Sahni, Principal Project Economist in ADB’s South Asia Department. "This project will define the conditions, capacities and resources needed for the sustainable expansion of small-mill flour fortification, benefiting the poor and vulnerable.”

The project will seek to find realistic solutions to the problems that currently prevent flour fortification at small mills, such as recurring costs, supply and support system difficulties, quality assurance issues, and a lack of consumer awareness. Among the innovations it will consider are community-based financing options, including possible channels for converting grain received as payment for use of the milling facilities, into hard cash.

Community participation is a key element of the project, with 65 village development committees to receive resources for the delivery and monitoring of the use of nutrients by millers, for collecting payments, for providing quality assurance monitors, and for raising community awareness. The target is to provide 360 small millers with the equipment and training to produce about 19,000 metric tons of fortified flour which will give nutrition protection for more than 200,000 people for two years.

Once the project outcomes have been assessed, they may be expanded to other parts of Nepal through ADB’s country assistance program.

Along with JFPR, the government will provide $122,000, the private sector $14,725, and beneficiaries about $130,000, for a total project cost of $2.066 million. The Ministry of Health and Population is the executing agency for the project which will run from 2010 to 2012.


Tuesday, December 29, 2009

NRB for special act on deposit insurance

POST REPORT KATHMANDU, DEC 27 - Following the government's policy announcement of introducing deposit insurance from this year, Nepal Rastra Bank (NRB) has suggested that the institution that insures the deposits be formed under a special act. NRB has also submitted its concept paper to the Finance Ministry.

While the government is yet to decide whether to treat this scheme as insurance or a financial scheme, the central bank has said that it should come under the deposit guarantee scheme and not insurance.

It has given two options regarding the institution dealing with deposit insurance --either upgrade the existing Deposit Insurance and Credit Guarantee Corporation (DICGC) or form another institution. Given the huge transactions associated with this scheme, the DICGC is in no position to guarantee deposits with its present financial strength. Its paid-up capital is just Rs. 70 million.

NRB has proposed that the company that runs the deposit insurance scheme have a paid-up capital of at least Rs. 1 billion. For this, all the stakeholders including the government, NRB and other financial institutions should be asked to buy shares in the institution that provides deposit insurance.

A senior NRB official said that bankers were also agreeable to injecting money into the institution that insures deposits.

Sashin Joshi, president of the Nepal Bankers Association, said that they were at the final phase of preparing their own report and would be submitting it to NRB within a few days. A DICGC official said that the DICGC could generate capital of Rs. 310 million from the existing shareholders including the government, NRB and a few other banks. "Other stakeholders including banks and financial institutions could inject money to raise its paid-up capital to Rs. 1 billion."

The DICGC source said that it was ready to shoulder the responsibility if it was upgraded. The DICGC has not been getting enough business after NRB phased out priority sector lending from the banks.

The government annou-nced through the budget for the current fiscal year that it would ensure the compulsory insurance coverage for individual deposits up to Rs. 200,000 in both fixed and savings accounts this year.

Joint secretary at the Finance Ministry Bimal Wagle said that the ministry was initiating the discussion process on deposit insurance and the ministry had sent a proposal regarding the issue to the NBA. When NRB views that deposit insurance is not an insurance policy, the Insurance Board (IB) is of the view that it should be considered as an insurance scheme.

IB chairman Phatta Bahadur K.C. said that it should be operated as per the principles of insurance. "There should be a re-insurance back-up for this scheme," said K.C.

President of the Develop-ment Banks Association Jhapat Bohora said that the responsibility of insuring deposits could be given to insurance companies as they get reinsured.

"It is better to give the responsibility of regulating the company that insures deposits to the IB," he said.

Friday, December 25, 2009

Load shedding hours to increase to six hours a day from next week

Nepal Electricity Authority (NEA) is increasing the load shedding hours to six hours from the existing four hours a day, from next week.

NEA has said, it is forced to increase the load shedding hours as the production is decreasing due to reducing water-levels in the rivers, while the consumption is increasing due to the winter season.

NEA's executive director Jivendra Jha said, a new schedule for load shedding will be released next week.

NEA sources said, the water level in Kulekhani hydro power project, the country's only reservoir based hydro-project has been saved due to the three-day strike called by the Unified CPN (Maoist) when most of the industries remained closed. The level of water in Kulekhani at present is more than 1500 meters.

Meanwhile, load shedding hours later this year is likely to be as long as it was last year as India has agreed to give only 30 MW power in commercial rate as opposed to 60 MW requested by Nepal.

Nepal is importing another 80 MW at a subsidized rate.