KATHMANDU: Welcome to the Nepal News Evening Economic Brief—your trusted roundup of the day’s most important financial developments in Nepal. Stay informed with concise insights on market trends, economic indicators, and policy shifts. Here are today’s top economic highlights.

Chinese Firm Gets Go-Ahead for Rs 20 Billion Buffalo Meat Export Project in Nepal:
The Department of Industry has approved a Rs 20 billion FDI proposal from China’s Chengdu Jian Co. Ltd. to establish Nepal’s largest buffalo meat export facility. The project—executed jointly with Himalayan Food International and Shanghai Ziyan Food Co.—includes a high-tech slaughterhouse and a buffalo-rearing center in Sindhuli, targeting meat exports to China. Construction begins August 17. The facility, spread over 85 bighas, aims to process 2.7 million metric tonnes annually. The investment stems from a 2024 Nepal-China protocol and marks the largest agriculture-related FDI in Nepal’s history, according to project partner Dr. Naveen Kumar Sharma.

Only 46.83% Paddy Planted in Madhesh Amid Monsoon Failure, Experts Warn of Food and Economic Crisis:
As the first week of Saun ends, only 46.83% of paddy plantation has been completed in Madhesh Province, largely due to weak monsoon rainfall. Most farmland remains barren, with farmers unable to even germinate seeds due to water shortages. Excessive Chure extraction has dried groundwater sources, worsening irrigation and drinking water crises. Experts warn of a 25% drop in paddy output if rain doesn’t arrive by the fourth week of Saun, threatening food security and the economy. Last year, Madhesh produced rice worth over Rs 60 billion. This year, delayed planting could severely affect GDP and food prices nationwide.

FDI Commitments to Nepal Rise Slightly by 5%:
Nepal received FDI commitments worth Rs64.96 billion for 840 projects in fiscal year 2080/81, marking a modest 5% rise. Despite some legal reforms, including new rules allowing investment via venture funds, experts cite persistent tax uncertainties, bureaucratic delays, and regulatory complexities as key deterrents. China and India remain Nepal’s primary FDI sources, with the service and tourism sectors attracting the highest pledges. Actual FDI inflow dropped sharply to $57 million in 2024, down 69% from 2019, according to UNCTAD. Experts stress the need for tax clarity, infrastructure reforms, and private sector openness to boost large-scale foreign investment and economic growth.

Lower Solu Hydropower Project Begins Supplying Power to National Grid:
The 82 MW Lower Solu Hydropower Project in Solukhumbu has begun supplying electricity to Nepal’s national grid via the 132 kV double-circuit Solu Corridor transmission line. Promoted by Solu Hydropower Ltd, the project started test production on Saun 4. Built with Rs 16 billion in investment from European banks including FMO, it is Nepal’s second-largest privately funded hydropower project after Solu Dudhkoshi. Despite facing landslides and climate-related delays, the project was completed two months ahead of its September 2025 target. Locals were employed in construction, and the project is expected to boost regional infrastructure, economy, and energy security.

Patan Hospital to Be Upgraded into 1,200-Bed Super Specialty Center:
Patan Hospital, under the Patan Academy of Health Sciences in Lalitpur-5, will be upgraded from 600 to 1,200 beds, transforming it into a modern super-specialty hospital. The new 10-story building, including two basement levels, will cover over 72,920 sq. meters with a 35-meter height and serve patients nationwide. The Rs 10.73 billion project will be completed in 36 months. Facilities will include advanced ICUs, cancer care, maternity, neonatal, dialysis, and mental health units, alongside upgraded education for MBBS, BDS, and nursing. The expansion will generate hundreds of jobs and feature a disabled-friendly design with accessible amenities and child-friendly treatment areas.

Rampant Illegal ‘Cashback’ Prompts Insurance Board to Supervise Life Insurance Companies:
After uncovering widespread illegal “cashback” practices in non-life insurance companies, Nepal’s Insurance Board is preparing to supervise life insurance companies as well. A recent on-site inspection of 14 non-life insurers revealed alarming levels of unlawful cashback—commission refunds given directly to clients or routed through dummy agents. The Board suspects similar malpractice in life insurance, where dummy agents are allegedly used to mask unauthorized payouts. Regulators warn that these practices undermine the sector’s integrity. Life insurers will now be inspected with a focus on dummy agents and expense manipulation. Officials confirm that monitoring and enforcement actions are being intensified.

Nepal Rastra Bank to Revamp Base Rate System for Loan Interest Calculation:
Nepal Rastra Bank (NRB) is preparing to reform the base rate calculation system introduced in 2012, aiming to align it with current economic realities. While the system won’t be scrapped, NRB plans to include factors like funding cost, risk premium, international loan prime rates, and marginal cost of lending. The current method—based on cost of funds, reserve requirements, and a fixed return on assets—has been criticized for lacking transparency and competitiveness. NRB plans to implement a revised framework within this fiscal year. Base rates now range from 4.89% to over 7% in commercial banks, with NIC Asia the highest.

New NRB Premium Cap Policy Puts Banks Under Dual Financial Strain:
Nepal Rastra Bank’s new directive capping loan premium at 2% for loans up to Rs 30 million has placed banks under financial pressure. Banks argue the policy prevents them from recovering high costs of capital raised via debentures and foreign loans. Recently, Siddhartha Bank issued debentures at 7.25%, and Nabil and Nepal SBI at 7%, but these costs can’t be reflected in interest rates. Additionally, banks can’t include shareholder capital returns in base rate calculations, further squeezing profit margins. The Bankers’ Association has urged NRB to revise the base rate and spread calculation system to accommodate real financing costs.

Banks Begin Disbursing Employee Bonuses as Fiscal Year Ends:
As Nepal’s fiscal year concludes, banks have started crediting employee accounts with bonuses. According to the Bonus Act 2030, private banks must allocate 10% of their net annual profit as staff bonuses. Many banks are offering advance bonuses equal to 1 to 3 months’ basic salary, with the remainder paid after external audits and annual general meetings. Government-owned banks follow different rules, limiting bonuses to 5% of profits or up to 3 months’ salary. Nabil Bank, Global IME, Prabhu, Sanima, and NMB are among the seven banks that have already disbursed bonuses. Others, including RBB and ADB, will do so post-audit.

IFC Set to Provide $14 Million Loan to WorldLink for Fiber Network Expansion:
International Finance Corporation (IFC) has been advised to provide a $14 million (Rs 1.93 billion) loan to WorldLink Communications, Nepal’s largest internet service provider. Legal counsel was offered by India’s Talwar Thakore & Associates (TT&A) and Nepal’s Pioneer Law Associates. Additionally, IFC will guarantee up to $12 million (Rs 1.65 billion) in partial loans through Standard Chartered Bank for WorldLink and its subsidiary Data World, enabling total financing of Rs 3.58 billion. The funding aims to expand Nepal’s fiber network and data centers, bridging the digital divide. This follows a prior $29 million financing agreement signed in July 2025.

Widespread Irregularities Uncovered in NEA’s PSC Pole Plants:
An internal investigation of Nepal Electricity Authority’s pre-stressed concrete (PSC) pole plants has exposed severe irregularities and technical opacity. NEA’s four plants—in Tanahun, Bara, Kailali, and Morang—have received over Rs 1 billion in investment, now at risk due to poor quality control, administrative interference, and misuse of resources. Faulty testing, fake diesel expenses, unauthorized contractor access, and pressure on engineers to approve incomplete reports were noted. Despite cheaper concrete poles, steel poles are being used even in the Tarai. The report calls for reforms, transparency, and private-sector competition to address policy gaps, weak oversight, and lack of technical personnel.

High Tension Switchgears Sees Strong Growth Amid Energy Infrastructure Boom:
With rising investment in Nepal’s energy infrastructure, private sector companies are showing notable progress. Among them, High Tension Switchgears Pvt. Ltd. has recorded impressive business growth. Specializing in high-voltage equipment and transmission line construction, the company is increasingly involved in key national power projects. As demand for reliable grid infrastructure grows, High Tension has positioned itself as a leading domestic provider of advanced electrical solutions. Industry observers note that such companies are playing a critical role in supporting Nepal’s power sector expansion and reducing dependency on foreign contractors for high-voltage infrastructure.

NEPSE Hits 5-Day Winning Streak, Breaks Records in Turnover and Capitalization:
The NEPSE index climbed for five straight trading days this week, adding 112.64 points to close at 2,982.64, up from last week’s 2,870. Turnover hit a record NPR 21.46 billion on Sunday, the highest in 11 months. Active trading in microfinance, manufacturing, and hydropower sectors fueled the rally. Market capitalization surged to an all-time high of NPR 4.977 trillion. The “Others” index reached 2,727, and the Hydropower index hit a record 3,941 points. Investors’ Association General Secretary SP Chaulagain called the rise natural and a strong sign of growing market confidence.

King’s College President Aryal Calls for Unified National Vision to Propel Nepal’s Entrepreneurship:
Narottam Aryal, President of King’s College, has urged Nepal to adopt a long-term national vision and establish a dedicated institution to coordinate its growing entrepreneurial ecosystem. Speaking at the Nepal Entrepreneurship Forum in Kathmandu on July 26, Aryal reflected on the decade since King’s launched Nepal’s first entrepreneurship degree, noting a surge in startups, global outreach, and public engagement. He praised recent policy momentum but warned against fragmented efforts by government and donors. Aryal called for inclusive, sustainable models rooted in local knowledge, emphasizing equal access to networks, capital, and opportunity across the country.

Kathmandu Metropolis Passes Law to Fine Smokers and Illegal Parkers in Public Spaces:
The Kathmandu Metropolitan City has introduced a new provision imposing a Rs 500 fine each time someone smokes in public spaces within its jurisdiction. This comes after the municipal assembly passed the fiscal bill for 2082/83. City Police Chief Raju Nath Pandey announced the measure at a press conference, citing frequent complaints via the metropolis hotline. Public awareness campaigns will be held in Shrawan, with enforcement beginning in Bhadra. The law also introduces fines for illegal parking—Rs 1,000 for three-wheelers and two-wheelers, Rs 2,500 for small four-wheelers, Rs 3,500 for medium vehicles, and Rs 5,000 for large vehicles parked outside designated areas.

Saptari Farmers Struggle as Drought Dries Up Borewells:
Facing a prolonged drought, farmers in Saptari have turned to borewells for irrigation, but falling groundwater levels have rendered many of them ineffective. In the past, only a few areas used boring, but now most farmlands have individual installations. However, farmers like Rita Devi Yadav and Punita Yadav, who borrowed Rs. 100,000 each, report failed returns as their borings run dry. With only 35% of paddy fields planted by mid-Asar—compared to 95% in previous years—experts warn of looming food insecurity. Officials say poor rainfall, drying rivers, and declining groundwater have made irrigation increasingly difficult, especially in northern Saptari.

Coffee Farming Expands Across Koshi Province, Contributing 20% to National Output:
Commercial coffee farming is rapidly growing in Koshi Province, now spanning over 2,000 hectares across 12 districts and involving more than 5,000 farmers. Ilam leads production with 50 metric tons from 900 hectares. The region contributes 20% of Nepal’s total coffee output, with 90–100 metric tons valued at Rs 200 million, over half of which is exported. The National Tea and Coffee Development Board is promoting expansion through grants and support, allocating Rs 28.35 million this fiscal year. However, challenges remain in processing, branding, and market access, limiting farmers from entering international markets directly despite growing demand.

Myagdi Builds 4.3-km Trekking Trail, Enhances Tourism Infrastructure with Rs 12 Million Budget:
In fiscal year 2081/82 BS, the Tourism and Industry Office in Myagdi constructed over 4.3 km of trekking routes under 10 tourism infrastructure projects with a Rs 12 million budget, of which Rs 0.96 million has been spent. Implemented through users’ committees, the projects included footpaths, rest stations, shelters, and drainage systems. Office chief Amrit Kandel noted challenges due to geography and delays, with payments based on technical assessments. Notable improvements include shelters and railings in Khopra, resting areas at Nagidevi Temple, and upgraded walkways in Bim Tallogaun and Barahapakhok’s Peace Park, enhancing mobility for tourists and locals alike.

Lumpy Skin Disease Outbreak Hits Sunsari, Over 1,500 Cattle Infected, 53 Dead:
Lumpy Skin Disease (LSD) is rapidly spreading among cattle in Sunsari district, including Inaruwa, Dharan, Itahari, Duhabi, Barahakshetra, Ramdhuni, and Gadhi. According to Manoj Mehta, Chief of the Veterinary Hospital and Livestock Service Centre, 1,516 cases have been reported so far, with Duhabi recording the highest infections at 276 and Dharan the lowest at 15. The outbreak has caused 53 cattle deaths, with Barahakshetra Municipality reporting the highest toll at 13. To curb the spread, 64,441 cattle have been vaccinated across the district as part of an ongoing prevention campaign.

55% Work Completed on Pokhara–Jamune Road; Seti Bridge Faces Delays Despite Ongoing Efforts:
The western section (Pokhara–Jamune) of the Pokhara–Muglin road has achieved 55.10% physical and 42.50% financial progress. Of the 38.88 km stretch, 37.70 km has been blacktopped. Eleven out of 13 bridges are complete, with Bijaypur and Seti bridges still under construction. The Bijaypur bridge is 60% complete, while the Seti bridge—awarded to Rasuwa Construction—lags at 48% due to design delays and obstructions. Seti’s cable-stayed structure is progressing, with completion targeted in five to six months. The project, run by China’s Anhui Kaiyuan and backed by ADB, is expected to conclude by this winter if no major hurdles arise.