88866 v2 Country Partnership Strategyfor Nepal FY2014-2018 Executive Executive Summary Summary i. Nepal has achieved remarkable progress over the last ii. To build on this progress, Nepal needs to take years. The country managed to halve the percentage of people advantage of its economic potential and put in place living on less than $1.25 a day in only seven years, from 53 the prerequisites that will provide faster, sustained percent in 2003/2004 to 25 percent in 2010/2011. Several social and inclusive growth. While the political process remains indicators in education, health and gender have also improved. intricate (understandably so, given Nepal’s relatively short In addition, since the end of the civil war in 2006, Nepal has experience with democratic governance), the country successfully transitioned away from being a post-conflict urgently needs to pay greater attention to the economy. country and former combatants have been integrated into the Remarkably, Nepal’s economy grew steadily even during the country’s armed forces. While the country’s political transition height of the conflict, and economic management remained – notably the drafting of a new constitution – is taking longer prudent, resulting in a budget surplus in 2013. Yet growth than expected, the November 2013 elections, which resulted in levels are too low to enable Nepal to continue its past a peaceful transfer in power, were an important step toward the progress and relegate poverty to history. Current growth formation of an inclusive and democratic state. relies heavily on remittances supporting consumption and growth in basic services with low growth potential. Country 4 Partnership Strategyfor Nepal FY2014-2018 iii. To move to a higher growth trajectory, Nepal will have iv. The World Bank Group stands ready to support Nepal’s to remove bottlenecks to private and public investment aspirations for increasing economic growth through in key growth sectors. The most vivid example of Nepal’s increased investments in key sectors and making growth economic potential is hydropower. While the estimated more inclusive to help equalize opportunities across potential for hydroelectricity generation in Nepal is 84,000 groups and communities. This constitutes a major shift megawatts (MW), of which at least half is economically viable, in World Bank Group (WBG) support away from short-term only 746 MW (less than 2 percent of the viable potential) is post-conflict assistance towards establishing the foundations currently developed. Hydropower development could be a for increased, inclusive and sustainable growth. After three game changer for Nepal. Development of the sector would consecutive interim strategies in Fiscal Years (FY) 2007, 2009 reduce load-shedding and provide major revenues through and 2011, the WBG will provide more long-term support. The exporting electricity to India and Bangladesh. Country Partnership Strategy (CPS) will cover four years from FY2014-2018. Country 5 Partnership Strategyfor Nepal FY2014-2018 Executive Summary v. World Bank Group support to Nepal will be aligned will focus on expanding hydroelectric power generation, to the Bank’s twin global goals—eliminating extreme enhancing transport connectivity, and improving the poverty and boosting shared prosperity. A poverty “lens”, business environment. Under pillar 2, the WBG will provide developed for the CPS, concludes that Nepal’s progress on support to increasing inclusive growth and opportunities poverty reduction has been commendable, yet a significant for shared prosperity, aiming to enhance the productivity share of the population remains clustered around the of agriculture and equalize access to health care, skills poverty line. It confirms the need for WBG support to focus development and social protection. Cutting across these on removing Nepal’s binding growth constraints to allow pillars, WBG activities will contribute to improving the for higher income levels. In this context the International effectiveness, efficiency and accountability of public Development Association (IDA), the International Finance expenditure. Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) will collaborate to make maximum use of their vi. WBG support will be guided by the principles of joint comparative advantage. WBG efforts will be organized balancing risks and rewards, selectivity and flexibility. within two pillars. Under pillar 1, the WBG will support In a shift from more cautious approaches taken in past increasing economic growth and competitiveness, and strategies, the WBG will engage in larger programs that Country 6 Partnership Strategyfor Nepal FY2014-2018 strive for nation-wide impact. Regarding selectivity, this environment and social impacts. Specific mitigation strategy consolidates the WBG’s engagement into fewer measures have been devised to prevent these risks sectors, where the Group has a comparative advantage from impacting CPS implementation and to deal and can leverage its financing and analytical resources for with them once they occur. These include, among greater development impact. In addition, the WBG will others, a more active cross-party engagement and maintain programming flexibility, given the politically- communication to build all-party consensus on fragile country environment. development needs; addressing both ex ante and ex post dimensions of public resource use through vii. The WBG’s engagement in Nepal will continue public financial management activities; increased to face significant risks that could affect strategy focus on safeguards during preparation and implementation. Given the challenges of developing implementation support through capacity building, hydropower potential in particular, the overall risk rating is training and study tour programs for key officials high—as well as the potential rewards. Among the most involved in safeguard work; and in hydropower significant risks are political instability that can impact in particular, taking a more holistic approach that economic performance, weak governance and increased focuses on the necessary governance, policy and corruption and fiduciary risks, and low capacity for program institutional frameworks and strengthening the implementation, including for assessing and mitigating synergies between IDA, IFC and MIGA. Country 7 Partnership Strategyfor Nepal FY2014-2018 8 Results Framework for the Nepal CPS FY14-FY18 FY2014-2018 Country Country goals1 + Constraints/opportunities Indicative CPS Outcomes and Indicators Indicative Milestones Ongoing and Indicative WBG Program toward progress on WBG goals2 Targets = FY18 unless specified Partnership Pillar 1: Increasing economic growth and competitiveness Strategyfor Nepal Country Goals: Outcome 1.1: Increased supply of electricity, including Milestone: Generation - (i) Ongoing Financing: Assist in economic progress and social import, and improved access to reliable and affordable Procurement for turbine and (i) Kabeli-A Transmission Project; Executive Summary development by developing modern energy electricity within Nepal main valve rehabilitation (ii) Nepal-India Electricity Trade and through the production and distribution of completed by December Transmission Project (IDA); Indicator 1: Power Generation Capacity added or hydropower. 2014; (ii) Procurement for (iii) Kali Gandaki Hydropower Rehabilitation rehabilitated (MW) EPC contract for 20 MW grid- Project Constraints/Opportunities: Local Capacity: connected solar project by Lack of energy main constraint to boost Indicative Financing: Baseline: Target: December 2014. competitiveness and growth as prerequisite (i) IFC Investments in Andhikhola, Upper for further reducing poverty. 0 MW (added or 144 MW rehabilitated and at Milestone: Transmission - Trishuli and Kabeli projects; rehabilitated; 2014) least 20 MW new capacity procurement for all substations, (ii) IFC & SREP term loan for banks for small High levels of load-shedding and need transformers and conductors hydropower projects (<=10 MW) financing; to rehabilitate and add new generation Power Imports: Target: completed by December 2014. (iii) Grid Solar and Energy Efficiency Project; capacity as well as importing power over the Baseline: 250 MW cumulative power (iv) Hydropower Project or PRG; medium-term. Milestone: Successful 100 MW import from India by end- (v) Scaling-up Renewable Energy Project commitment of 2 IFC investments Need for increased transmission and 2017 (TF); by end of CY2015. distribution both to improve access within Source: Project Data (Bank and IFC) (v) Energy DPO; Nepal and to link with India for import and (vi) Investment for the Indo Nepal Power ( eventual export of power. Indicator 2: Length of transmission and distribution IDA); system added or rehabilitated (vii) IDA/IFC Kabeli A Hydropower Project. High hydropower potential, but low power generation capacity, low supply and low Baseline: Target: Ongoing AAA/Others: reliability. 0 km (new or rehabilitated; 600 km new and (i) Technical Assistance for hydropower 2014) rehabilitated project preparation and sector reform; Source: GoN; Project Data (ii) Hydropower Dialogue. Country Goals: Outcome 1.2: Improved transportation connectivity, Milestone: All road Ongoing Financing: Expand a sustainable and safe transport internally and with India construction contracts (i) Bridges Improvement and Maintenance network that contributes towards national procured by 2016 Program; Indicator 1: Number of district headquarters connected socioeconomic integration, regional balance (ii) Road Sector Development Project; with all-season roads DP Milestone: All road up-grading and development. (iii) Nepal India Electricity Trade and contracts procured by 2016 Transmission Project; Enhance the opportunities of income and Baseline: Target: (iv) Nepal-India Trade and Transport Project; employment by promoting domestic and 59 65 (v) Rural Transport Project. international trade. Source: GoN and Project Data Indicative Financing: Constraints/Opportunities: Indicator 2: Average time from ship readiness to unload (i) Nepal Fast Track; Lowest road density in South Asia with one to final destination for an imported container, on Kolkata- (ii) Strategic Road Network Project. third of hill residents living more than 4 Birgunj-Kathmandu Corridor (days) hours from an all-season road. Ongoing AAA/Others: Baseline: Target: (i) Fast Track Studies; Need to expand regional transportation 22 days 18 (ii) Fast Track TA. connectivity and trade with India and potentially China. Source: Project Data 1. Approach paper to the 2013/14-2015/16 Development Plan (translated from Nepali original). 2. End extreme poverty and promote shared prosperity. Country Goals: Outcome 1.3: Increased financial sector stability and Milestone: The strengthened Ongoing Financing: Ensure financial sector stability through improved environment for private sector investment legal framework for effective bank (i) IFC facilitated syndi-cation and sponsor balanced monetary, foreign exchange and resolution has been enacted and equity investment in indicative 500MW Indicator 1: State-owned banks (NBL and RBB) financial sector polices. conflicts between the NRB Act and hydro project; recapitalized as per prudential norms and NBL privatized BAFIA have been removed (ii) SEDF: Investment Climate for Industry Create enabling environment to improve (IFC); access to banking and use of available Baseline: Target: (iii) Access to finance in SME Ventures and financial means leading to accelerated Capital Adequacy Ratio Milestone: The legal framework Poultry (IFC); economic activity. (FY13): for deposit insurance has (iv) Financial Sector DPC; Increase foreign investment by promoting a NBL: -0.49% been enacted and DCGT has (iv) IFC equity and debt support to foreign investment friendly environment for RBB: 3.33% 10% CAR for each one operationalized the Act by infrastructure companies, MFIs and FIs. the development of priority sectors. developing adequate operating GoN ownership of NBL: 30% GoN ownership of NBL: 0% Indicative Financing: capacity and by issuing enabling Constraints/Opportunities: Source: NRB and GoN (i) IFC Investments in Andhikhola, Upper regulations and bylaws Instability in the financial sector, including Trishuli 1, Joint Development Agreement for Indicator 2: The NRB program of special inspections has been risks of insolvency of state-owned banks and Upper Marsyangdi and, and Kabeli power completed and all undercapitalized institutions have been low levels of capitalization. projects; either resolved or are under formal Prompt Corrective Action. Milestone: 10 IFC led technical (ii) IFC’s support to tourism by investing in Low levels of private investment, including advisory and/or PPP projects by Baseline: Target: hotel projects; compliance cost savings in climate 2015 No inspections 50% of assets of Class A (iii) Second Financial Sector DPC. interventions. Low access to finance. banks Ongoing AAA: Source: NRB and project data (i) Competitive Industries Study; Milestone: 4 IFC led investment Indicator 3: Amount of new private investment mobilized in (ii) IFC Nepal Investment Climate Reform projects by 2015 priority sectors Program (SEDF); (iii) IFC advisory with existing clients in Baseline: 0 Target: $100m Nirdhan and RMDC (FM+A2F); Source: IFC (v) IFC payments projects; Indicator 4: Compliance cost savings of investment in climate (vi) IFC PPP transaction advisory to GoN; interventions (vi) Financial Sector Assessment Program (FSAP); Baseline: Target: (vii) Financial Sector Development Strategy 0 $18.5m (TA); Source: IFC (viii) AgriFinance advisory to Nirdhan (TF); Indicator 5: Access to finance: Improved access to finance - (ix) IFC’s South Asia Regional Integration to be measured by number of beneficiaries (individuals and in Trade and Investment (SARTI) Policy SMEs, disaggregated by gender) Program; (x) IFC SME Banking and Financial Baseline: Target: Infrastructure Projects. SMEs: 43,900 (5,268 female SMEs: 51,300 (6,300 female- owned); Individuals: 2.3 million owned); Individuals: 2.5 (of which 1.5 million female) million (of which 1.6 million 9 female) Source: IFC FY2014-2018 Country Partnership Strategyfor Nepal 10 Pillar 2: Increasing inclusive growth and opportunities for prosperity Country Goals: Outcome 2.1 Increased agricultural productivity and Milestone: Increase in Ongoing Financing: To improve economic status of rural commercialization production of tomatoes and (i) Project for Agriculture FY2014-2018 people by increasing the production and Indicator 1: Productivity of priority high value milk by 8%, 32% respectively; Commercialization and Trade (PACT); Country productivity of agriculture and livestock commodities FCR reduction for poultry by 0.2 (ii) Modernization of Rani, Jamara, Kulariya Partnership commodities in line with the requirements Baseline: Target: (2016). Irrigation Project (RJK); (iii) Nepal Zoonoses Control Project (TF); Strategyfor Nepal of farmers and other stakeholders. Tomato : 84t/ha 110t/ha Milestone: Increased cropping Milk : 978 ltr/year,cow 2,250 ltr/year,cow (iv) Irrigation and Water Resource To increase agricultural production and Sugarcane: 39.5t/ha 47 t/ha (IFC) intensity by at least 1.90% Management Project (IWRMP); (2016). Executive productivity through efficient, sustainable, Poultry FCR: 2.1:1 1.9:1 (IFC) Summary (v) Nepal Agriculture Food Security Project effective and reliable irrigation system for Source: Project Data (PACT and NPSCSP) Milestone: Increased total area (GAFSP grant); providing irrigation facility to the agricultural Indicator 2: Percentage increase in the cropping intensity irrigated to at least 18,000 ha (vi) Nepal Poultry Supply Chain land throughout the year Baseline: Target: (2016). Strengthening Project (IFC). Constraints/Opportunities: Cropping intensity: 1.68 2.20 Milestone: Increased volume of Indicative Financing: Agriculture second greatest source of value- Source: Project Data (IWRMP) ginger marketed by smallholder [Will be determined by the outcomes of added to the economy; largest source of farmers by 25mt/year (min. 0.5% on-going AAA] employment, income and poverty reduction. Indicator 3: Area under irrigation farming per year; 2016). Baseline: Target: On-going AAA: Only 28 percent of Nepal’s arable land is Irrigated area: 15,817 ha 26,800 ha Sources of Growth in Agriculture irrigated; most irrigation systems are farmer- Source: Project Data (IWRMP) Indicative AAA: managed and in need of modernization and rehabilitation Indicator 4: Annual smallholder production marketed Strengthening the Poultry Value Chain (IFC) Need to improve agriculture productivity Baseline: Target: for marketable commodities and increase Ginger: 2,288 mt/year 2,324 mt/year integration of smallholders in value chains Milk: 5,122,260 ltr/year 5,170,520 ltr/year for non-traditional higher value commodities Source: Project Data (PACT) (market-oriented smallholder production) to improve rural incomes. Country Goals: Outcome 2.2: More equitable access to education and Milestone: 12,000 (3,000 per Ongoing Financing: To provide opportunities for literacy and skills development, of higher quality and relevance year) poor students at secondary (i) School Sector Reform Program (SSRP; continuous education to all Nepalese, Indicator 1: Enrollment rate (NER) in secondary education (by and tertiary levels receiving education SWAp); particularly to women and people from gender and income quintile) scholarships from 2014 to 2017 (ii) Pro-poor Targeted Stipend Project (TF); poor communities by linking literacy with Baseline: Target: Source: GoN (iii) Enhanced Vocational Education and way of life and by establishing inter-linkages Male: 30.9% Male: 34% Training Project; Female: 30.3% Female: 33.5% Milestone: (by mid-term) between skills and work. 3 (iv) Second Higher Education Project. Poorest Quintile : 17.7% Poorest Quintile: 22.5% NER Second Poorest: 25.9% Second Poorest: 25.9% Ongoing AAA: Male:33.5% Create skills and vocational training Source: GoN (NLSS if available) (i) Nepal Education Studies; Female: 33.0% opportunities to create human resource able (ii) Impact Evaluation of short-term Indicator 2: Number of students graduating annually from Source: GoN to compete both nationally and internationally. training. tertiary accredited institutions Indicative Financing: Milestone: 3,500 students Constraints/Opportunities: Baseline: 2,000 Target: 5,000 graduating from accredited (i) Higher Education Reforms Project; Low levels of access across to post-basic Source: GoN HE institutions; 15 institutions (ii) Skills Development Project. (secondary and tertiary) education across Indicator 3: Percentage of graduates from supported are accredited; 45,000 persons Indicative AAA: income groups and gender. Considerable programs gainfully4 employed at least for six months after trained (i) Evaluation of different modalities of wage premiums for higher levels of education completion of the short term training enhancing early grade reading skills; in Nepal as well as for migrant workers. Low Baseline: 68% Target: 70% (ii) Skills Development Study; levels of employability and need for training Source: GoN (iii) Education Sector Review. to be more employment focused. 3. NER will be based on EMIS, whereas NER of poorest Qs is based on NLSS data. 4. Gainfully employed means that a graduate earns at least NRs 27,600 (NRs 4,600 per month on average) from the job (or self-employment) that is directly related to the training received by the graduates. The graduate must have been placed in employment within two months of completion of the training. Country Goals: Outcome 2.3: Improved health and nutrition Milestone: At least 500 Skill Birth Ongoing Financing: To increase equitable access and quality of outcomes, particularly for the poor and disadvantaged Attendants training to doctors/ (i) Second HNP and HIV/AIDS Project health, education and water supply services nurse/mid-wives completed every (health SWAp); Indicator 1: Percentage of births delivered by skilled birth to all citizens, especially the marginalized year (ii) Community Action for Nutrition attendants in the poorest two quintiles population groups. Project. Milestone: at least 200 To increase equitable access to and quality Baseline: Target: disadvantaged VDCs have the Ongoing AAA: basic- health care services. Lowest 10.7% Lowest 20% nutrition project (i) Food Security and Nutrition Thematic 2nd Lowest 23.7 % 2nd lowest 30% Report; Provide basic drinking water and sanitation Milestone: Impact Evaluation Source: Project Data; DHS data (ii) Capacity Assessment of Community facilities to all citizens of Nepal. Reach of Health Insurance Indicator 2: Percentage of children 6-24 months of age who Workers to Implement Priority Nutrition universal access to water and sanitation by completed consume a minimum acceptable diet in the most disadvantaged Actions in Nepal; 2017. Milestone: People trained on (iii) District Profiles of Determinants of VDCs of the 15 project districts Constraints/Opportunities: improved hygiene behavior Malnutrition in Nepal; Low birth attendance in health facilities/ by Baseline: Target: and sanitation practices from (iv) Review of Behavior Change for skilled personal for the poorest quintiles. 11.8 25 zero (2014) to 0.3 million Infant and Young Child Feeding (IYCF) Source: Project Data (2015) and 1.6 million (2017) Interventions in Nepal; Low progress in reducing hunger and Indicator 3: Proportion of people in a district enrolled in health (v) Preparation of a strategic improving nutrition; high prevalence of poor insurance communications plan to raise infant and child feeding practices. awareness and increase commitment Baseline: Target: High out-of pocket expenditures for health for action against food and nutrition 0 10% and low enrollment in health insurance. insecurity in Nepal; Source: Project Data (vi) Nepal Rural Water Supply and 85 percent water access in rural areas and Indicator 4: New households with access to safe drinking water, Sanitation Sector-Identification of 55 percent sanitation access. High need new Village Development Committees (VDCs) that are open Options to Increase Sustainable Access for repairs of existing rural water systems. defecation free (ODF) and new public latrines to Services. About 5.5 million people suffer from inadequate water service and 16 million Baseline: Target: Indicative Financing: from inadequate sanitation facilities. Drinking water: 0 (2014; project Drinking water: 177,000 new (i) Third Rural Water Supply and area only) households (2017) Sanitation Project; Sanitation: 0 VDCs (2014; Sanitation: 240 new VDCs or (ii) Third Nepal Health Sector Program. project area only) about new 116,000 households Public latrines: 0 (2014; project (2017) area only) New public latrines: 600 Source: RWSSP3 project data 11 FY2014-2018 Country Partnership Strategyfor Nepal 12 Country Goals: Outcome 2.4: Improved social protection Milestone: Number of Gender Ongoing Financing: To enable economically vulnerable and socially and Social and Inclusion (GESI) (i) Emergency Peace Support Project; FY2014-2018 Indicator 1: Number of marginalized household excluded marginalized individuals, groups and Strategy in key ministries (ii) Poverty Alleviation Fund II Project Country supported with productive assets communities to cope and manage risks and monitored for progress on (PAF II); Partnership vulnerabilities by providing them minimum gender and inclusion scores. (iii) Social Safety Nets Project; Baseline: Target: Strategyfor Nepal level of social protection. (iv) Human Development and Social 416,7125 575,0006 Milestone: GESI Analysis of 3 Source: PAF-II Protection Pilot (TF) Constraints/Opportunities: sectors completed. Executive Continued high vulnerability of Ongoing AAA: Summary Indicator 2: Percentage of vulnerable people benefiting Milestone: 4,500 new PAF marginalized households, including lack (i) Human Development Note (based on from safety net programs7 community organizations by of availability of productive assets. NLSS data); Baseline: 42% of poor receive SA end of July 2015. (ii) Gender and Social Inclusion Target: 50% Milestone: 6,120 new PAF Assessment of NLSS; Source: HDSP, SSNP and SPP community organizations by (iii) Food Insecurity Targeting; Indicator 3: Number of payment accounts opened end of July 2016. (iv) Gender and nutrition review of (disaggregated by gender) public works; (v) IFC’s TA Nepal Payments Regulatory Baseline: 0 (male vs. female: N/A) Reform Program Target: 1 mn (of which 0.12mn female) Indicative Financing: Source: IFC’s TA Nepal Payments Regulatory Reform (i) Social Safety Nets Systems Building Project. Indicative AAA: (i) Social Protection Study; (ii) Review of public works program as a safety net; (iii) Social Protection Programmatic AAA. 5. The figure is based on PAF’s Progress Report (as of November 15, 2012) 6. This number is based on the estimates for the Second AF suggesting that PAF will cover an additional 153,000 households based on the additional financing of $80 million for the second AF of PAF II. The additional financing will provide support for about 6,000 additional community organizations. 7. Poor people who are benefiting of a reliable and robust safety nets program which has an efficient delivery mechanism IDA Operations Portfolio As Of Date 4/15/2014 Closed Projects 89 IBRD/IDA Total Disbursed (Active) 730.96 of which has been repaid 0.00 Total Disbursed (Closed) 770.19 of which has been repaid 422.00 Total Disbursed (Active + Closed) 1,501.15 of which has been repaid 422.00 Total Undisbursed (Active) 683.47 Total Undisbursed (Closed) 6.66 Total Undisbursed (Active + Closed) 690.13 Active Projects Difference Between Last ISR Expected and Actual Supervision Rating Disbursements a/ Project Project Name Development Implementa- Fiscal IDA Cancel. Undisb. Orig. Frm Rev’d ID Objectives tion Progress Year P132289 Kali Gandaki Rehab MS MS 2013 27.26 27.84 P125495 NP: Bridges Program Support MU MU 2012 60 43.31 9.56 P120265 NP: Emerging Towns Project MU MU 2011 25 6.43 10.50 5.74 -1.52 P104015 NP: Enhanced Vocational Educ & Trng MS MU 2011 50 10.37 26.57 24.88 -0.00 P099296 NP: Irrig & Water Res Mgmt Proj S S 2008 114.3 59.79 -4.73 9.57 P112893 NP: Kabeli Transmission Project MU MU 2011 38 27.09 8.51 P105860 NP: PAF II S MS 2008 245 0.03 82.04 -62.80 -4.69 P110762 NP: Peace Support Project MS MS 2008 50 13.06 0.68 15.33 13.71 P118179 NP: Rani Jamara Kulariya Irrigation Proj S MS 2012 43 30.68 11.58 P095977 NP: Road Sector Development Project MS MU 2008 117.6 28.49 -46.72 -1.26 P113441 NP: School Sector Reform Program MS MS 2010 230 83.16 -32.68 98.65 P090967 NP: Second Higher Education Project MS MS 2007 60 9.50 7.68 1.43 P117417 NP: Second HNP and HIV/AIDS Project S MS 2010 129.15 57.16 30.34 P113002 NP: Social Safety Nets Project S MS 2009 64.47 5.18 7.81 -30.67 12.13 P087140 NP:Agriculture Commercialization & Trade S MS 2009 60 50.75 8.50 P125359 NP:Community Actionfor Nutrition Project MU MU 2012 40 37.68 2.63 P132750 SNRTP S S 2014 100 100.42 0.67 Overall Result 1453.78 35.07 683.47 -52.17 128.02 Regional Projects with Nepal Components Project Project Name Development Implementa- Fiscal IDA Cancel. Undisb. Orig. Frm ID Objectives tion Progress Year Rev’d P144335 Nepal-India Reg Trade & Transport Prj S S 2013 99 93.2 -6.0 186.1 P121210 REG: Wildlife Protection: BD and NP MS MU 2011 39 31.3 20.3 90.6 P115767 REG:Northeast Regional Electr. Transmiss MS MS 2011 138 122.6 64.3 324.9 Overall Result 276 247.0 78.5 602 Country 13 Partnership Strategyfor Nepal FY2014-2018 14 FY2014-2018 Country Partnership Strategyfor Nepal Nepal Trust Fund Portfolio (As of March 31, 2014) Executive Summary USD in Million S. Project Trust Fund Project Effective Closing Net Commit. Disb. Total Cum. % Disb. Undisb. No. ID Number Date Date Amount FY14 Disb. Balance 1 P090038 TF 56440 Nepal - Biogas Program 3-May-06 31-Jul-15 7.00 1.57 3.55 50.73% 3.45 2 P095978 TF 90264 Nepal - Village Micro Hydro 30-Jun-07 15-Dec-15 1.96 0.00 0.00 0.00% 1.96 3 P090967 TF 93397 Japan Social Development Fund Grant for Pro-poor Targeted Secondary School 2-Jan-09 15-Jan-14 1.90 0.18 1.58 82.87% 0.33 Stipend Project (C) 4 P125198 TF 94724 Nepal REDD Readiness Preparation Program 26-Aug-09 30-Jun-15 3.60 0.73 1.43 39.64% 2.17 5 P119113 TF 98650 Program to Promote Demand for Good Governance (C) 24-Jan-11 31-Dec-13 1.41 0.19 1.32 93.53% 0.09 6 P123653 TF 97889 ADKF Small Grants Program 1-Mar-11 28-Feb-14 1.00 0.00 1.00 100.00% 0.00 7 P113441 TF 98235 Nepal: School Sector Reform Program 21-Mar-11 15-Dec-14 120.00 13.41 116.33 96.94% 3.67 8 P125891 TF 99675 Strengthening Institutional Capacity of the DNPWC for the Effective 25-Aug-11 25-Aug-14 0.50 0.16 0.33 66.04% 0.17 Management of Mountain Protected Areas 9 P125331 TF 99288 Nepal: Human Development - Social Protection Pilot Project 29-Aug-11 31-Jul-14 1.50 0.34 0.79 52.69% 0.71 10 P124088 TF 99274 Additional Financing to the Poverty Alleviation Fund II 11-Oct-11 30-Jun-14 10.00 0.47 10.00 100.00% 0.00 11 P125770 TF 10452 Strengthening PFM Systems in Nepal 31-Oct-11 30-Jun-15 4.30 1.49 3.15 73.33% 1.15 12 P128744 TF 11208 Nepal: Making markets work for the conflict affected in Nepal 17-Feb-12 17-Feb-16 2.65 0.43 0.79 29.72% 1.86 13 P127040 TF 10455 NP: Strengthening the Office of the Auditor General 23-Feb-12 30-Jun-15 2.30 0.64 0.99 43.24% 1.31 14 P130089 TF 12273 Zoonoses Control Project (ZCP) (C) 5-Jul-12 31-Mar-14 10.00 3.56 5.06 50.60% 4.94 15 P129177 TF 11452 Nepal: Pilot Project for Seismic School Safety in the kathmandu 23-Jul-12 30-Jun-14 1.37 0.10 0.10 7.30% 1.27 16 P131860 TF 12485 Nepal PFM-MDTF Strengthening Civil Society Organizations’ use of Social 30-Aug-12 30-Jun-14 0.80 0.35 0.70 87.41% 0.10 Accountability to improve PFM in Nepal 17 P127508 TF 13557 Building Resilience to Climate Related Hazards 20-Jun-13 30-Nov-18 15.00 0.00 0.00 0.00% 15.00 P127508 TF 13665 16.00 6.00 6.00 37.50% 10.00 18 P130461 TF 13464 Output-Based Aid for Municipal Solid Waste Management 21-Jun-13 30-Jun-17 4.29 0.26 0.26 6.10% 4.03 19 P128905 TF 13719 Nepal Agriculture and Food Security Project 30-Apr-13 31-Mar-18 46.50 4.25 4.25 9.14% 42.25 20 P145359 TF 15780 JSDF for Pro-Poor Urban Regeneration Pilot Project 10-Feb-14 30-Sep-17 2.75 0.00 0.00 0.00% 2.75 21 P145736 TF 16296 Adolescent Girls Employment Initiative II 10-Feb-14 30-Sep-17 0.58 0.00 0.00 0.00% 0.58 TOTAL 255.40 34.12 157.62 61.72% 97.78 S. No. Project COFN Project Effective Closing Net Commit. Disb. Total Cum. % Disb. Undisb. ID Number Date Date Amount FY14 Disb. Balance 20 P105860 COFN C1200 Poverty Alleviation Fund II 31-Jul-08 31-Dec-14 3.94 0.09 3.81 94.29% 0.13 Project Preparation Fund S. No. Project PPF Name of Disbursing PPF Effective Closing Net Commit. Disb. Total Cum. % Disb. Undisb. ID Number Date Date Amount FY14 Disb. Balance 20 P143036 IDA Q8700 Rural Water Supply and 24-Sep-13 30-Jun-14 3.00 0.00 0.00 0.00% 3.00 Sanitation Improvement Project + Utilization of Resources as of March 31, 2014 . * Exchange Rate Adjustment # Adjusted Trust Amount amount in columns 8 are figures derived after cancellation from original Trust Fund amount. Note: 1) The matrix presents the disbursement status of only ongoing portfolio and closed portfolio with disbursement period open. Projects which are already closed are not included in the matrix. 2) Japan Social Development Fund Grant for Pro-poor Targeted Project (TF93397) extended until January 15, 2014 (extension letter dated July 31, 2012) 3) Social Protection Project (TF 99288) extended until July 31, 2013 (1st extension) 4) TF 94724 FCPF REDD Cell extended by one and half year with new closing date of June 30, 2015.(1st extension) Country 15 Partnership Strategyfor Nepal FY2014-2018 Executive Summary Nepal IFC Portfolio IFC’s Committed and Disbursed Outstanding Investment Portfolio As of 03/31/2014 (In USD Millions) Committed Disbursed Outstanding FY Approval Company Loan Equity **Quasi *GT/ Partici Loan Eq- **Quasi *GT/ Partici Equity RM pant uity Equity RM pant 2008/ 2009/ 2010/ BoK 8.00 0 0 0.74 - 6.40 0 - 0.74 - 2011/ 2012/ 2013/ 2014 2009/ 2013 Buddha Air Nepal 5.45 0 0 0 - 5.45 0 - 0 - 2010/ 2013 Butwal Power Co 8.24 0 0 0 - 5.66 0 - 0 - 2014 Himtal Hydro - 2.000 0 0 - 0 0 - 0 - 1998 Jomsom Resort 4.00 0 0 0 - 4.00 0 - 0 - 2011/ 2012/ 2013/ Laxmi Bank Ltd - 0 0 0.04 - 0 0 - 0.04 - 2014 2009/ 2010/ 2011/ NIC Bank - 0 0 0.02 - 0 0 - 0.02 - 2013/ 2014 2012/ 2014 NWEDC - 3.894 0 0 - 0 3.00 - 0 - 2011/ 2012 Nepal BO2 - 0.283 6.70 0 - 0 0.28 - 0 - 2010 Nirdhan MFB - 0.187 0 0 - 0 0.19 - 0 - 2012 RMDC Nepal - 0.539 0 0 - 0 0.54 - 0 - 2009 Smartchoice - 0.350 0 0 - 0 0 - 0 - 25.69 7.25 6.70 0.79 - 21.51 4.00 - 0.79 - * Denotes Guarantee and Risk Management Products. ** Quasi Equity includes both loan and equity types. Nepal: IFC Investment Operations Program 2010 2011 2012 2013 2014* Original Commitments (US$m) IFC and Participants 14 13 35 22 4 IFC’s Own Accounts only 14 13 35 22 4 Original Commitments by Sector (%)- IFC Accounts only E - Transportation and Warehousing 0 0 0 32 0 O - Finance & Insurance 53 98 73 57 33 P - Collective Investment Vehicles 0 2 19 0 0 V - Electric Power 47 0 8 11 67 100 100 100 100 100 Original Commitments by Investment Instrument (%) - IFC Accounts only Guarantee 51 98 48 57 33 Loan-LN 47 0 23 43 0 Quasi-Equity (Loan Type) 0 0 19 0 0 Straight Equity (incl. Fund) 2 2 10 0 67 Total 100 100 100 100 100 * As of Mar 31, 2014 Country 16 Partnership Strategyfor Nepal FY2014-2018 IDA lending program FY14-18 Fiscal Year Lending Indicative IDA ($ m) 2014 Strengthening the National Rural Transport Program 100 Irrigation and Water Resource Management AF 50 Rural Water Supply and Sanitation Project 72 Others (Trust Funds): • Scaling-up Renewable Energy (SREP) – Biogas 20158 Higher Education Reform Project Total: Second Financial Sector Development Policy Credit 200-300 Energy Sector Development Policy Credit Grid Solar and Energy Efficiency Project Kabeli A Hydroelectric Project Technical Assistance for Preparation of Hydropower Project and Sector Reform Others (Trust Funds): • ESMAP – Wind Energy Resource Mapping 2016 Third Health SWAp (Health, Nutrition & Population - HNP) Total: Second Energy Sector Development Policy Credit 200-300 Hydropower Project or IDA Partial Risk Guarantee (PRG) Social Safety Nets Systems Building Project Strategic Roads Network Project Others (Trust Funds): • Public Procurement Performance Improvement Project 2017 Hydropower Project or IDA PRG Total: Skills Development 200-300 Local Roads Bridges 2018 Hydropower Project or IDA PRG Total: Nepal Fast Track 200-300 Proposed AAA and TA (FY14-18) FY14 FY15 FY16 FY17 FY18 Advocacy Poverty and shared prosperity Non-lending Technical Assistance (NLTA) Social protection CEM/Growth study Nutrition policy Mapping local service delivery Competitive industries diagnostic Education PETS Federalism Quality Hydropower dialogue, studies and TA Fast Track study and TA Financial sector strategy TA Public Financial Management TA Agriculture growth PEFA Education sector review Skills development study Advice Policy notes Economic updates National risk assessment ROSC Governance reform Governance reform Country 17 Partnership Strategyfor Nepal FY2014-2018 Executive Summary IFC Portfolio and Pipeline Summary Ongoing Non Lending Activities (IFC) Business Line No of projects* Total IFC-managed funds** (US$mn) Access to Finance 7 2.9 Investment Climate 3 7.4 Sustainable Business Advisory 2 2.4 Total Non Lending Activities 12 12.7 * Based on primary business line ** Based on product wise split for the projects *** Data as of Apr 14, 2014 Summary of Ongoing Non Lending Activites (IFC) Expected Project Name Project Description End Date Access to Finance Sustainable Energy Finance Improve the financial performance of Nepalese industry by reducing energy costs as well as FY14 Nepal emissions of greenhouse gases by helping 2-3 local Nepalese banks to develop a sustainable business in EE finance and promote energy efficiency within industry AS to Nirdhan Bank The overall objectives includes: (i) support Nirdhan to expand its operations and outreach to FY16 the clients; (ii) strengthen its risk management system and processes; and (iii) diversify and introduce new products and delivery mechanisms Nepal Payment Systems Engage with Nepal Rastra Bank and the Ministry of Finance in Nepal to facilitate the formulation of FY14 Regulatory Reform regulations and policies concerning National Payment Systems. The project also aims to provide capacity building for NRB so that it is able to monitor and regulate the financial sector efficiently. TA to M. Nepal on Launching Engage with M.Nepal to develop and roll out mobile financial services by developing a mobile FY14 of Mobile Money Initiative and banking strategy and product as well as an agent and risk management framework. Agent Network Development TA to CEDBL, Nepal - Women Increase access to finance for women entrepreneurs by providing advisory services to a Nepali FY15 in Business bank, CEDBL on strategy, product development and portfolio development Nepal SME Banking Improve SME banking practices in Nepal through the following 2 key objectives: (1) Developing FY16 SME Banking and Risk Management capacity among regulators and BFIs, and dissemination of SME Banking and RM global best practices through training programs; and (2) Advisory to banks on SME Banking/RM RMDC Risk Management and Provide advisory to RMDC across two key components: (i) Support RMDC in creating a strong FY17 Microinsurance AS risk management foundation & allow some of the largest MFIs in Nepal to prioritize RM practices. (ii) Build internal expertise & incentivize RMDC to act as an aggregator & insurance agent in scaling up of Nepal’s small & medium size MFIs’ insurance business Investment Climate Nepal ICRP - Regulatory The objective of the Project is to improve the investment climate in Nepal by (i) identifying and FY14 Reform removing major regulatory constraints for starting and operating a business, (ii) reducing tax compliance burden for businesses and (iii) improving the efficiency of export-import procedures. Nepal ICRP - Public Private The project will comprise of the following three components: (i) Establishment and FY14 Dialogue Operationalization of NBF Mechanism; (ii) Support private sector reforms to reduce the cost of doing business and capacity building; (iii) Communications and stakeholder engagement Nepal Investment Climate for Support the Government of Nepal in streamlining procedures related to investment, improving FY16 Industry air safety and food standards, as well as enhancing the capacity of investment promotion agencies, which will stimulate growth of the tourism sector through additional investments. Sustainable Business Advisory Nepal SME Ventures Build a pipeline of investable SMEs for the Fund by igniting interest and helping SMEs develop FY17 their managerial capacity and thus become more qualified and attractive for investments. PPCR- Promoting Climate Work with agribusiness lead firms to promote improved agricultural and water management FY17 Resilient Agriculture, Nepal practices and introduce new technologies among smallholder farmers producing rice, maize and sugarcane to adapt to climate change. * Data as of Apr 14, 2014 Country 18 Partnership Strategyfor Nepal FY2014-2018 Country 19 Partnership Strategyfor Nepal FY2014-2018 The World Bank Group Nepal Office P.O. Box 798 Yak and Yeti Hotel Complex Durbar Marg, Kathmandu, Nepal Tel.: 4226792 Fax: 4225112 Email: infonepal@worldbank.org www.worldbank.org/np www.facebook.com/WorldBankNepal