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N T I S2010Index 4: Socio-economic ImpactCurrent Employment and Job-Creation Prospect: The SCAEF member firms are estimated to have given fulltimepermanent jobs to 2,563 persons, but most of them are working for domestic projects. The major andleading consulting firms have more than 100 staff each. There is only anecdotal evidence about exportorientedemployment numbers and it seems to be very limited, apart from engineers working abroad. Thesample of five interviewed companies employs a total of 300 engineers, but it is not known which share of thatcan be considered export-related. 135Gender Impact: Women employment in the sector is low (15-20 per cent).Contribution to Skill Development: Being a high-skilled activity, exports of engineering services could positivelycontribute to skill development, in particular through exposure with international engineering know-how.Impact on Development of Disadvantaged Regions: There is no particular impact on disadvantaged regionsthrough export of engineering services.Environmental Impact: None.Market Attractiveness IndexWe have taken an MAI for the construction industry provided by Davis Langdon, one of the leading globalconstruction consultancies. The index is based on a survey of industry experts. Numbers show the numberof respondents that state that a particular market will rank highest in the category. Overall, UAE, China, andIndia are ranked as highest.RankCountryTable 2.52Attractive Markets for EngineeringAttractive markets for Engineering servicesFastestgrowingTop 10Mostprofi tableMost openOverall index1 UAE 8 15 12 352 China PRC 21 7 4 323 India 5 2 2 94 Brazil 4 3 0 75 Quatar 3 2 0 56 USA 0 0 5 57 Nigeria 1 2 1 48 United Kingdom 0 0 4 49 Turkey 1 0 0 110 Saudi Arabia 1 0 0 1Source: The table is taken from Davis Langdon and Seah International, WorldConstruction 2009. The report is available athttp://www.davislangdon.com/upload/StaticFiles/EMEper cent20Publications/Otherpercent20Researchper cent20Publications/10654_Constructionper cent20Trendspercent207.pdf135ADF, which mainly exports its services, employs only 20 people and WLINK, for which exports constitute only 15-20 per cent of sales, employsa total of 100 persons.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT117
N T I S201019) Hydropower 136The structure of this sector profile is slightly different from those of other sectors due to the particularities ofthe electricity sector.BackgroundNepal does not export significant amounts of electricity at the moment. In fact, small amounts of electricityare currently imported from India because there is not enough electricity generation in Nepal and loadsheddingof 16 hours per day is common at certain times. Peak supply is around 700 MW, of which 650 MWis from hydropower and the remainder from thermal power. However, supply during the dry season is lessthan 400 MW. Domestic demand is estimated at around 800 MW, so there is a significant gap. Electricityprices in Nepal are relatively low. Prices are around 9 NRP (US$0.12) for private and 7 NRP (US$0.10) forindustrial users, but costs are many times higher for self-generated electricity during blackouts. Apart fromthe political situation and labour issues, power supply is seen as the major problem for most companies thatwere interviewed during the preparation of this study. Therefore, the most pressing issue is to improve powersupply in Nepal, but export of electricity could become a major source of export earnings in the long run.Potential for Hydropower ExportsThere are currently no exports of hydro-energy from Nepal. However, it is useful to assess briefly the potentialexports and export revenue that could be earned from hydropower.It is estimated that Nepal has a potential of 83,000 MW of hydropower capacity, out of which 43,000 MThas been identified as economically viable. Total revenue from hydropower, once a significant share of thepotential is tapped, could reach many billion US dollars per year, of which of course a significant share needsto be used to finance the initial construction costs. The key issue is whether Nepal will be able to capture alarge share of the rent that can accrue from hydropower. It is argued that India, the main potential buyer,does not believe in ‘avoided cost’ pricing but has been insisting on a ‘cost plus’ approach for hydroelectricity,which would mean that any rent is actually captured by India, rather than Nepal. That would mean that therewould be few welfare gains for Nepal from such projects, even if electricity exports reach levels many timeshigher than exports of other goods and services. Obviously, royalties need to be modest so as to assure thefinancial viability of any hydropower project. It is impossible to assess the potential gains for an individualhydropower project, but it is very likely that economic rents would accrue in most projects, i.e. the overallcosts per kWh, including all capital costs for the dam and transmission lines and maintenance costs, wouldbe below the price that can be obtained in the Indian market. As Nepal could provide peak load, the revenuecould be even higher if peak load would be priced accordingly, i.e. similar to marginal costs of peak loadgeneration which should be above average costs.One way to capture that revenue would be to tax foreign investors accordingly, e.g. by some amount per kWh.Another option would be for the GoN or other domestic entities to invest in hydro projects themselves, as itis happening in Bhutan with financing through loans from India.A very rough calculation shows the order of magnitude of potential revenue that could be accrued by Nepalassuming that foreign investors are financing all projects and are then taxed by applying royalties payment perkWh. If Nepal would receive a modest royalty of US$1 ct/kWh, then an installed capacity of 10,000 MW could136We classify exports of hydropower as a service export, but it should be noted that electricity exports could also be considered as falling undergoods exports. Whether electricity is a good or service can have important legal consequences, but it hardly matters for the context of thisstudy.118NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT
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Nepal Trade Integration Strategy 20
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Table of ContentsForewordAbbreviati
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Table 2.17 Acreage and Production o
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List of BoxesBox 2.1 A Nepalese IT
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LoD Limit of DetectionM&E Monitorin
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Chapter 1Trading Environment, Expor
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N T I S20101.3 Capacity Development
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N T I S2010Table 1.1Balance of Paym
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N T I S2010Changes in the Nepalese
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N T I S20101.5 Expanding an ‘Incl
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N T I S2010 Index 4 measures the po
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N T I S2010Table 1.9Impact of 19 Ex
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N T I S2010Table 1.10Geographical D
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N T I S20101.7 Declining Importance
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N T I S2010negotiate for the inclus
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N T I S2010Types of Exported Produc
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N T I S2010Table 2.2Large Cardamom:
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N T I S2010Index 4: Socio-economic
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N T I S2010Index 1: Export Performa
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N T I S2010exporters. Nepal permits
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N T I S2010RankCountryExports Nepal
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N T I S2010like China and Australia
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N T I S2010The opportunities for pr
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N T I S2010Lentils are subject to o
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N T I S2010Production Capacity: Nat
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N T I S2010Gender Impact: This sect
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N T I S2010Export Prospect: Accordi
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N T I S2010Cost and Quality of Infr
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N T I S2010Attractive markets for T
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N T I S2010Market Access Conditions
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N T I S2010Gender Impact: The respo
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N T I S2010Information from industr
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N T I S2010Cost and Quality of Infr
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N T I S2010RankCountryTable 2.26Att
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N T I S2010# Botanical Name 41 Spec
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N T I S2010Current Export Destinati
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Page 84 and 85: N T I S2010Availability and Quality
Page 86 and 87: N T I S2010Attractive Markets for S
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Page 94 and 95: N T I S2010Export Prospect: Accordi
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Page 98 and 99: N T I S2010The value added of those
Page 100 and 101: N T I S2010sheep population, which
Page 102 and 103: N T I S201013) TourismBackgroundTou
Page 104 and 105: N T I S2010Index 2: World Market Co
Page 106 and 107: N T I S2010There are also about 24
Page 108 and 109: N T I S2010Index 1: Export Performa
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Page 112 and 113: N T I S2010Contribution to Skill De
Page 114 and 115: N T I S2010Types of Exported Servic
Page 116 and 117: N T I S2010Cost and Quality of Infr
Page 118 and 119: N T I S201016) Health ServicesBackg
Page 120 and 121: N T I S2010medical services are bei
Page 122 and 123: N T I S201017) Education ServicesBa
Page 124 and 125: N T I S2010should be interpreted ca
Page 126 and 127: N T I S2010foreign students. The me
Page 128 and 129: N T I S2010Under mode 4 (presence o
Page 132 and 133: N T I S2010generate revenue of US$3
Page 134 and 135: N T I S2010monopsony power. Several
Page 136 and 137: N T I S2010The possibility of direc
Page 138 and 139: N T I S2010Dairy Products, specific
Page 140 and 141: Chapter 3Access to the Indian Marke
Page 142 and 143: N T I S2010The Nepal-India Trade Tr
Page 144 and 145: N T I S2010Most issues reported abo
Page 146 and 147: N T I S2010Nepalese Domestic Issues
Page 148 and 149: N T I S2010India’s view is that t
Page 150 and 151: Chapter 4Access to the Chinese Mark
Page 152 and 153: N T I S2010products must be wholly
Page 154 and 155: N T I S2010The findings discussed h
Page 156 and 157: N T I S20104.5 Other Impediments to
Page 158: N T I S20104.7 Recommendations: Cha
Page 161 and 162: N T I S2010inflow between 2000 and
Page 163 and 164: N T I S2010Industrial Parks and SEZ
Page 165 and 166: N T I S2010Lack of up-to-date polic
Page 167 and 168: N T I S2010Apart from the critical
Page 169 and 170: N T I S2010capabilities in all five
Page 171 and 172: N T I S20105.5. Combining Investmen
Page 174 and 175: Chapter 6Trade FacilitationN T I S2
Page 176 and 177: N T I S2010In the 2005 Trade Facili
Page 178 and 179: N T I S2010The latest phase of impl
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N T I S2010improve efficiency. Few
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N T I S2010Figure 7.1Future Organog
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N T I S2010EU countries, special pr
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N T I S2010Act 1980. So far, 130 fi
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N T I S2010The current projects inc
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N T I S2010The NBSM as a secretaria
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N T I S2010Many more organizations
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N T I S2010Table 7.8Existing Nepal
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Table 7.9Standards Issues for Ten E
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N T I S20107.14 Priority Actions an
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N T I S2010It is not clear what amo
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N T I S2010GeneralNepal’s general
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N T I S2010a crucial part of the PR
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N T I S2010residue limits (MRLs) ar
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N T I S2010The viral diseases chirk
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N T I S2010SPS issues Affecting Tra
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N T I S2010Indian phytosanitary sta
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N T I S20108.5 Conclusions and Reco
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N T I S2010Simpler requirements suc
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Table 8.4Summary of Export Environm
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N T I S2010To register a patent, a
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N T I S2010breaches of law. The Nep
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N T I S2010Intellectual Property is
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Chapter 10Barriers to Service Trade
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N T I S2010Constraints in the touri
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N T I S2010Table 10.2Nepal GATS Com
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N T I S2010locations favourable for
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N T I S2010Barriers to Exports of H
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N T I S2010Institutional IssueThe s
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N T I S2010 Strengthening sub-natio
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N T I S2010Observations from enterp
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N T I S2010Nepal Ginger Producers a
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N T I S2010 Helping paper manufactu
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N T I S2010Computer Association of
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N T I S20105. Also related to the a
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N T I S2010The key principles inclu
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N T I S2010That being said, Nepal h
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N T I S2010Nepal Business ForumOn M
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N T I S2010Third, capacity developm
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N T I S2010expected to emerge from
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N T I S201012.7 Possible Options fo
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N T I S201012.8 RecommendationsThe
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N T I S2010GoN / MoF (2009), Econom
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N T I S2010Thapa, Ajit N.S. (2006).
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N T I S2010NEPAL TRADE INTEGRATION
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N T I S2010MainOutcomes Recommended
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N T I S2010NEPAL TRADE INTEGRATION
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N T I S20102. GINGERStrengths Tradi
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N T I S20104. LENTILSStrengths High
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N T I S20105. TEAStrengths Very fav
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N T I S20106. INSTANT NOODLESStreng
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N T I S2010 Review, simplify, and i
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N T I S20109. SILVER JEWELRYStrengt
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N T I S201011. CHYANGRA PASHMINA PR
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N T I S201013. TOURISMStrengthsNatu
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N T I S201015. IT AND BPO SERVICESS
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N T I S201017. EDUCATION SERVICESSt
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N T I S201019. HYDRO-ELECTRICITYStr
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Appendix 1Methodology for Export Po
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N T I S2010B. Data SourcesThe analy
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Appendix 2Market Attractiveness Ind
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N T I S2010Rank13) Tourism1 Germany
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Appendix 3Updated Legislative Actio
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N T I S2010specified management sys
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N T I S2010than pesticide residues
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Appendix 5Malaysia GAP (Skim Amalam
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N T I S2010E. Document ControlQMS d
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Appendix 7Good Agricultural Practic
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