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Date: 06/17/2009

Highlights

• The five ruling parties which have been holding marathon meetings to resolve

the weeks-long dispute over power-sharing among the coalition partners failed

to reach a decision on Tuesday as well.

• Maoist Chairman Pushpa Kamal Dahal has termed the new coalition a “puppet

government” formed under the influence of the foreign powers.In his 19-page

political document presented at the Maoist politburo meeting on Tuesday,

Dahal has said, “It is a puppet government formed with support from external

forces.”

• At least three Nepali Congress (NC) heavyweights -- not NC President Girija

Prasad Koirala this time around -- are likely to fight for the post of NC's

Parliamentary Party leader on Saturday, the date slated for the election of the

PP Working Committee.

• Tuesday's meeting of the five key partners in the CPN-UML-led coalition

could not come up with a power-sharing arrangement acceptable to all, even

as Prime Minister Madhav Kumar Nepal’s press adviser Bishnu Rijal said the

parties had agreed to sort out their differences on portfolio division and

administer the oath of office to new ministers by Wednesday evening.

• The disgruntled People’s Liberation Army (PLA) combatants at the First

Division headquarters in Chulachuli, Ilam, have begun deserting the camps.

• President Dr. Ram Baran Yadav appointed Professor Dr Bharat Bahadur Karki

as the Attorney General of Nepal on Tuesday.The President appointed him as

per Article 134 (1) of the Interim Constitution of Nepal based on the

recommendation of Prime Minister Madhav Kumar Nepal.

• National Human Rights Commission has initiated investigation on the death of

district committee member of the Unified CPN (Maoist) Rajendra Phuyal.

• Employees of Nepal Bank Limited (NBL) have protested against the bank

management's decision to implement both the voluntary and compulsory

retirement schemes to right-size the workforce.

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• Federation of Nepalese Chambers of Commerce and Industries (FNCCI) has

urged the government to focus on investment in the upcoming budget.

• The tourism industry of Nepal is in an urgent need of new marketing

strategies, opined Basanta Raj Mishra, president of Nepal Association of Tour

Operators (NATO). “Due to frequent disruptions, the international perception

of Nepal will directly affect this industry,” said Mishra.

• The number of Nepalese migrant workers leaving for foreign destinations

during the first 11 months of the current fiscal year is down from last year.

• Import prices of petrol and diesel have inched up, shrinking the profit margin

of Nepal Oil Corporation (NOC) and hence its loan repayment capacity, the

latter by Rs 315.50 million for June.

• After going downhill for three straight days, the Nepal Stock Exchange

(NEPSE) gained 5.42 points on Tuesday to close at 681.83 points.

• Nepal Petroleum Dealers Association, Koshi, has accused the Ministry of

Industry (MoI) of flouting the law while granting a license to Koshi

Petrochemicals for producing diesel and demanded that the government

investigate the matter.

•

POLITICS:

PM tries to woo Madhesi parties with exchange offer

The five ruling parties which have been holding marathon meetings to resolve the

weeks-long dispute over power-sharing among the coalition partners failed to reach a

decision on Tuesday as well. As a last option to woo the Madhes-based political

parties, Prime Minister Madhav Kumar Nepal proposed an exchange of two ministries

-- Ministry of General Administration and Ministry of Peace and Reconstruction

which have been allocated to CPN-UML -- for other ministries demanded by the

Madhesi political parties. The dispute was "reduced significantly" after the prime

minister´s proposal, but this failed to satisfy the disgruntled Madhesi leaders,

according to one leader of the Madhesi People´s Rights Forum (MPRF) present at the

meeting.

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The MPRF-faction led by Deputy Prime Minister Bijay Kumar Gachchhadar is

satisfied with the allocation of four ministries -- physical planning and works,

education, tourism and civil aviation, and women, children and social welfare -- to

MPRF.But Tarai Madhes Democratic Party (TMDP) and Sadbhavana Party (SP)

continue to object to the allocation. TMDP has been demanding three portfolios while

the prime minister has offered the party two ministries and to split one ministry into

two. But, TMDP insisted on three separate ministries along with three state ministers

for itself."We are demanding three ministries without any split ministry," said Ram

Kumar Sharma of TMDP.

SP has been demanding the ministry of water resources, which is already allocated to

the NC, or any other key ministry.The prime minister tried to assure the SP by

promising to give it preference in political appointments to be made by the

government later.TMDP and SP insisted on making a review of the portfolios shared

by CPN-UML and NC. But, the prime minister categorically ruled out any further

revision in portfolios allocated to CPN-UML and the NC.

"The options presented by the prime ministers at the five-party meeting (today) are

the last and this is the maximum flexibility possible on his part," said a UML leader

present at the meeting. Those who accept the proposal will join the government on

Wednesday or else will be dealt with later, the leader said. "But the cabinet expansion

will take place tomorrow."

"We are in discussions among the three parties. After taking a common stance over

sharing of portfolios among us, top Madhesi leaders will meet the prime minister and

most probably resolve the matter tomorrow (Wednesday) morning," the MPRF leader

said.The other option suggested by the prime minister was increasing the number of

state ministers for the Madhes-based parties.

The NC and UML will not compromise on the key ministries including home,

defense, finance, ministry of water resources and local development, according to a

UML leader.The Madhesi parties had earlier strongly objected to the prime minister

reaching a power-sharing deal with NC without consulting the three Madhes-based

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political parties.The prime minister had argued that NC and UML reached their

agreement only after the Madhesi parties told the main parties to reach such an

agreement first.

Source: www.myrepublica.com

Date: 06/17/2009

Dahal report says coalition a puppet

Maoist Chairman Pushpa Kamal Dahal has termed the new coalition a “puppet

government” formed under the influence of the foreign powers.In his 19-page

political document presented at the Maoist politburo meeting on Tuesday, Dahal has

said, “It is a puppet government formed with support from external forces.”

According to Maoist spokesperson Dinanath Sharma, Dahal´s document, among other

things, reviews the party´s performance in the current national and international

context. The politburo meeting which was postponed twice, began in Kathmandu

Tuesday. Dahal was under intense pressure to present the party´s course of action in

writing.The leaders will deliberate on the chairman´s paper for the next few days.

According to a leader loyal to the hardline camp, Dahal has not incorporated “People

´s Rebellion” in his report and the hardliners are likely to present a separate paper.

“But we are not sure whether we will present a separate paper as we have yet to

discuss the paper presented by the chairman,” said the leader. Dahal has not explicitly

incorporated people´s rebellion as the party´s future course of action, as demanded by

the party hardliners led by the party leader Mohan Baidya.A leader loyal to the party

establishment, however, said that Dahal´s paper includes all the issues and

incorporates the different opinion in the party and ruled out the possibility of a

different paper coming up in the meeting.In the paper, Dahal has expressed concern

over the growing factionalism in the party, and stressed the need for unity.

The former rebel leader has also stated that the Maoists should take initiatives to form

a new government only after the "extra-constitution" move of the president is

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rectified. He has stated that the Maoists should form a consensus government led by

the leftist and patriotic forces.“Patriotic and progressive forces should take initiatives

to form a government,” the paper states. The paper also states that the party has lately

become weaker. The paper says the party has become larger after a unity with the

CPN (Unity Center-Masal), but has qualitatively become weaker, and that has given

rise to anarchy in the party, according to a leader. In Dahals´ evaluation, the party was

successful while in the government, despite lack of experience. Dahal has also stated

that international situation has ripened for the writing of a constitution in favor of the

people. “Colonialist country USA, capitalist and Europeans are facing economic

recession,” a leader quoted Dahal´s paper, “Taking all these into consideration,

ground is ripe for the writing of a constitution in favor of the people.”

Source: www.myrepublica.com

Date: 06/17/2009

3 contenders for NC PP leader

At least three Nepali Congress (NC) heavyweights -- not NC President Girija Prasad

Koirala this time around -- are likely to fight for the post of NC's Parliamentary Party

leader on Saturday, the date slated for the election of the PP Working Committee.

Senior NC leaders Sher Bahadur Deuba, Ram Chandra Poudel and Kul Bahadur

Gurung have thrown their hats into the ring and are busy garnering support from

among 114 lawmakers who will cast one vote each to elect one PP leader and 17

working committee members. According to Poudel, Koirala has decided not to contest

due to health reasons. Koirala has been the party's president and PP leader for most

part of the post-1990 years. Saturday's election is expected to stand out in the entire

history of the party for at least two reasons: First, the election will pass over the

party's key leadership role to a second gene-ration leader, a development much

desired but long deferred due to Koirala's reluctance, according to NC leaders.

Second, one of the important committees of the party will become more inclusive

because it is adopting a proportional electoral system for the first time, according to

Ananda Dhungana, who is coordinating Saturday's election.

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The election will select, apart from the PP leader, 17 other members, five of whom

will be represen-ting each of the five development regions, two Madhesi men, one

Madhesi woman, one Dalit woman, two men and two women from indigenous and

backward communities, and two men and two women from the remaining groups.

Poudel, who declared his candidacy at Reporters' Club on Tuesday, held that this

electoral exercise would play a key role in democratizing the party. “This election is

the need of the hour and I am confident it will help make NC a model Loktantrik

party.” He said that “team spirit” and not factionalism should be the guiding principle

for Saturday's election. “I am trying to convince my friends to support me

unanimously, if that does not happen, I will contest.” Gurung, another contender, said

the election held great significance for the party's future. “Saturday will elect a new

leader capable of upholding democratic values and giving a new direction to the

party,” he told the Post.

Source: The Kathmandu Post

Date: 06/17/2009

Power talks on

Tuesday's meeting of the five key partners in the CPN-UML-led coalition could not

come up with a power-sharing arrangement acceptable to all, even as Prime Minister

Madhav Kumar Nepal’s press adviser Bishnu Rijal said the parties had agreed to sort

out their differences on portfolio division and administer the oath of office to new

ministers by Wednesday evening. The leaders of Madhesi Janadhikar Forum (MJF),

Tarai Madhes Loktantrik Party and Nepal Sadbhavana Party (Anandidevi) of the

United Madhesi Democratic Front (UMDF) and Nepali Congress and CPN-UML

have been discussing power-sharing arrangements since Monday after the UMDF

opposed the NC-UML deal to secure important ministries, including Home and Water

Resources.

UDMF leaders have requested for a revision in the power-sharing deal, while the NC

and UML have said there will be no readjustment. As per the deal, UML has secured

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the Home Ministry for its leader Bhim Rawal. The Ministry of Water Resources has

been divided into energy and irrigation ministries to sort out the tug-of-war between

the NC and UML. UDMF leaders have been demanding Home, Information and

Communications, Tourism, Culture and Civil Aviation, Local Development and

Health portfolios. Deputy Prime Minister Bijaya Kumar Gachhadar of the MJF has

been demanding the Home portfolio.

Source: The Kathmandu Post

Date: 06/17/2009

POLICY:

Desertion whiff in PLA

The disgruntled People’s Liberation Army (PLA) combatants at the First Division

headquarters in Chulachuli, Ilam, have begun deserting the camps. And the trickle

may end up in a deluge in the coming days. Three satellite camps — located at Tandi

and Yangshila in Morang and Danabari in Ilam — come under the First Division.

Platoon vice-commander Sharan and three section commanders — Biplab, Roshan

and Sunil — left the camp on Sunday. However, Naresh, secretary, First Division,

PLA, claimed that the four commanders were on home leave. Prabin Mishra,

coordinator, Youth People Security Committee, Kochila State, which is affiliated to

rebel Maoist leader Matrika Prasad Yadav’s breakaway faction, claimed that the

deserters got in touch with his outfit yesterday. “As many as 24 PLA members have

left the First Division due to serious differences of opinion over various issues,” said

Mishra. According to him, several reasons contributed to the desertion. “The

dissatisfaction stemmed from the fact that they were denied basic political rights

coupled with tardy payment of salaries and allowances.

To make matters worse, the Maoist top brass is enjoying the trappings of material

comfort,” he reasoned. A large number of unhappy PLA fighters may follow suit

soon.

They are planning to hold a press conference to shed light on the hardships inside the

camp.

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Mishra claimed that the combatants, living in Chulachuli and the satellite camps, are

under strict surveillance to muzzle any form of dissent.

Matrika Yadav said at a function here yesterday that he weaned away those PLA

fighters, who displayed a revolutionary zeal in them.

He claimed that he was compelled to break away from the Unified CPN-Maoist since

the latter diluted its revolutionary appeal, alleging that the PLA fighters were cut up

with Maoist chairman Prachanda.

Though, the UNMIN had verified 3,121 PLA fighters at Chulachuli and in the

satellite camps in the first phase, allegations abound that the figure is only around

2,000.

Source: The Himalayan Times

Date: 06/17/2009

Karki appointed AG

President Dr. Ram Baran Yadav appointed Professor Dr Bharat Bahadur Karki as the

Attorney General of Nepal on Tuesday.The President appointed him as per Article

134 (1) of the Interim Constitution of Nepal based on the recommendation of Prime

Minister Madhav Kumar Nepal.

Prof Dr Karki is an academic person as he had worked as the Dean of Law Faculty in

1990 and the chief of the law faculty of Tribhuvan University. Karki has experience

as law teacher for the last three decades. Born in Khotang District in 1950, Karki

completed his schooling from Adarsha Secondary School and college education from

the Mahendra Morang College. He got his LLM, and Ph D from Delhi University in

1979 and 1984 respectively.

After being appointed for the post of government's chief legal advisor, Dr Karki

expressed his commitment to work in order to maintain rule of law and protect human

rights as well.

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Source: The Himalayan Times

Date: 06/17/2009

NHRC initiates investigation on Phuyal’s death; death due to poison

National Human Rights Commission has initiated investigation on the death of district

committee member of the Unified CPN (Maoist) Rajendra Phuyal.

An NHRC team went to Tribhuwan University Teaching Hospital, Maharajgunj

Monday and queried the forensic specialist involved in Phuyals’ post-mortem.

Preliminary reports have shown Phuyal died due to consumption of a pesticide,

Metacid. Doctors involved in the post-mortem said residue of some poisonous

substance was found in Phuyal’s stomach. Final reports are yet to come.

The doctors said they will send Phuyal’s body for final viscera examination to

determine the cause behind his death.

Cadres of the Young Communist League and other Maoist affiliated organizations

had organised a bandh in Kathmandu and staged demonstrations at various places

saying Phuyal was murdered by UML affiliated Youth Force.

Source: www.nepalnews.com

Date: 06/17/2009

BANKING:

NBL staff slam CRS scheme

Employees of Nepal Bank Limited (NBL) have protested against the bank

management's decision to implement both the voluntary and compulsory retirement

schemes to right-size the workforce. The staff criticized management's plan to reduce

the service period from 33 years to 30 years under the compulsory retirement scheme

(CRS). Semanta Gouli, chairman of Bittiya Sanstha Karmachari Sangh, said, "Since

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management brought this scheme without consulting the employees, we're protesting

against it."

The employees have closed down the bank's head office. However, banking activities

have not been disturbed. According to Gouli, there was an agreement between the

bank management and the employees union four years ago regarding the service

period. At that time, both sides had agreed to fix the service period at 33 years.

This is the fourth time that the voluntary retirement scheme is being implemented at

NBL. According to Gouli, more than 300 employees had shown an interest in the

plan. Although the 30-year service period policy has been implemented at other

government owned banks -- Rastriya Banijya Bank (RBB) and Agricultural

Developm-ent Bank Limited (ADBL) -- for the compulsory retirement scheme, the

period was maintained at 33 years at NBL.

Nepal Rastra Bank (NRB), which is currently in charge of NBL management, has

clarified that the staff at the oldest bank needs to be downsized under the financial

sector reform programme. The bank has 3,317 employees across the country. The

central bank is of the view that that downsizing the number of employees at NBL was

very essential given that as much as 89.14 percent of its interest income is spent on

staff salaries and perks.

In contrast, RBB and ADBL spend just 30 and 24 percent respectively of their interest

income on salaries. NRB governor Dipendra Bahadur Kshetry said that that

government has spent Rs. 7 billion under the restructuring programme. "The bank will

not see reform if the required changes are not made."

According to NRB statistics, the average age of NBL employees is 47 years, which is

too high compared to private sector banks. As many as 2,835 out of 3,317 employees

are permanent staff of the bank. The agitating employees and the bank management

have held a dialogue over this issue but nothing came off it.

Source: The Kathmandu Post

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Date: 06/17/2009

ECONOMY:

FNCCI seeks pro-investment budget

Federation of Nepalese Chambers of Commerce and Industries (FNCCI) has urged

the government to focus on investment in the upcoming budget. It stressed that the

new budget must be an ‘investment budget’. Speaking at an interaction here today,

president of the umbrella organization of the Nepali private sector Kush Kumar Joshi

called for an end to anarchy and stopping the culture of frequent bandhs, strikes and

road blockades. He added, “If bandhs continue, Nepali industrialists will be

compelled to close their business.” Joshi also demand compensation for losses caused

by bandhs, strikes and road blockades. FNCCI has requested the government to take

strong measures to promote investment in productive sectors. “We want that the

upcoming budget be guided by the value of production,” Joshi said. He added that the

new budget must lift strapped tax and introduce multiple VAT system. He urged the

government not to introduce wealth tax until the federal structure of Nepal is set up.

Security of investors and their investment are the main problems in Nepali private

sector. Other obstacles are dilemma in adopting an economic policy, laws and their

implementation and energy crisis. “We feel the government is in a dilemma over

whether to adopt liberal or mixed economic policy,” said Pradeep Man Vaidhya,

chairman of the FNCCI’s Revenue and Tax Committee.

FNCCI also urged the government to make a business friendly environment and

ensure safety of entrepreneurs along with promotion of private public partnership in

infrastructure development, enhancing purchasing power of consumers and promote

good governance.

Moreover, FNCCI advised the government to set a gross domestic production (GDP)

target of 8 per cent for the fiscal year 2009-10. “It is a prerequisite for fast

development,” said Vaidhya. “We can achieve this target if there is peace and a

business-friendly environment.” For speedy development, the government must

introduce foreign investment policy, industry policy, commerce policy, form an

introduce investment board and set up special economic zones within a month, he

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added.

Finance Minister Surendra Pandey todl the FNCCI members that the government

would take their suggestions positively and try to incorporate these in the upcoming

budget. Finance secretary duo Rameshwor Khanal and Krishna Hari Baskota also

assured of their support in including the suggestions in the budget.

Source: The Himalayan Times

Date: 06/17/2009

Tourism needs new marketing strategies

The tourism industry of Nepal is in an urgent need of new marketing strategies,

opined Basanta Raj Mishra, president of Nepal Association of Tour Operators

(NATO). “Due to frequent disruptions, the international perception of Nepal will

directly affect this industry,” said Mishra.

According to him, to change the growing negative international perception of tourism

in Nepal, a high level delegation team must lobby for the tourism industry of Nepal in

all the major tourism markets abroad. “This is the only sector which can be revived

easily and has greater possibility of growth,” added Mishra. The government, along

with tour operators and stakeholders, should coordinate in this regard and help the

Nepali tourism sector to be competitive in the international arena, Mishra said. He

also urged for an effective budget for the tourism industry in order to unleash its full

potential. A nine-member delegation of NATO met Finance Minister Surendra

Pandey today. The delegation led by Mishra handed over a 15-point memorandum to

the minister for the development and promotion of the Nepali tourism industry.

The memorandum includes demands for conducting more effective tourism

marketing, enhancing Nepal’s image as a premier tourist destination, strengthening

the national flag carrier and attracting more foreign international airlines, declaring

tourism as a national industry, taking action against wilful defaulters, providing

troubled tourism companies with an easy exit and building up tourism infrastructure

in new areas.

Speaking on the occasion, Mishra suggested that the government should not change

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the existing tax structure as the tourism industry in Nepal suffered a setback during

the past 10 years. He underscored the need for political consensus to discourage

strikes, bandhs and blockades as such activities are affecting the country’s tourism

image in the international arena. Delegation member and senior tourism entrepreneur

Tek Chandra Pokhrel urged the government to offer incentives to foreign film

producers so as to promote the country.

FM Pandey assured the delegation that the government would take the suggestions in

a positive light.

NATO third vice-president Greesh Bindra and executive members Ambica Shrestha,

Bikram Pandey, Shibesh Shrestha, BB Malla and Sanjay Bhakta Mathema were part

of the delegation that met FM Pandey

Source: The Himalayan Times

Date: 06/17/2009

10pc less Nepali workers leaving

The number of Nepalese migrant workers leaving for foreign destinations during the

first 11 months of the current fiscal year is down from last year. There were 197,347

departures to 50 countries worldwide during the period, a drop of 10.07 percent from

219,458 previously. However, the number of jobseekers going to foreign lands

through personal contact surged by 234.99 percent to 40,658 individuals during the

same period. Departures last year numbered 12,637.

Mohan Krishna Sapkota, director general of the Department of Foreign Employment

(DoFE), said that the trend of finding employment through personal contact had

increased due to fear among manpower agencies caused by the global recession.

“They are afraid of sending fresh workers, and entertain only genuine demands from

foreign employers," said Sapkota.

A manpower agency, requesting not to be identified, said that it was easy to get

personal approval from the DoFE to leave the country for foreign employment. "If

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you are going through a manpower agency, there is a lot of red tape," he added. Tilak

Ranabhat, president of the Association of Foreign Employment Agencies, said that

the practice of obtaining government approval through an agent was increasing.

According to the DoFE, Qatar, Saudi Arabia, Malaysia, the United Arab Emirates,

and Bahrain are the top five countries to absorb Nepalese workers during the period.

Qatar took in 68,844 individuals, Saudi Arabia received 44,741 individuals and

Malaysia received 31,157 individuals during the period. Similarly, the United Arab

Emirates and Bahrain provided jobs to 28,607 and 6,102 individuals respectively.

Malaysia, which is one of the major labour markets for Nepalese workers, had hired

45,697 persons last year during the same period. The number of Nepalese going to

work in Malaysia started declining in mid-August 2008 due to falling demand. In

January 2009, the DoFE stopped issuing work permits to fresh workers after the

Malaysian government announced that it would stop recruiting foreign workers citing

the worldwide financial crisis.

According to Sapkota, the government is sending Nepalese jobseekers to work in

other sectors in Malaysia besides textiles, electrical and manufacturing. "Malaysia is

employing less foreign workers than before in sectors which Nepalese jobseekers

traditionally joined because of the recession," he added.

Source: The Kathmandu Post

Date: 06/17/2009

MARKET:

Oil import prices rise Govt refuses to adjust retail rates

Import prices of petrol and diesel have inched up, shrinking the profit margin of

Nepal Oil Corporation (NOC) and hence its loan repayment capacity, the latter by Rs

315.50 million for June. However, this is not going to impact consumers, as the

government has refused the corporation´s proposal to adjust retail prices, fearing

political resistance and consumers´ ire. Under the new import rates received on

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Tuesday, the corporation´s profit margin on petrol has dropped to Rs 6 a liter, or nine

rupees less than what it needs to be able to repay loans. In the case of diesel, NOC has

suffered a net loss of about Rs 1 a liter, whereas for meeting its loan repayment

schedule, the corporation was required to post a profit margin of Rs 6.5 a liter. “The

new pricing has lowered our profit margin to Rs 184.50 million a month,” said NOC

spokesperson Mukunda Dhungel. To keep up with its loan repayment schedule, the

corporation needs a profit of Rs 500 million a month.

NOC had Rs 15.96 billion in loans till eight months ago, taken for financing imports

as it went bankrupt after crude prices skyrocketed and the government refused to

adjust domestic rates in line with international trends over the last four years. But

when prices receded, the government endorsed NOC´s repayment plan, which set a

target of clearing loans in 30 months through profit-taking of Rs 500 million a month.

Profit-taking was to be maintained by not lowering retail prices even though crude

dropped as low as US$ 38 a barrel. “Unfortunately, crude prices have caught a rising

trend yet again and threaten to jeopardize our payment schedule,” said Dhungel to

myrepublica.com, adding that the corporation would surely miss the payment timeline

unless the government gave a nod on time for local price adjustments.

Close on the heels of rising crude prices, the Indian government this week hinted at an

oil price hike. However, the newly formed government here has argued that the time

is not appropriate for adjusting oil prices.Sources said NOC did seek consent for a

price adjustment, but the government turned it down.With profits reaped by fixing

domestic prices at a higher level, the corporation has managed to lower its loan

liability to Rs 11.19 billion as of mid-June 2009. Of the total outstanding loans, NOC

presently owes Rs 8.01 billion to the government, Rs 986 million to the Citizens

Investment Trust (CIT) and Rs 2.20 billion to the Employees Provident Fund (EPF).

Source: www.myrepublica.com

Date: 06/17/2009

NEPSE up by 5 points

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After going downhill for three straight days, the Nepal Stock Exchange (NEPSE)

gained 5.42 points on Tuesday to close at 681.83 points. The sensitive index and all

the sub-indices also recorded a growth. Among the sub-indices, hydropower was the

biggest gainer with 19.38 points. The banking sub-index posted a 1.81-point gain.

Among the 21 commercial banks whose shares were traded on NEPSE on Tuesday,

13 saw their share prices go up. Nabil Bank was the highest gainer with a rise of 56

points.

A rise in the share price of Butwal Power Company (BPC) pushed up the hydropower

sub-index by 19.38 points. BPC on Tuesday posted a gain of 37 points. The price of

Chilime's stock also increased by 10 points. Among the 11 development banks whose

shares were traded on NEPSE, seven saw their share prices go up. The top gainer

among development banks was Clean Energy Development Bank whose stock rose 12

points while Business Development Bank was the biggest loser with its stock

shedding 12 points.

Reliable Finance was the biggest gainer among finance companies with a gain of 37

points. NEPSE saw a total turnover of Rs. 49.47 million through 116,512 units of

shares. Shares of 56 companies changed hands on NEPSE. Nepal Credit and

Commerce Bank, Reliable Finance, Shikhar Insurance, Butwal Power Company and

Global Bank were the top five gainers on Tuesday. Likewise, Yeti Finance, Nepal

Bangladesh Bank, Lumbini Bank, Business Development Bank and Nepal Investment

Bank were the top five losers on NEPSE.

Source: The Kathmandu Post

Date: 06/17/2009

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BUSINESS:

Probe license to Koshi Petrochemicals: Dealers

Nepal Petroleum Dealers Association, Koshi, has accused the Ministry of Industry

(MoI) of flouting the law while granting a license to Koshi Petrochemicals for

producing diesel and demanded that the government investigate the matter. “How

could the ministry grant a license for crude imports and production of petroleum

products in the country without formulating appropriate laws and policy? We smell a

rat in the deal,” said Mukunda Neupane, general secretary of the association in the

region. The dealers, who are affiliated to Nepal Oil Corporation (NOC), have also

demanded that the government test the quality of diesel Koshi Petrochemicals is

supplying to industrial plants.

“The state must ascertain that its product matches the standard product specification

for diesel,” Neupane told myrepublica.com. They have also threatened to launch a

strike if the government does not fulfill their demand for investigations within 15

days. Dealers mainly flayed the MoI step after the company started fixed the price of

its diesel Rs 1 cheaper per liter than that supplied by NOC. Koshi Petrochemicals is

based in Nemuwa of Morang district and had received a license from DOI on May 20,

2009, securing permission to import crude oil and produce diesel, furnace oil and

mineral turpentine oil in the country. Interestingly, the company started selling diesel

from May 22, just two days after getting its license. “This whole saga appears sinister.

Hence, we want a deeper investigation of the case,” said Neupane. The company, on

the other hand, says it is sourcing crude from the Gulf countries. “We are presently

producing 30,000 liters of diesel and refining the crude at our own refinery,” said

Subodh Koirala, promoter of the company.

Source: www.myrepublica.com

Date: 06/17/2009

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INTERNATIONAL COVERAGE:

Eastern Nepal Burning Under Terrorism

Terrorism has been rising in Nepal. Its rise in the Eastern part is shocking and

alarming. The government does not care about the lives of the people. In the absence

of security, the people have no option than to flee the villages and the cities.

Thousands of Nepalese are sheltering in the adjoining parts of India and other

countries. Nepal's Eastern part now has dozens of terrorists’ outfits.

The Maoists which rampaged in the past still continue to act like terrorists. After

rejecting the government they are protesting in the street against the president's action,

all over the country. They are showing their real face to the public by torturing

people, setting fire to public property and personal property. Everybody is scared of

them and worried about their future in their motherland.

The maoists participated in the Constituent Assembly elections and formed the

government but they did not make any changes in their behavior. From their past

activities lots of group are now forming and following the Maoists’ principles to come

to power by extortion, kidnapping and killing day by day.

The leaders of the Maoists are themselves engaged in extortion. They are forced by

their commanders to do these illegal acts. The middle-level Maoists are acting as

revenue collectors who in turn have to handover a big portion of the extorted money

to the commanders. This is how the extortion is becoming a part of life in the Maoists

party.

The Maoist culture has also been copied by the Terai (plain land) organizations. The

Terai Mukti Morcha, The Terai Tiger, The Terai Virus Killers, The Madhes Jana

Jagaran and a few others. All these terror networks are scattered around the country.

There are also some organizations like Kirat Mukti Morcha and Tharu Sangram that

demand an independent nation within our small nation, Nepal. Each and every

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organization resorts to violence at the smallest of disagreements. There is every

possibility that an opponent is inhumanely killed and many people already lost their

lives over the past decade.

The fight for power between and within the parties neglects the security of the people.

The people have experiencing no government since the Maoists themselves formed

the Government in the center through the rigging of the Constituent Assembly

elections.

The unchanged behavior of the Maoists made people think of their safety on their own

and the best option remaining for them is to flee their homes. Due to the violence in

the Eastern part of Nepal, up to fifty thousand people have already left their homes.

The ever growing numbers of terrorist outfits will make more people flee in the near

future. No one wants to lose their life. No one wants to hand over their hard earned

money to the terrorists just because they ask for it. Thus, the only thing remaining is

to leave the home where you have grown up, where you have your beautiful past and

where you have dreamt of having a beautiful life for the rest of your life.

The tragedies of the Nepalese people are immense. The people in the Eastern part of

Nepal are living under such human tragedies. No one is there to listen to their pains.

Source: www.newsblaze.com/story

Date 06/17/2009

Nepali expatriates protest against Indian aggression

The Progressive Nepali Forum in Americas (PNEFA) in collaboration with other

organizations around the world June 16, 2009 held a global day of action against

Indian aggression in Nepal.

The Nepali expatriates organized protest programs in New York, Tokyo, Taiwan,

Japan, Germany, Belgium, Canada, UK and Nepal.

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Nepalis and peace-loving friends of Nepal protested the encroachment into Nepali

lands in Dang District by the Indian Border Security Forces (IBSF) last month.

Participants in the rallies put forward the following demands: that the Indian

government retract its recent aggression, that the IBSE be brought home to their

barracks in India, that the government of India apologize to those Nepalis who have

been the victims of a barbaric act, and that it compensate those whose property has

been destroyed. The rallies also appealed all Nepalese, regardless of their ideology or

party affiliation, to defend sovereignty. Organizers ask international friends and

communities to condemn Indian aggression in Nepal. The systemic encroachment

into Nepali lands as well as the atrocities committed against Nepalese citizens are a

violation of international law and human rights, and constitute an attack on Nepal’s

sovereignty. People from Nepal and India have very cordial relations: they respect

and admire each other. They share many common attributes. Nepalese appeal to the

Indian government to base its foreign policy on those attributes as envisioned in

Gujaral Doctrine. It is high time for Indian foreign policy making be taken out of the

hands of bureaucrats still living in the shadow of colonialism.

Source: www.telegraphnepal.com

Date: 06/17/2009

ZTE snaps up two UMTS deals in Nepal, Mongolia

Chinese equipment vendor ZTE Corp has announced it has won two UMTS network

supply contracts, one with Spice Nepal Private Ltd (SNPL, or Mero Mobile) and the

other with SkyTel in Mongolia. Under the deal with the Nepalese firm, ZTE will build

a W-CDMA network covering six main zones in the country with Phase I of the

project scheduled to be completed by October 2009. In Mongolia, the Chinese vendor

will roll out a nationwide commercial UMTS network for SkyTel. ZTE previously

built a CDMA2000 1xEV-DO network for the Mongolian operator.

Source: www.telegeography.com

Date: 06/17/2009

International Financial and Economical NewsBrief:

TOP STORY

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Opposition to financial regulatory revamp likely despite compromises

The Obama administration has already scaled back its proposed overhaul of the

financial regulatory system, but some of the initiatives are still expected to face

opposition. The proposal includes establishing a systemic federal regulator, providing

greater oversight for derivatives and giving the government the authority to seize

large institutions. "I think this is significant; I think they're headed in the right

direction," said Lawrence White, a former economist and regulator at the White

House. "They're trying to go up with a politically feasible proposal rather than a pie-

in-the-sky one." CNBC (15 Jun.)

ECB warns of pitfalls with more losses expected at banks

In the European Central Bank's June Financial Stability Report, policymakers warn

that commercial banks in the eurozone could face an additional $283 billion in losses

by the end of next year. "Hard-to-value assets have remained on bank balance sheets,

and the marked deterioration in the economic outlook has created concerns about the

potential for sizable loan losses," the ECB said. Lucas Papademos, vice president of

the ECB, warned that "there is no room for complacency because the risks for

financial stability remain high, also bearing in mind that the credit cycle has not yet

reached a trough." Bloomberg (15 Jun.) , The Times (London) (15 Jun.)

Market of Islamic bonds faces challenges from defaults

The market for Islamic bonds has suffered from its first two defaults, and more are

expected as Saad Group and other issuers face financial difficulties. Defaults are

forcing investors to seek redress through Western laws on bonds that comply with

Islamic laws. Mohamed Damak, an analyst with Standard & Poor's in Paris, said

ongoing court cases might "give some guidance to investors on the default of sukuk

and how this would be resolved." The Wall Street Journal (16 Jun.)

Benchmark residential rate in U.S. eases down to 5.52%

The interest rate on 30-year fixed-rate home loans in the U.S. declined Monday to

5.52%, according to Zillow.com reported. The rate was at 5.67% on Friday. Reuters

(15 Jun.)

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Russia might invest in bonds issued by Brazil, India, China

To diversify its currency reserves, Russia is thinking about buying bonds issued by

Brazil, India and China, its fellow members of the BRIC countries, said Arkady

Dvorkovich, the Russian government's top economic adviser. Russia would expect the

other BRIC countries to reciprocate by purchasing the country's bonds, he said. The

Wall Street Journal/The Associated Press (16 Jun.) China to loan Russia, Central

Asian nations $10 billion: The Shanghai Cooperation Organization, of which Russia

and four Central Asian nations are members, will get a $10 billion loan from China to

bolster its members' economies. Chinese President Hu Jintao announced the deal at a

summit of the organization in Yekaterinburg, Russia. China Daily (Beijing) (16 Jun.)

White House rejects California's request for bailout

California's appeal for emergency financial aid was turned down by the Obama

administration. U.S. officials are worried that if they give California what it wants, the

federal government will be buried under an avalanche of similar requests from other

states. The Washington Post (16 Jun.)

Credit card issuers cut deals to settle late accounts

Credit card issuers are increasingly giving their employees the power to negotiate

deals with customers to settle delinquent accounts, industry experts said. For the first

time in years, issuers are willing to slash account balances. The New York Times (15

Jun.)

Europe's green investment falls behind U.S., China

The use of green investment to stimulate growth in Europe is falling substantially

short of efforts in the U.S. and China, the head of the European Commission's

environmental arm said. "EU states spent 3% to 13% of recovery aid on what we

would call green activities," Karl Falkenberg said. "On the U.S. side, we come up

with about 14% ... but we see China in the upper 30s." Reuters (15 Jun.)

MARKET ACTIVITY

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Asian markets drop on worries that gains are outpacing recovery

Share markets throughout Asia slid Tuesday, with banking and resource stocks

leading losses. Tokyo's Nikkei 225 plummeted 2.9%, Hong Kong's Hang Seng Index

gave up 1.8% and China's Shanghai Composite slipped 0.5%. South Korea's Kospi

Composite dropped 0.9%, Taiwan's Taiex inched down 0.1% and Australia's

S&P/ASX 200 fell 1.6%. The Wall Street Journal (16 Jun.)

Lively bond market expected to spur loan activity

Senior bankers said companies throughout Europe are refinancing loans with equity

and bond issues. The deals are pouring cash back into the syndicated-loan market,

freeing up money at banks for new loans. "A lively bond market should act as a

catalyst to loan activity, as it promises quick takeout, something that gives banks

greater confidence," said one banker in London. The Guardian (London)/Reuters (15

Jun.)

Net selling cuts China's holding of U.S. Treasuries

China's investment in U.S. Treasuries fell to $763.5 billion in April, the lowest since

June 2008, according to the U.S. government. The drop "seems to stem from net

selling of Treasury bills," said Chirag Mirani of Barclays Capital Research. China

Daily (Beijing) (16 Jun.)

ECONOMICS

IMF revises U.S. forecast, sees shorter, milder downturn

The International Monetary Fund is painting a much more optimistic picture of the

U.S. economy than before. The agency predicted a 2.5% GDP contraction this year,

compared with its previous figure of 2.8%. The IMF also called for the country to

expand by 0.75% next year. Bloomberg (15 Jun.) , Telegraph (London) (15 Jun.)

Record unemployment in eurozone crushes hopes of fast recovery

The recession cost the eurozone 1.22 million jobs in the first quarter, the biggest

decline since records began in 1995, according to Eurostat, the EU's statistics office.

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Employment dropped 0.8% compared with the last quarter of 2008, driven largely by

rising joblessness in Spain and Greece. Forbes/Reuters (15 Jun.)

"Zombie" banks block Spain's recovery, BBVA chairman says

Spain's growth is being held back by feeble, "zombie" banks that are kept afloat

artificially, BBVA Chairman Francisco Gonzalez said. "The weakness in certain

institutions and sector overcapacity are weighing heavily on economic recovery and

future growth," he said. Reuters (15 Jun.)

Australia can't be complacent about downturn, Swan says

Despite optimism from experts who think Australia has emerged from the worst of the

recession, Treasurer Wayne Swan said the country still has to cope with falling

international trade and a drop in domestic business investment. "So, for some time to

come, there will still be a rocky road ahead," he said. The Australian/Australian

Associated Press (16 Jun.)

Geithner: U.S. faces "exceptionally challenging time"

Recovery of the U.S. economy will not come quickly, and unemployment will

continue to rise, even after the healing process begins, Treasury Secretary Timothy

Geithner said. "Recovery will be slower than we would normally see," he said. "This

is still going to be an exceptionally challenging time for business and consumers."

Reuters (15 Jun.)

GEOPOLITICAL/REGULATORY

Obama's regulatory overhaul focuses on asset-backed securities

On Wednesday, the Obama administration is set to unveil its proposed overhaul of

financial regulations and the regulatory framework. The changes would include a

revamp of asset-backed securities. Buyers would get more information about the

securities' underlying assets, while sellers would share in any losses. The EU also

plans to adopt a requirement that sellers share in losses, a move that would prevent

firms from simply shifting sales of asset-backed securities to European markets. The

Washington Post (16 Jun.) , Financial Times (free registration) (15 Jun.)

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FINANCIAL PRODUCT

ALPS seeks approval for 5 ETFs on commodities, energy

ALPS Fund Services filed with the U.S. Securities and Exchange Commission to

bring to market five commodity and energy exchange-traded funds. The products are

Commodity Producers Composite ETF, Agricultural Producers ETF, Industrial

Metals Producers ETF, Precious Metals Producers ETF and Energy Producers ETF.

The ETFs will be passively managed, making worldwide investments in companies

that generate half or more of their revenue from the market segments they track.

IndexUniverse.com (09 Jun.)

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