Spearheaded by the Ministry of Infrastructure Development, the draft titled 'Bill Designed to Amend and Integrate Laws Related to Infrastructure Development Fund-2083' seeks to modernize the nation's financial framework under the federal system. The initiative is designed to overcome traditional budgetary constraints and attract massive capital into urban development, roads, drinking water, sewerage, and waste management.
Capital Structure and Shareholding
According to the draft bill, the fund will feature an authorized capital of Rs 100 billion, an issued capital of Rs 50 billion, and a paid-up capital of Rs 20 billion, distributed through 1 billion ordinary shares.
The multi-stakeholder investment framework brings together all tiers of government alongside public and private entities:
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Government of Nepal: 40%
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Metropolitan, Sub-metropolitan, and Municipalities: 15%
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Government Corporations, Banks, Financial Institutions, and International Institutions: 15%
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Rural Municipalities: 10%
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Provincial Governments: 5%
Diversifying Financial Resources
The primary motivation behind the fund is to reduce over-reliance on traditional government budget allocations. By mobilizing alternative financial resources such as foreign investments, public-private partnerships (PPPs), mixed investments, and green climate finance, the fund aims to meet the ambitious economic development targets outlined in the Sixteenth Plan.
In addition to equity contributions, the fund is empowered to accept domestic and international grants and loans, as well as raise capital by issuing debentures and bonds. The mechanism is intended to provide a steady, long-term stream of financial resources so that local and provincial projects no longer need to wait for annual government grants.
Project Support and Guarantees
Beyond direct equity investments, loans, and grants for projects selected across federal, provincial, and local levels, the fund will provide technical and financial consultancy services for project identification, feasibility studies, construction, and operation.
To strengthen the financial standing of local bodies, the fund can provide various forms of security—including loan guarantees, partial loan guarantees, payment guarantees, and liquidity guarantees—to back bonds issued by local levels. However, project approvals will strictly depend on rigorous feasibility assessments, income sources, repayment capacity, and risk analysis.
The draft also introduces provisions for operating debt repayment provident funds and issuing green and sustainable infrastructure bonds to support eco-friendly and climate-resilient urban development.
Governance and Oversight
Management of the fund will be overseen by a 10-member Board of Directors chaired by the secretary (or a designated official) of the Ministry of Infrastructure Development. The board will comprise ministry joint secretaries, provincial and local level representatives, private banking sector delegates, and domain experts. Day-to-day operations will be managed by a Chief Executive Officer (CEO) appointed through an open, competitive process for a four-year term to ensure professional leadership.
To ensure financial stability, the draft stipulates that dividends can only be distributed to shareholders after allocating 20 percent of net annual profits to a reserve fund. All accounts and financial operations will be audited by the Office of the Auditor General or an auditor designated by it.
