Employees Provided Fund reluctant to invest in road projects

EMPLOYEES Provided Fund (EPF) has been reluctant in investing in road projects although it its investment in the infrastructure sector, particular hydropower, is rising. At a time when the private sector is seeking to invest in road projects such as Kathmandu-Hetauda road and Kathmandu-Tarai Fast-Track, the EPF is not interested in investing in such projects, showing concern over collateral security. EPF Administrator Krishna Prasad Acharya said the EPF could not invest the funds collected from its members in road projects as such projects could hardly provide any collateral security. “We cannot take risk with members’ money,” he said. The EPF has pledged Rs 26 billion in loans for five hydropower projects over the next five years. It has pledged Rs 16 billion to four projects — Rasuwagadhi (111 MW), Middle Bhotekoshi (102 MW), Upper Sanjen (14.8 MW) and Sanjen (42.5 MW) — being undertaken by Chilime Hydropower Project, and Rs 10 billion to 456MW Upper Tamakoshi project. “Out of the pledged amount, we have already disbursed Rs 5 billion,” said Acharya. He said the projects had put up adequate collateral. “NEA, which is developing Upper Tamakoshi, has put Middle Marshyandi Hydropower Project up as collateral and has also provided its corporate guarantee,” said Acharya. “Chilime has put its running ‘Chilime Project’ up as collateral.” But road projects cannot offer such guarantee, Acharya said. “We were inquired informally about the possible lending for the proposed tunnel highway, but they didn’t make a formal request after we made our position clear,” he said. At a meeting on Thursday, Finance Minister Shankar Prasad Koirala had also asked EPF to be cautious while lending to road-related infrastructure projects. “The Finance Minister asked us not to take much risk with the employees’ money,” said Acharya. The EPF has not invested in any infrastructure projects developed by the private sector so far. Even hydropower projects find it difficult to get loans from the EPF. “To get loan from us, a hydropower project must be relatively cheaper with the cost remaining below Rs 120 million per megawatt, while the promoter must first manage 30 percent of the equity amount,” said Acharya. The EPF plans to invest 25 percent of its total portfolio in the infrastructure sector over the next five years. Currently, it has invested around 11 percent of its funds in government’s bonds, around 20 percent deposited in commercial banks, and has given over 50 percent to its members in loans. The EPF has around Rs 146 billion in its portfolio. Says it cannot invest its members’ money in projects that cannot provide collateral security