Project environment; political environment in Nepal

Project environment is the set of internal and external conditions, such as political, economic, social, technological and natural factors, that surround and influence a project.

Effect of the political environment in Nepal

The political environment includes government policy, laws, stability and the behaviour of political parties. In Nepal it affects projects in these ways:

• Policy and law: hydropower, tourism, mining and procurement depend on policy and law, e.g. the Public Procurement Act, the Hydropower Development Policy and the Electricity Act. Frequent changes create uncertainty.
• Government instability: frequent changes of government and ministers delay decisions, approvals, budget release and project priorities.
• Bandhs, strikes and protests: these stop work and transport, and labour and local groups make demands.
• Budget and funding: projects depend on annual budgets and political priority; donors react to stability.
• Federalism: three tiers of government (federal, provincial, local) create overlapping approvals and changed responsibilities.
• Land acquisition and compensation: political pressure often delays right-of-way.
• Contractor selection and corruption risk: political interference can reduce quality and cause delay.
• Positive side: supportive policy, tax incentives and government guarantees (such as a power purchase agreement) encourage investment.

Hence the manager should keep good relations with the authorities, include political risk in the risk plan and allow time contingency.