Infrastructure Development

Concept and Meaning

Infrastructure refers to the essential prerequisites required for the operation of any organization, system, or country. It serves as the foundation or backbone for development and economic activities, providing necessary services and facilities. Infrastructure development involves identifying and utilizing local resources and potential to ensure sustainable development. It is often referred to as the system of public works or the work skeleton, facilitating citizen service delivery and promoting economic and social mobility. Infrastructure development encompasses the construction, establishment, expansion, improvement, and strengthening of infrastructure systems.

Perspectives on Infrastructure

General Understanding: Roads, drinking water, electricity, telecommunications, sewage/sanitation, etc.
Technical Perspective: Initial structures necessary for development and construction.
Functional Perspective: Structural foundations required for promoting economic and social mobility through goods and service production.

Types of Infrastructure

Infrastructure can be classified based on its nature and scope:

Based on Nature

Hard Infrastructure: Transportation, energy, communication, water and sewage systems, waste management, buildings.
Soft Infrastructure: Institutional structures, education, culture, social and recreational aspects, policy environment.
Social Infrastructure: Education, health, social security.
Economic Infrastructure: Banks, financial intermediaries.

Based on Scope

Local Infrastructure
Strategic Infrastructure

Infrastructure and Development

In developing countries, infrastructure services are often equated with development itself. Most countries prioritize infrastructure development during early stages of progress, as it facilitates economic and social mobility, reduces poverty, and supports human development through effective service delivery. The quality and extent of infrastructure serve as indicators of a country's development level.

Infrastructure Development Efforts in Nepal

Pre-democracy, little focus was given to infrastructure development.
Since planned development began, infrastructure has been a key priority.
The First to Third Five-Year Plans prioritized infrastructure development.
The current Sixteenth Plan emphasizes energy, roads, and other socioeconomic infrastructure.
Infrastructure is a key strategy for poverty reduction.
Foreign aid is primarily mobilized for infrastructure projects.
Infrastructure is prioritized in economic development and prosperity programs.
24 (+3) National Pride Projects are being implemented as nationally prioritized infrastructure initiatives.

Common Challenges in Infrastructure Development in Nepal

High demand with limited capacity.
Geographical complexities.
Dominant government role with minimal private sector involvement.
Private sector's inability to treat infrastructure services as an industry.
Lack of operation, maintenance, and regular upkeep of created assets.
Limited adoption of modern technology and insufficient investment.
Delays in project completion regarding time, quality, quantity, and cost.
Scattered resource allocation without prioritizing investments.
Lack of partnerships in infrastructure development.
Issues with utilizing forests and protected areas.
Challenges in land acquisition, compensation, rehabilitation, and resettlement.
Politicization of large infrastructure projects (politics over development rather than for development).
Lack of inter-agency and inter-tier coordination, requiring integrated implementation.
Impacts of climate change and other disasters.
High reconstruction costs due to natural disasters damaging infrastructure.
Poor quality of constructed infrastructure.

Suggestions for Infrastructure Development

Strategic prioritization of projects.
Establishment of an appropriate policy environment.
Adequate investment allocation.
Capacity building (organizational, financial, etc.).
Increased private sector participation and collaboration.
External partnerships like OBOR and MCA.
Mobilization of unconditional foreign aid aligned with national interests.
Effective utilization, protection, and maintenance of constructed infrastructure.
Adaptation to climate change and disaster resilience.
Post-disaster reconstruction planning.
Robust governance practices.

Opportunities for Infrastructure Development in Nepal

Constitutional commitment to infrastructure development through foreign capital and technology for import substitution and export promotion.
Long-term vision of "Prosperous Nepal, Happy Nepali" supported by periodic plans.
Alignment with Sustainable Development Goals (SDGs) and international commitments.
Federal structure with 761 governments fostering competitive development.
Strategic location between two major economies.
Demographic dividend (62% of population in working age).
Immense potential for hydropower production.
High potential for tourism development.
Opportunities in education, health, IT, yoga, meditation, and religious centers.
International image as a peace-loving nation with political stability.
Utilization of knowledge, skills, experience, investment, and networks of non-resident Nepalis.
Growing and strengthening private sector.
Goodwill and support from development partners.
Investment-friendly environment.

Emerging Trends in Infrastructure Development

Commercialization and cooperativization of public infrastructure service providers.
Performance agreements between government and service providers.
Technical autonomy and capacity enhancement for service providers.
Adoption of cost-recovery principles in infrastructure services.
Decentralization of infrastructure development and management to local and provincial levels.
Public-Private Partnerships (PPPs) involving government, private sector, community organizations, and individuals sharing risks and benefits.

Prerequisites for Public-Private Partnerships

Policy and legal reforms.
Innovative risk mitigation strategies.
Simplified and effective procurement processes.
Development of capital markets.

Importance of Public-Private Partnerships

Increases cost-effectiveness.
Enhances rational cost allocation.
Reduces weighted average cost of capital and improves financial engineering.
Adopts a business-oriented approach to problem-solving.
Encourages innovation and modern technology adoption.
Fosters strong relationships between public entities and service providers.
Promotes competition, ensuring value for money (VfM).
Controls leakages (e.g., electricity, water, public resources).
Creates an environment to tap hidden potential and opportunities.
Reduces claim culture.
Mitigates risks effectively.

Summary

Infrastructure development is a critical prerequisite and foundation for national development, serving as a vital tool and indicator of prosperity and quality of life. Nepal has made gradual progress in various types of infrastructure development. However, challenges include the lack of an integrated and forward-looking policy, weak implementation of existing policies, ineffective resource mobilization, poor quality of constructed infrastructure, lack of coordination among stakeholders, and inadequate infrastructure systems. Developing modern, innovative, and high-quality sustainable infrastructure to meet public expectations and contemporary needs is a significant challenge. Systematic and planned development of accessible, modern, and quality infrastructure, along with enhanced interconnectivity, is essential to accelerate Nepal’s development, boost production and productivity, and improve the quality of human life. The Sixteenth Plan emphasizes quality physical infrastructure development and intensive interconnectivity.

3.2 Infrastructure development