Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Nepal based on a desk review. It applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective SusPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country overview" section with an maturity rating and graphic, key achievements and remaining gaps, and timeline of key events.
• ""State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.

The Factsheet is intended to be a living document that will be revised and improved as new information is uncovered and advances are made. It is designed to support the ADB training programs on SusPP.

Nepal’s economy has traditionally been agriculture and forestry based, with minimal industrial activity - resulting in minimal GHG emissions. In recent years, the country has made significant progress in reducing poverty and achieving lower middle income country status in 2019. This progress has been coupled with a staggering rise in resources and air pollution in its main city of Kathmandu. The country has serious infrastructure needs from modern waste management facilities, improved energy transmission and transportation infrastructure, and quality housing.

Nepal has an opportunity now to leapfrog to a green growth trajectory and public procurement, amounting to about 20% of GDP, offers a useful tool to catalyze this new development pathway. The Government has committed to achieving the SDGs and becoming a net zero country by 2045. However, limited support for sustainable procurement exists in the country’s current law and policy framework. Most sustainable infrastructure projects to date have been constructed with international donor financing. However, national interest may be rising as several studies were completed in 2011/2022 that examine the country’s potential for green growth, green buildings and sustainable consumption and production.

>> Snapshot of Sustainable Procurement Maturity Level

Maturity Level:

Very Early Stage

Key Achievements

• Clear commitment to the SDGs and achieving net zero
  
• Pilots of sustainable infrastructure completed with international donor support
  
• Procurement law allows for domestic preference especially in works contracts
  

Ongoing Work

• Development of passive building design guidelines, tools, standards and manuals (EU Switch Asia project)
  

Potential pathways forward

• Minimal policy support for green or sustainable public procurement
  
• Need for legal reform to explicitly allow integration of sustainability criteria in procurements
  
• Misconceptions persist on durability and quality of eco-friendly building materials
  

>> Timeline of Implementation of SusPP Policies and Activities

2013

2007

2016

2021

2022

2008

Sustainable Development Goals Status and Roadmap 2016-2030 prioritizes environmental protection & sustainable natural resource use

Nepal sets commitment to be a net zero country by 2045

World Bank Green, Resilient and Inclusive development (GRID) approach adopted to guide post-COVID recovery

UN Habitat project develops Green Building Guidelines and support SME capacity building to develop sustainable construction materials

Public Procurement Act 2007 adopted

EU Switch-Asia project (2022-2026) aims to develop passive building design guidelines, tools, standards and manuals.

Public Procurement Rules 2008

adopted

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

The Government of Nepal committed to achieving the SDGs through its Sustainable Development Goals Status and Roadmap 2016-2030. To do so, it recognizes the need to “make sure that the country’s environment is protected and that its natural resources are used sustainably. The country’s commitment to the SDGs has been reiterated in its 15th Development Plan (2019-2023) and the 25-Year Long-Term Vision 2043. In 2021, Nepal set an ambition to become a net zero emission country by 2045 including by significantly scaling up hydropower investments.

The Government has made recent actions indicating its commitment to climate-friendly and green growth. The country introduced a climate change budget code into its public expenditure tracking system in 2012, indicating its interest in managing public budgets in climate-friendly ways. In 2021, Nepal adopted the Green, Resilient and Inclusive development (GRID) approach (developed by the World Bank) to guide its post-COVID recovery. This announcement signals its strategy for long-term green growth, climate action, and sustainable development for all. A 2022 World Bank Country Climate and Development Report called for four main transitions: improve resiliency of its agriculture, water and forestry management practices, realise its hydro potential, manage sustainable urbanization and build climate-resilient road infrastructure. Significant policy changes will be needed to achieve these transformations.

No specific policies have been adopted to date to promote the concepts of green or sustainable public procurement, nor sustainable consumption and production (SCP). However, a 2022 European Union (EU)-financed study examined the potential for SCP adoption in the country. The study specifically recommended the adoption of sustainable public procurement to encourage green innovation investments, green financing and green consumption. However, it is unclear to what extent the Government of Nepal will integrate these recommendations.

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

The Public Procurement Act 2007 (2063) (the “PPA”) and Public Procurement Rules 2008 (2064) (the “PPR“) outline the requirements and procedures relating to public procurement in Nepal. The PPA was amended in 2016 to incorporate provisions that supported the new Constitution of Nepal that shifted the country from a centralized to federal system of governance.

Article 14(8) allows public procurers to set preferences for domestic suppliers in international level bidding. Such preferences must be clearly stated in the notice on invitation to bid and bidding document. Foreign bidders are invited to appoint and identify a Nepalese agent in their bids and may receive a preference if they enter into a joint venture with a domestic construction entrepreneur. For the procurement of goods, locally manufacturers may be awarded contracts even if their bid price is up to 10% greater than an offer made by a foreign bidder.

The amended Public Procurement Act added clauses that allowed procurers to waive the requirement for qualification criteria of contractors for procurement projects less than NRs two crores NRs. However, most SMEs remained unsatisfied with this exemption and call for more supportive policies such as limiting documentation needs, dividing procurements into lots, ensuring prompt payment and allowing for mergers.

Beyond this, the procurement law framework does not promote the inclusion of environmental or social criteria (e.g. gender equality, social inclusion of minorities).

Pillar 3: Institutions & Capacity

The Public Procurement Monitoring Office (PPMO) was established under the PPA to ensure good governance in the public procurement system, placed directly under the prime minister. It focuses on improving transparency, efficiency and anti-corruption and advancing the e-Government Procurement System. The Centre for Procurement Management at the Nepal Administrative Staff College is responsible for providing training in the areas of procurement and contract management.

Pillar 4: Market Practices

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

The EU Switch-Asia program has offered support to Nepalese companies to adopt sustainable practices and technologies including:

• sustainable construction materials from concrete hollow block, micro-concrete roofing, reinforced cement concrete doors and window frames and natural round aggregate;
  
• sustainable carpet and pashmina production;
  
• lead-free paints;
  
• metal products for building and construction; and
  
• bioenergy through biocharcoal.
  

The UN Habitat “Green Homes” initiative provided support to build the capacity of local companies to offer green construction materials. The 2015 earthquakes created an opportunity for the country to rebuild using sustainable sourced construction materials, with 600,000 buildings requiring reconstruction and 250,000 repairs or retrofits. In that period, the UN Habitat project was actively supporting local suppliers to adopt eco-friendly building techniques such as rammed earth construction. Such construction uses locally sourced soil produced with less emissions than bricks (made in polluting kilns) at reduced costs. In 2020, the Bayalpata Hospital in Accham was built with rammed earth technology and was recognized with international design awards.

However, adoption of rammed earth construction remains low with most buildings in Nepal rebuilt with concrete after the earthquake. A misconception persists that mud mortar buildings are weak, since many of the buildings that fell in the earthquake were brick and mud mortar (but not rammed earth construction). Greater awareness is needed of these locally available and sustainable materials.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

Environmental and social criteria have been integrated into infrastructure projects in Nepal through projects led by international partners. From 2013-2016, UN Habitat implemented a Green Homes initiative aimed at promoting sustainable housing in Nepal. The initiative focused on five aspects: green building materials, passive solar design, energy efficiency, water conservation and waste management. The IFC and Netherlands-based development bank FMO invested $6 million in a sustainable, green business hotel in Kathmandu in 2015. The World Bank developed a Green Resilient Highway Corridor Concept to “green” the design of transport infrastructure to make it more climate-resilient, biodiversity-friendly and socially responsible.

Nepal currently does not have standards, guidelines or regulations regarding energy efficient building design for new construction or for retrofitting of existing buildings. An EU-financed Switch-Asia project (2022-2026) aims to tackle this challenge by supporting the development of passive building design guidelines, tools, standards and manuals. Capacity building is planned for actors throughout the building sector value chain to promote energy and resource efficient building.

No national ecolabel program exists in Nepal. However, several international ecolabels are present in the country including: FSC, Good Weave, IMO Certified, PEFC, TCO-Certified, EarthCheck and Certified Wildlife Friendly.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

The National Planning Commission (NPC) is the principal agency for SDG monitoring. However, no monitoring system is in place to track green or sustainable public procurements.

Projects Supported by ADB

To come

Other Initiatives supported by National/International Agencies

ICF: Coordinates the Nepal Urban Resilience Project (NURP), a 5-year program to ensure more resilient urban areas through proven resilient building construction techniques and other approaches.

EU Switch-Asia:

• Coordinates several projects to build capacity of Nepalese companies to adopt resource efficient practices in the building (brick, metal, paint, carpet), agri-food, bioenergy and tourism industries
• A new project (2022-2026) aims to develop passive building design guidelines and training programs and build capacity across the building sector to deliver at least 200 energy and resource efficient buildings in 60 municipalities across Nepal.
  
• A 2013-2015 Green Homes project (by UN Habitat) developed Green Building Guidelines and supported SMEs to produce hollow concrete blocks and solar energy installations.
  

Resources

Global Green Growth Institute (2017). Green Growth Potential Assessment Nepal Country Report.

IFC (2022). Green Buildings Market Intelligence - Nepal Country Profile.

Samriddhi Foundation (2020). Public Procurement Act, 2063 - Policy Brief.

Switch Asia (2022). Sustainable Consumption and Production in Nepal.

World Bank Group (2022). Nepal Country Climate and Development Report. CCDR Series. World Bank, Washington, DC.

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