The Nepal Peace Trust Fund (NPTF) made an inauspicious start to its second phase on Wednesday, with five of its prominent donors—Denmark, Finland, Norway, Switzerland and UK’s Department for International Development (DFID)—deciding to cease their financial support to the fund. The withdrawal of support from the five donors, who have been funding millions of dollars for reconstruction and rehabilitation since the beginning of peace process, meant the NPTP now has only European Union and USAID as its major donors. The two signed a new Joint Financing Agreement with the Government of Nepal on Wednesday. Germany, one of the initial donors, had pulled the plug on its funding after the integration and rehabilitation of former Maoist combatants in 2012. “The other NPTF donors to date (Denmark, Finland, Germany, Norway, Switzerland and the UK’s Department for International Development) will continue their support for peacebuilding in other areas through different mechanisms,” the EU said in a statement. Government officials and diplomatic sources see the government’s failure to address the transitional justice mechanism as per the international standards, delay in holding local bodies’ elections, differences between the government agencies and donors over priorities and lack of transparency in financial dealings as the reasons behind the donors’ move. “Internal management of the fund like channelling over millions of rupees to Nepal TV and Radio Nepal to run peace related programmes in a very opaque manner has irked the donor agencies,” said a diplomatic source. The donors have contributed Rs9.3 billion to the NPTF since its establishment in 2007 following the signing of Comprehensive Peace Agreement to support Nepal’s transition from civil war to peace. The representatives from Denmark, Norway, Switzerland and DFID had made it clear to Minister for Peace and Reconstruction Narahari Acharya that they would not inject any more funds in the NPTF during a meeting on Tuesday. “They have informed us that they will not extend the JFA,” said Damodar Bhandari, joint spokesperson at the Ministry of Peace and Reconstruction, which also looks after the NPTF. “They told us that they were positive on resuming the support if local elections will be conducted.” Expressing his desire to see the peace projects on time or earlier, Finance Minister Ram Sharan Mahat told the 17th NPTF board meeting, “We need to thoroughly investigate where there has been misuse of project funds and ensure the completion of ongoing projects as soon as possible.” The board also approved a strategy implying support of about Rs 2.4 billion ($2.4 million) for peace building projects over the next two years. Finance Minister Mahat, Peace Minister Acharya, Ambassador of the EU to Nepal Rensje Teerink, Mission Director of USAID Beth Dunford were present at Wednesday’s meeting along with senior government officials and some political leaders. Envoy Teerink said the EU and other donors were keen to see significant progress in the statute writing that reflects the people’s aspirations, and “hopefully local elections are held soon”. She also stressed the need to bring victims’ views into the peace process. According to the new strategy, NPTF funds will be used for activities grouped in four focus areas: conflict affected people as defined by the government; access to security, including police service delivery; transitional justice in compliance with Nepal’s international and national commitments, and CA, consultations and elections.