Kathmandu, October 1

The government is planning to award the contract to prepare the detailed project report and construct the 71.92-km Outer Ring Road project to a Chinese government-owned company named China Energy Engineering Corporation without following the Public Procurement Act.

Minister of Urban Development Mohammad Estiyak Rai has said that the government and CEEC will soon sign a memorandum of understanding to construct the Outer Ring Road under the engineering, procurement, contract and financing model.

“We have held many rounds of discussions to select an appropriate company for the project,” Rai informed, adding that CEEC had submitted a proposal to the Ministry of Urban Development to conduct the DPR for free. The MoUD has already approved CEEC’s proposal to conduct the DPR.

According to Rai, the ministry has forwarded the proposal to the Ministry of Finance and the Ministry of Law, Justice and Parliamentary Affairs for their consent.

After receiving the go-ahead from the aforementioned ministries, MoUD will forward the proposal to the Cabinet for final approval to hand over the contract of the project to the Chinese company.

Minister Rai added that CEEC had provided assurance regarding completion of the DPR of the project within three months of the MoU being signed and the construction works within five years of the DPR being prepared.

“As the market value of privately held land has been increasing rapidly, we need to build the project as soon as possible, otherwise it will not be possible to procure land needed for the project,” he said.

As per the initial study report in 2008, the cost of construction of the project was expected to hover around Rs 70 billion. However, since the price of land has sky-rocketed in the intervening years, the project construction cost is expected to stand at around Rs 125 billion.

“The government is committed to building the project to manage the urban development process and ease Kathmandu valley’s traffic congestion,” he added.

Rai said CEEC had proposed a 30-year payback period for the country to return the construction cost to the company.

The MoUD is also planning to review the existing DPR of the 6.6-km Chobhar-Satungal section of the Outer Ring Road project. Earlier, Minister Rai had said that the price of land along the initial alignment had risen tremendously due to the collusion between the land mafia and  government officials, and that the ministry would conduct a fresh study on how private land could be acquired at a cheaper rate for the project.

The project will be spread across all three districts of the valley, with 35.08 km falling in Kathmandu, 15.80 km in Lalitpur and 21.05 km in Bhaktapur district. The project aims to interconnect all three old cities of the valley and the newly-declared municipalities through a single road network.