Kathmandu, February 20

The panel, led by Vice Chairman of the National Planning Commission (NPC) Min Bahadur Shrestha, has submitted its report on resource arrangement, procurement modality and applicability of Detailed Project Report (DPR) for the Kathmandu-Tarai Expressway Project prepared by the Indian firm, Infrastructure Leasing and Finance Services (IL&FS), to Prime Minister Puspa Kamal Dahal today.

The panel has recommended a special purpose vehicle for the 76-km expressway project. According to Vice Chairman Shrestha, the panel has recommended building the fast track under company model or development committee model, whichever the Ministry of Physical Infrastructure and Transport, the executing agency, finds appropriate.

The panel report has suggested the government to form either a company or a development committee at the earliest to expedite the project. It also decided that the DPR prepared by IL&FS will be applicable as the government has already compensated the people whose land was acquired based on the alignment of the DPR prepared by IL&FS. “It will consume more time if we start to prepare DPR of this project again. We have to conclude project within three to five years,” said Shrestha.

According to Shrestha, any special purpose vehicle that the government forms can avail the DPR from IL&FS through negotiation and award the contract simultaneously by dividing the 76-km road into three sections.

“International contractors should be hired through a global bid,” as per Shrestha. “There will not be any resource crunch for the project if the government allocates Rs 20 billion annually in the fiscal budget of the next five years.” He further mentioned that if the project needs to be completed in a shorter period of time then resources can be managed by issuing development bonds for this particular project.

As the government has decided to utilise the DPR prepared by IL&FS, the government will have to pay IL&FS for it. The Indian firm has sought Rs 60 million for the DPR, however, it will be finalised during the negotiation.

IL&FS had submitted DPR of the fast-track road project, which links the capital with the proposed Second International Airport in Nijgadh, to the government in July, 2015.  The DPR has estimated the total cost of the project to hover around $1 billion. IL&FS had quoted Rs 317 billion as minimum revenue guarantee (MRG) from the road in 25 years of operation under the build, own, operate and transfer modality.

IL&FS had estimated annual flow of around 7,500 vehicles on the expressway. If the flow of vehicles is less, the government would be liable to pay the deficit amount to the firm as MRG and if revenue exceeds the MRG, the company had proposed to equally share the additional revenue with the government. But the government did not agree on the condition of MRG proposed by IL&FS and decided to cancel the agreement with the Indian firm on December 22 through a Cabinet meeting and formed the NPC vice chairman-led panel to recommend the modality within a month.