Kathmandu, December 6

Delay in negotiations between Investment Board Nepal (IBN) and bidders of the Kathmandu Valley Integrated Solid Waste Management Project have put the fate of the project in limbo. The negotiations were supposed to start in the beginning of September this year as the IBN has already short-listed two bidders to develop the project.

The major factor hindering the negotiation process is the high service fees that need to be deposited prior to the negotiation. According to a provision of the Investment Board Regulation, the bidder has to pay 0.20 per cent of the total project cost as the service fee to the government. Under this provision, the bidder has to deposit 30 per cent of the service fee prior to sitting for the negotiation and the remaining 70 per cent before starting work after concluding the negotiation with IBN.

The IBN has invited the selected bidders for the negotiation, but they seem reluctant to sit for the talks due to the aforementioned provision. “The government has included the provision of 0.20 per cent of the service fee to strengthen the financial health of IBN, but it is not investor-friendly,” a high-level source at IBN said.

Apart from the Integrated Solid Waste Management Project (ISWMP), IBN is also slated to discuss mono rail project in Kathmandu Valley, chemical fertiliser plant and some mega hydroelectric projects, among others. But due to the provision of the high service fee, IBN has not been able to make any headway in ISWMP, which is considered a low-hanging fruit for the board at present.

The total cost of solid waste management in Kathmandu district alone is estimated to hover around Rs 6.3 billion. Similarly, the total cost of the project in Lalitpur sub-metropolitan city and Bhaktapur is estimated at Rs 1.95 billion. Thus, Nepwaste (a joint venture of the Organic Village and Finnish company Compunication Oy), the bidder for the Kathmandu district has to pay Rs 12.6 million as service fee. Moreover, as per the provision of the regulation, the bidder needs to deposit Rs 3.8 million before sitting for the negotiation and the remaining amount after a successful negotiation.

Also, IBN has selected Clean Valley (a JV of BVG India Ltd and Kryss International Pvt Ltd) for integrated solid waste management in Lalitpur and Bhaktapur districts. The bidder would need to deposit a total of Rs 3.9 million — Rs 1.17 million before sitting for the talks and Rs 2.73 million after the negotiation.

As the government has formed IBN to provide a single window for investments of above Rs 10 billion, the provision of 0.20 per cent of the total project cost in the mega projects translate to a significant amount that needs to be deposited to the government’s account as service fee.

To expedite implementation of such mega project, IBN has proposed differing the 0.20 per cent (of the total project cost) service fee in the agenda of its board meeting.

“The board meeting can differ the provision, through which the IBN could start the negotiation and award project to the bidders on condition that the service fee would be paid later,” said Maha Prasad Adhikari, CEO of IBN. However, the board of directors meeting, led by the prime minister has not been held since the formation of the new government on August 3.