Fast Track road project runs into controversy

Kathmandu, July 29

The government’s preparations to award the contract of the Kathmandu Tarai Fast Track road to an Indian consortium has been criticised by former prime minister and senior UCPN Maoist leader Baburam Bhattarai and other lawmakers. They said that instead of giving the project to the Indian firm, the government should build it with its own resources.

As part of preparation to award the project, Ministry of Physical Infrastructure and Transport (MoPIT) recently completed negotiations with the Indian firm — a consortium of Infrastructure Leasing and Financial Services (IL&FS) Transportation Networks, IL&FS Engineering and Construction, and Suryavir Infrastructure Construction — which was the lowest bidder to build the project under build, own, operate and transfer (BOOT) modality.

“Instead of awarding the project to the bidder, the government can allocate Rs 15 billion each year and complete the project within five years,” said Bhattarai, addressing an interaction on the Fast Track road today. He said that the preparation to award the project to the Indian firm looked dubious as the government has made an assurance to the firm to provide a loan of Rs 75 billion from the Rs 100 billion line of credit extended by India, a separate subsidy of Rs 15 billion, and expensive toll charges.

After the bidder reported that it was unable to obtain a loan at a cheap rate in India, the Ministry of Finance (MoF) has been planning to give Rs 75 billion loan at three per cent interest. Lawmakers in the programme said that instead of giving so many facilities to the bidder by going against the national interest, it would be better to hire a Nepali contractor to build the project by mobilising the Indian soft loan, which will cut down the price of the project and also help enhance their capacity.

However, to utilise such a line of credit, there are generally conditions which require involvement of a contractor from the country providing the soft loan. As per government officials, allocation of Rs 15 billion to a single project looks difficult too, as the annual budget has multiple sectors to take care of including other development projects. Similarly, every year a huge portion of the budget constitutes foreign loans and grants.

For example, foreign loans and grants have a 25.12 per cent contribution in the budget for the current fiscal, which has recurrent expenditure target of Rs 484.27 billion, and tax and non-tax revenue collection target of Rs 475.01 billion. As per detailed project report (DPR) prepared by the Indian bidder earlier, the project is estimated to cost $980 million excluding VAT. The DPR was evaluated and endorsed by a technical evaluation team formed by the government.

“The DPR for this project was prepared in haste, which shows that the bidder was more bothered about how to bag the contract than the quality,” said Rabindra Adhikari, chairman of the Development Committee of the Legislature-Parliament. He said since the government itself was considering of providing a huge loan at subsidised interest rate and there was also a burden of toll charge on consumers, the issue is a serious one.

Experts like Surya Raj Acharya, Ranjan Kumar Dahal, Tuk Lal Adhikari, Bharati Sharma, lawmaker Ram Ji Yadav, and Contractors Jaya Ram Lamichhane and Bikram Pandey, among others said that the government was awarding the project to the bidder without giving a second thought to the possibility of building the project with its own resources and Nepali contractors.

Chairman of Public Accounts Committee of Legislature-Parliament Janardan Sharma said the project was being awarded intentionally to the Indian bidder with vested interest of some political leaders and MoPIT. “We will investigate and expose the leaders who are involved in corruption in different projects,” he added.

When asked about the charge on MoPIT preparing to hand over the project by going against national interest, Tulasi Pasad Sitaula, secretary of MoPIT, said such discussions regarding high priority projects are necessary. “We want to be transparent, but the decision on whether or not to award the contract to the Indian bidder will be taken by the Cabinet.”