MoPIT holds stance on Fast Track bidder selection

Kathmandu, July 30

The controversy surrounding the selection of the bidder for the Kathmandu-Tarai Fast Track road seems to be getting uglier, as Minister for Physical Infrastructure and Transport Bimalendra Nidhi today said that those against the government’s preparations to select the bidder for the project are ‘anti-nationalists’.

The minister made the remarks while addressing a meeting of a parliamentary committee, aiming at former prime minister and senior UCPN Maoist leader Baburam Bhattarai.

Minister says it would be a big mistake for govt to undertake the project itself due to many risks involved

On Wednesday, Bhattarai had underlined the need to develop the expressway with the government’s resources by involving local contractors. He had said that as the government was in favour of providing Rs 75 billion loan at a cheaper rate and grant of Rs 15 billion to the bidder and impose expensive toll charge on users, it would be better if the government built the project itself and make the proposed road free for access.

Nidhi said that it would be a big mistake for the government to undertake the project itself due to many risks involved and they will be required to restart the entire process all over again.

“We have now reached the final stage by completing all processes to reach the agreement with the bidder and whoever tries to disrupt it is an anti-nationalist,” he said during the meeting of the Development Committee of the Legislature-Parliament.

As per him, the project will link Kathmandu with Nijgadh within a 59-minute drive and save annual fuel consumption worth Rs five billion.

Amid controversy regarding the Ministry of Physical Infrastructure and Transport (MoPIT)’s preparation to sign concession agreement with the bidder — a consortium of Infrastructure Leasing and Financial Services (IL&FS) Transportation Networks, IL&FS Engineering and Construction, and Suryavir Infrastructure Construction — the committee had invited Nidhi, National Planning Commission (NPC) vice-chairman, secretary of MoPIT and Ministry of Finance (MoF) officials to discuss about the project and the latest developments.

A majority of lawmakers of the committee suggested the government to continue the current process, while some expressed doubt regarding timely completion of the project by the Indian bidder citing examples of Indian contractors fleeing from sites of Postal Highway, and some recommended MoPIT to look for options like building the project through the government’s own initiative.

Based on the discussions, the panel has also directed the government to speed up the Fast Track project work in a transparent manner. Earlier, it was also in favour of implementing the project with the government’s own resources and by hiring Nepali contractors.

After completing negotiations with the bidder, MoPIT had sent financial and technical proposals of the bidder to the NPC for feedback. NPC Vice Chairman Govind Raj Pokhrel said that it was necessary to hand over the project to a foreign developer as there is no ‘skill and knowledge’ in developing such types of big projects within the country.

The project had drawn controversy after the government considered providing $750 million loan at three per cent interest rate from the $1 billion line of credit provided by India. MoPIT had recommend MoF to provide the loan to the bidder from the Indian credit, after the bidder reported of being unable to fetch the loan amount to build the project at a cheaper rate from India.

“Even though there is a possibility to give the loan, we are yet to discuss the issue with India,” said Madhu Marasini, joint secretary of MoF. He added that since Indian Foreign Affairs Minister Sushma Swaraj during her last visit to Nepal had stated of converting 40 per cent of the credit to Nepal into grant for reconstruction effort, they were yet to confirm how much of the credit could be utilised for the Fast Track road.

As per the detailed project report of the project prepared by the bidder, the cost of project construction is projected to stand at Rs 111.03 billion, including Rs 12.77 billion VAT. It will cost Rs 34.54 billion for road works, Rs 35.1 billion for structure works, Rs 6.86 billion for tunnel and Rs 17.37 billion for drainage and protection works, among others.

“The project is profitable as it has 14 per cent internal rate of return (IRR), even in worst case scenario of Second International Airport not being constructed in Nijgadh,” said Satyandra Shakya, chief of the Fast Track Road Project. He added that development of the airport would increase the traffic volume and ensure 23 per cent IRR.