Nepal | July 02, 2020

SC issues stay order on monorail project

Umesh Poudel
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Kathmandu, June 8

The Supreme Court has asked the Investment Board Nepal (IBN) to put on hold its decision to seek Rs 100 million as performance guarantee from Kathmandu Monorail Company Ltd (KMCL) before signing a memorandum of understanding (MoU) to prepare detailed project report (DPR) of Kathmandu Monorail Project.

The apex court has scheduled the next hearing of the case on June 25 when both the parties will present their arguments. The court will then decide whether or not to continue the stay order, first issued on May 28 and continued on June 4.

The case was filed by KMCL Director Tara Devi Dhakal against the Office of the Prime Minister and Council of Ministers and IBN. The SC has also issued a show cause notice to the defendants.

On May 28, a single bench of Justice Bam Kumar Shrestha had issued interim order in the case, and scheduled hearing for June 4. On that day, a division bench of Justices Om Prakash Mishra and Kedar Prasad Chalise had decided to continue the stay order and asked both parties to present their arguments on June 7. However, the government side was not present to contest the case.

The much-hyped Kathmandu Monorail Project has been delayed following a spat between IBN and KMCL over a few provisions in the draft of the MoU of the project.

The draft MoU prepared by IBN has a provision that KMCL should deposit Rs 100 million as ‘performance guarantee’ before conducting the DPR of the project. KMCL has been saying that this provision will add financial burden on the company and there is no provision in the law stating that such a huge amount should be allocated as performance guarantee.

However, Uttam Bhakta Wagle, spokesperson for IBN, argued that performance guarantee is necessary to ensure timely completion of the DPR and the project itself. “We have submitted all the relevant documents to the SC and will accept the court’s decision.”

Talking to The Himalayan Times, DN Thapa, chairman of KMCL, also expressed reservations against another provision in the MoU that states that the IBN can simply purchase the DPR from KMCL and award the contract to build the project to another company. “This provision gives IBN full power to cancel the contract with us, even if our performance is good,” he claimed.

In December 2016, KMCL had inked a joint venture agreement with Powertek Sdn Bhd of Malaysia to construct a monorail in Kathmandu covering the Valley’s Ring Road. KMCL will have 70 per cent stake and the Malaysian company will have 30 per cent stake in the project.

According to Thapa, feasibility study of the project showed that monorail construction along the Ring Road will cost Rs two billion to Rs three billion per kilometre. The project, which envisions constructing the monorail at a height of above 14 feet from ground level, will be able to transport up to 150,000 passengers a day.

At a time when IBN and KMCL have been at odds about the DPR for the monorail project, the Kathmandu Metropolitan City (KMC) and China Railway Construction Corporation Ltd (CRCCL) — a state-owned construction company of China — inked an agreement to conduct the feasibility study of the same project on May 26.

“We haven’t received any information regarding the agreement between the KMC and CRCCL,” said Wagle.

A version of this article appears in print on June 09, 2018 of The Himalayan Times.

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