Loan pact for Nagdhunga-Naubese tunnel road project signed

Loan pact for Nagdhunga-Naubese tunnel road project signed

Published: December 23, 2016 5:00 am On: Business

The government today signed a loan agreement for the construction of Nagdhunga-Naubise tunnel road project with the government of Japan. Japan government has extended a loan assistance of 16.63 billion yen (approximately Rs 15.28 billion) to Nepal to implement the aforesaid project. This assistance was announced during the visit of Japanese State Minister for Foreign Affairs Nobuo Kishi to Nepal in September this year at the ceremony of the 60th anniversary of establishment of diplomatic ties between Japan and Nepal. Finance Secretary Shanta Raj Subedi and Ambassador of Japan to Nepal Masashi Ogawa signed and exchanged a set of Exchange of Notes on behalf of their respective governments for extending the said loan at an event organised at the Ministry of Finance (MoF) today.

Similarly, at the same time, a loan agreement was also signed and exchanged between Baikuntha Aryal, chief of International Economic Cooperation Coordination Division under the MoF, and Jun Sakuma, chief representative of Japan International Cooperation Agency (JICA), in the presence of Deputy Prime Minister and Minister for Finance Krishna Bahadur Mahara and Minister for Physical Infrastructure and Transport, Ramesh Lekhak. Speaking during loan agreement signing ceremony, Ambassador Ogawa said that the project is regarded as the 60th anniversary commemoration project and the Japan government considers this project to be a symbolic landmark for the socio-economic development of Nepal and for the deepening relationships between our two countries. He remarked that Japan has many years of experience in developing such tunnel road projects and highly developed tunnel construction technology of Japan will be used in Nagdhunga-Naubise tunnel road project.

Referring to the present condition of this road link, Ambassador Ogawa further said that the road conditions of Naubise–Thankot section of the Tribhuvan Highway are very poor and the vehicular movement is slow due to the many sharp curves and steep gradient. Considering the complex geological condition of this stretch, the need for its upgradation or realignment with a better alternative had been felt for long.

Under this loan assistance, the project will purchase the products and services necessary to construct 5.05 kilometres of tunnel-road that stretches from Baad Bhanjyang, Kathmandu to Sisnekhola, Dhading districts. The 2.45 kilometres of the stretch will be a two-lane tunnel and 2.20 kilometres (Kathmandu side) and 0.40 kilometre (Dhading side) will be approach roads. It is anticipated that this project will significantly improve vehicular movement and, accordingly, travel time and transport expenses for fuel and spare parts will also decrease significantly. It is reported that it will take one-and-a-half years to prepare the detailed project report of the project and another three-and-a-half years for the construction. The contractor for the project will be selected under the international competitive bidding. The Ministry of Physical Infrastructure and Transport is the executing agency of the project, which is expected to be completed by August 2022.

Cabinet cancels fast track agreement

Kathmandu, December 22

The Cabinet meeting today endorsed the proposal of the Ministry of Physical Infrastructure and Transport (MoPIT) to cancel all the agreements with Indian firm, Infrastructure Leasing and Finance Services (IL&FS), for construction of the 76-km Kathmandu-Tarai fast track road project.

MoPIT had announced that it would cancel the agreement with IL&FS a few months back.

The Cabinet meeting today also formed a committee under chairmanship of Vice Chairman of the National Planning Commission Min Bahadur Shrestha to commission a study on managing resources to construct the fast track project, procurement modality and applicability of the Detailed Project Report (DPR) prepared by IL&FS. The committee has been asked to submit the report within a month from the date it commences its work.

According to Minister for Physical Infrastructure and Transport, Ramesh Lekhak, as the government has announced to build the $1 billion project through its own resources, the committee will conduct a study on how the resources can be generated. “We can build the road through EPC (engineering, procurement and construction) contract or any other modality if we are able to generate resources. If EPC is not feasible we have to choose EPCF (engineering, procurement and construction and financing) contract,” Lekhak told The Himalayan Times. “The government will take a decision based on the report submitted by committee.” IL&FS had already submitted DPR of fast track road project, which links Capital with proposed Second International Airport in Nijgadh, to government in July 2015. IL&FS had quoted Rs 317 billion as minimum revenue guarantee (MRG) from the road in a period of 25 years of operation under the build, own, operate and transfer modality. It has estimated annual flow of around 7,500 vehicles and if the flow of vehicles is less, government would be liable to pay 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. Government will have to pay Rs 60 million to IL&FS for DPR if committee finds the DPR applicable.