Panel to suggest acquisition of DPR from Indian firm

Panel to suggest acquisition of DPR from Indian firm

  • Kathmandu-Tarai fast track project


Feb 5, 2017- A committee is considering requesting the government to acquire the detailed project report of Kathmandu-Tarai Fast Track prepared by an Indian firm to expedite the process of building the 76-km expressway which is expected to reduce travel time from the country’s capital to Nijgad in the south to less than an hour. A seven-member committee formed under National Planning Commission Vice Chairman Min Bahadur Shrestha is planning to make this recommendation to the government to prevent further delays in construction of the crucial project which will link the proposed second international airport in Nijgad. If the government agrees to this proposal, a separate committee will have to be formed which will determine the compensation amount that needs to be extended to the firm that prepared the report. “It makes a lot of sense to acquire the detailed project report, because if we restart the process of preparing a new one, it will take us one to two years to complete it,” a reliable source with knowledge of the matter told the Post. “This delay will increase the cost of project by around 6 to 7 percent per year if inflation is adjusted, and inflict intangible losses emanating from fuel consumption and wear and tear of vehicles operating on existing highways.”

The report, according to the source, however, will be acquired “on our terms and conditions” and if the consultant demands “a reasonable amount”. The government, in March 2015, handed over the task of preparing the detailed project report of the fast track to a consortium comprising Infrastructure Leasing and Financial Services (IL&FS) Transportation Networks, IL&FS Engineering and Construction, and Suryavir Infrastructure Construction. At the time of its appointment, the consortium had agreed not to recover the cost that had gone into preparing the report, if it was allowed to build the project. mAfter the report was submitted in June 2015, the late Sushil Koirala-led government had even started making preparations to award the project to the Indian consortium.

But questions were raised over the intention of the Koirala-led government after it decided to provide an annual minimum revenue guarantee of $150 million to the project developer. This meant if the traffic was low on the proposed toll-way and annual earnings stood at, say, $50 million, the government would extend remaining $100 million to the developer every year in compensation. At that time the government had also started exploring the possibility of getting a fresh soft credit line of up to $750 million from India and extend it to the Indian consortium at lower interest rate to support the project’s construction. These facilities raised eyebrows of many and the issue reached the Supreme Court, which issued an interim order, bringing the process of handing over the project to the Indian consortium to a complete halt.

As this process became controversial, the government, in December, scrapped all the agreements reached with the Indian consortium and took a formal decision to build the project on its own. Subsequently, the government also formed a committee under Shrestha to determine a modality for implementation of the fast track project. At that time, Physical Infrastructure and Transport Minister Ramesh Lekhak had said the proposed highway would be a toll-free public expressway. The proposed four-lane expressway, with shoulders, is expected to have 100 bridges and 1.2-km tunnel. The Indian consortium had put the cost of building the project at $1,297 million, including $1,117 million for construction and $180 million for non-construction purposes that factored in price escalation during the construction period and losses triggered by devaluation of Nepali currency.