Previous deals scrapped, govt to build fast track

Previous deals scrapped, govt to build fast track

- Post Report, Kathmandu


Dec 23, 2016- The Cabinet on Thursday scrapped all the agreements made with an Indian firm to build a 76-km expressway linking Kathmandu with Nijgadh, clearing legal hurdles to allow the government to build the fast track with its own resources.  The government has formed a seven-member taskforce led by National Planning Commission (NPC) Vice-Chairman Min Bahadur Shrestha to study whether the detailed project report (DPR) prepared by the dismissed Indian company could be used to take the project ahead, said Minister for Information and Communications Surendra Kumar Karki. The taskforce has also been asked to submit a report on possible sources of funding for the project which is expected to cost Rs100 billion.  Following the statement of Minister for Physical Infrastructure and Transport Ramesh Lekhak that the proposed highway would be a toll-free ‘public expressway’, the taskforce has been asked to study whether funds could be mobilized from the general public or state-owned lenders.

“The taskforce has been given a month’s deadline to submit its report,” said Karki, who is also the government spokesperson. However, the Cabinet’s Economic Infrast-ructure Committee will approve the full mandate to be given to the taskforce, according to government officials.  In 2014, the Sushil Koirala administration had made efforts to award the project to an Indian consortium consisting of Infrastructure Leasing and Financial Services (IL&FS) Transportation Networks, IL&FS Engineering and Construction and Sury-avir Infrastructure Constru-ction. The government had shortlisted the Indian consortium as a potential developer for the Kathmandu-Tarai/Madhes Fast Track Project. In February 2015, the Indian consortium was named the successful bidder and invited to sign a memorandum of understanding. Subsequently, negotiations began between the government and the firm. However, questions were raised over the intention of the Koirala government after it decided to offer the developer a minimum revenue guarantee of up to Rs15 billion a year if traffic failed to generate adequate profits.

At that time, the government had also proposed to extend a loan to the Indian developer at a subsidized interest rate, drawing criticism from all quarters.  Amid the controversy, the Supreme Court issued an interim order in October 2015 against the plan to award the project to the Indian consortium. The project then ground to a halt due to confusion over who would build it. Subsequently, the KP Sharma Oli administration made a fresh decision to build the project by mobilizing the government’s own resources. The Pushpa Kamal Dahal-led government gave continuity to the plan.  Friday’s Cabinet decision to terminate the agreements and decisions reached in the past has cleared all obstacles for the government to build the project on its own.