No consensus on awarding Ktm-Tarai track to Indian firm


Oct 7, 2015-The government’s effort to generate a political consensus on handing over the 76-km Kathmandu-Tarai Fast Track Project to an Indian developer failed on Tuesday as cross-party leaders insisted on revising several provisions in the proposed agreement.

Having tabled the proposal at the Cabinet, the government was planning to award the project to a consortium of Infrastructure Leasing and Financial Services (IL&FS) Transportation Networks, IL&FS Engineering and Construction, and Suryavir Infrastructure Construction.

Minister for Physical Infrastructure and Transport Bimalendra Nidhi briefed about the development in negotiations with the Indian company to senior leaders of the major parties at prime minister’s Residence in Baluwatar on Tuesday.

Prime Minister Sushil Koirala, Deputy Prime Minister Bam Dev Gautam, Finance Minister Ram Sharan Mahat, Nepali Congress leaders Ram Chandra Poudel and Sher Bahadur Deuba, CPN-UML leaders Madhav Kumar Nepal, Jhalanath Khanal, Bhim Rawal, UCPN (Maoist) Chairman Puhspa Kamal Dahal attended the meeting. Also present were Parliamentary Finance Committee and Development Committee chairmen Prakash Jwala and Rabindra Adhikari.

After the briefing, leaders of the major parties insisted on revising several clauses of the proposed concession agreement before awarding the project to Indian developer, said leaders and officials participating in the meeting.  

Among NC leaders, Sher Bahadur Deuba insisted on taking ahead the project ahead while Ram Chandra Poudel stressed on revision.

Presenting the view on the behalf of the UML, senior leader Madhav Kumar Nepal called for addressing the concerns raised by parliamentary committees before signing any agreement with the Indian developer. Both finance and development committees have raised questions over many provisions in the draft of agreement.

Terming cost of the project as extremely high, the UML leader asked why Nepal should bear the huge cost in the name of minimum revenue guarantee at a time when the government itself has promised the developer with Rs75 billion in loan at just 3 percent interest, UML leader Bhim Rawal quoted Nepal as saying. The government has also promised Rs15 billion in equity investment.

According to one estimate, a total of 23,858 passenger car unit (PCU) should ply the road for it to break even. The PCU is calculated on the basis of a car, while bus is considered two cars; truck as three cars and motorcycle as half a car.

Given the most controversial part of the agreement being the minimum revenue guarantee (MRG) offered by the government (Rs15 billion a year) officials at the ministry claimed the MRG does not mean the entire guaranteed amount should be paid to the developer.

According to the participants, the UML leaders had insisted on significantly reducing profit margin for the developer from the proposed 16 percent given that the government is providing the loan at such a low interest.

During the conversation, Deputy Prime Minister Gautam said that the current government could not sign any deal as the process of a new government formation has already begun, according to Rawal.

Even the NC leaders insisted on revising the draft of the concession agreement. Finance Minister Ram Sharan Mahat had talked on revising two provisions in the draft, , the participants said. Firstly, he insisted that the developer should take certain portion of traffic risk. Secondly, the project’s actual cost should be reflected on MRG as the cost will be determined at the time of agreement.

UCPN (Maoist) Chairman Dahal, who left midway through the meeting, demanded the draft be revised in favour of Nepal.

A source, however, said that renegotiation with the Indian developer is a must to address the all of the concerns raised during the meeting. “Without MRG, it is difficult to find any developer to build the project,” the source said.

Published: 07-10-2015 08:25

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