Money

TourMin told to pay Landmark for Nijgadh feasibility study

  • The government has fast tracked the initial works as India has shown keen interest in implementing the project
- Sangam Prasain, Kathmandu

Sep 5, 2017-Prime Minister Sher Bahadur Deuba has directed the Tourism Ministry to pay the money due to the Korean company for preparing a detailed feasibility study report of Nijgadh International Airport planned to be built in Bara, 175 kilometres south of Kathmandu.

A meeting of the National Development Action Committee (NDAC), held on Monday under the chairmanship of the prime minister and attended by all ministers and secretaries, has told the ministry to make payment by mid-October and move the project ahead.

Landmark Worldwide Company (LMW) of Korea had prepared the detailed feasibility study at a cost of $3.55 million and submitted it to the government in August 2011. It received the contract to carry out the study in March 2010.

The modern airport proposed to be built in Nijgadh will be spread over 80 square kilometres, which will make it the biggest in South Asia in terms of area.

“How can the government be so negligent and delay payment to a contractor for such a long time?” said Tourism Minister Jitendra Dev during the meeting.

Tourism Ministry officials said the government would fast track the project’s initial works as India has shown keen interest in implementing the project. The Nepal Army has been assigned to build access and perimeter roads and clear trees at the construction site.

A Nepal-India joint statement released during Deuba’s state visit to India last August states that the two prime ministers agreed that their governments would hold discussions to explore the feasibility of cooperation on a mutually agreed basis in different projects including the international airport at Nijgadh.

This is not the first time that the southern neighbour has shown interest in developing the airport.

In 2015, speaking at a conference on investment opportunities in Nepal, Abhay Thakur, the then joint secretary in-charge of Nepal at the Indian Foreign Ministry, said India was interested in developing the airport in Nijgadh.

Subsequently, India’s Minister for External Affairs Sushma Swaraj urged the Nepal government to expedite the construction of the airport with India’s participation.

“Work on Nijgadh airport with India’s participation should be expedited. This project will create jobs, contribute to revenue and facilitate long-term recovery,” Swaraj told the International Conference on Nepal’s Reconstruction held in Kathmandu in June 2015.

Again in July 2015, a four-member delegation of the Airport Authority of India (AAI) arrived in Kathmandu and inspected the planned airport site in Nijgadh. The visiting team had informed government officials that they were ready to invest in the project, either through the private sector or government funding or both, as per Nepal’s wish.

New Delhi is keen on the idea of an international airport close to the southern border as it will be convenient for the people of the Indian state of Bihar.

Hordes of foreign investors have expressed interest in developing the project, but the government seems to be in no hurry to award the contract to anybody.

Prompted by all the interest, the Tourism Ministry started work to pay the Korean company for the detailed feasibility study. Last January, it asked LMW to submit paperwork and claim payment.

LMW has formally applied for payment of the cost of the study plus 10 percent opportunity cost and 8 percent annual interest for seven years. According to the company, the opportunity cost is the benefit it could have received if the money had been invested somewhere else. Altogether, the bill for the detailed feasibility study cost could come to $7 million.

As per the deal made with the government, the Korean company would not charge a fee for conducting the feasibility study if it got the contract to build it within three months after submitting the study report. If it did not get the construction contract, payment would have to be made within nine months.

LMW’s report has proposed constructing the airport under the build, own, operate and transfer (Boot) model. It has estimated a price tag of Rs65 billion for the first phase, Rs7.78 billion for the second phase and Rs8.79 billion for the third phase.

Recently, the Tourism Ministry had proposed two financial modalities for the construction of the airport — Boot and EPCF (engineering, procurement, construction and finance). Accordingly, the ministry has decided to form a high-powered committee to facilitate and fast track the construction of Nijgadh airport.

Published: 05-09-2017 08:42

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