Govt woos bidders by sweetening deal

- POST REPORT, Kathmandu
Govt woos bidders by sweetening deal

Sep 10, 2014-

The government on Wednesday issued another call for expressions of interest from international companies for the Kathmandu-Tarai Fast Track with an assurance of a minimum revenue guarantee and a 20 percent stake in the project.

The government has sweetened the deal as previous bidders have abandoned the project seeing scant chances of being able to make much money from it. “We have made the project attractive for potential investors by assuring them a minimum revenue guarantee and government investment in the project,” said Tulasi Prasad Sitaula, secretary of the Ministry of Physical Infrast-ructure and Transport (MoPIT).

He added that if vehicular movement was greater than the fixed level, the developer would have to share the income on a 50:50 basis. “In case traffic is less than expected, the developer will be compensated based on the toll fee determined in consensus with the government,” he said.

Previously, the government had asked prospective developers what the  government’s stake in the project should be, but this time the government has stated what its stake will be.

Earlier, the government had mulled developing the project by itself with financial assistance from doors and even under the annuity model where the developer builds the project and the government pays it.

“We didn’t go for the first option as we wanted to give a second try to the Build, Operate and Transfer (BoT) model,” said Sitaula. “The annuity model was also cancelled as the interested party stated that the government should make payment by adding 12 percent interest to its cost.

The notice inviting expressions of interest has asked applicants to submit their applications before October 11. As per the notice issued on Wednesday, only applicants having past experience in building highways, tunnels a nd bridges costing more than $ 1,000 million on BoT basis over the past 10 years and a net worth of $ 150 million or more jointly or severally may apply.

The government said that bidders involving Nepali contractors as equity partners would be given preference by awarding them additional points in the total score in proportion to the equity share of the Nepali contractor subject to a maximum of 10 percent.

The project involves survey, design, engineering, financing, procurement, construction, operation, maintenance and transfer of the approximately 76-km-long Kathmandu-Nijgadh expressway and a 18-km long additional two-lane expressway on the existing two-lane road (making a four-lane expressway) of the Nijgadh to Pathlaiya section of the East West Highway.

According to Sitaula, the developer cannot charge a toll fee for the expansion of the Nijgadh-Pathalaiya section of the road.

Based on a preliminary feasibility study, the project cost in 2014 including 20 percent financing cost may be around $ 844 million, said the MoPIT. The applicants have been asked to make field visits to make their own cost estimates.

According to the ministry, land acquisition is 90 percent complete and track opening has been completed on 80 percent of the proposed length.

Published: 11-09-2014 09:40

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