Print Edition - 2015-08-06 | MONEY
Sub-committee set up to study Fast Track
- fresh controversy
Aug 5, 2015-
The long-delayed scheme has run into a fresh controversy with a group of experts led by former prime minister Baburam Bhattarai objecting to the government’s plan to extend financing to the potential Indian developer calling it an anti-national step.
The government has been preparing to award the construction contract for the project to an Indian consortium. The combine, consisting of Infrastructure Leasing and Financial Services (IL&FS) Transportation Networks, IL&FS Engineering and Construction, and Suryavir Infrastructure Construction, also conducted a detailed project report (DPR) of the 76-km road which will link the Cap-ital with the southern plains.
The Ministry of Physical Infrastructure and Transport said that it had concluded negotiations with the Indian consortium under which Nepal will provide funds to the project amounting to $750 million with an additional grant of $150 million.
The project’s total estimated cost is $980 million excluding value added tax (VAT), which means most of the financing requirement will
be fulfilled by the Nepal government. The Finance Committee has formed the panel to study the project and submit a report within 15 days even as the Development Committee continues with its own investigation.
Other members of the sub-committee are lawmakers Keshav Badal, Garima Shah, Gopal Dahit, Jagadishwor Narsingh KC, Bikram Pandey and Shakti Basnet, according to the panel. The sub-committee has also been instructed to appoint a coordinator.
Committee chairman Prak-ash Jwala said they formed the sub-committee to study the financing part of the project amid charges that the contract was being awarded to an Indian company with Nepal providing most of the money.
“There have been demands that the project be developed by the Nepal government itself as it is putting up almost all the investment,” said Jwala. “We will see if awarding the job to the Indian company will hurt Nepal’s interests.”
He added that even if the project was awarded to the Indian consortium, the panel would study how the country could gain more benefits through measures such as reducing the compensation amount that it will be required to pay as a minimum revenue guarantee and converting the $150 million grant into equity.
Although the Development Committee had been looking into the project, Jwala said he took the initiative after consulting with its chairman. Parliamentary committees have been known to clash other jurisdiction issues.
According to the Physical Infrastructure Ministry, it concluded negotiations with the potential Indian developer based on the assumption that the Nepal government would provide a soft loan at 3 percent interest. The line of credit provided by India is expected to be spent on the project.
However, the Finance Ministry said that resources for the project had not been ensured. The government asked for an additional line of credit for the project at the third Bilateral Line of Credit Review Meeting between Nepal and India on Monday.
The Indian government has said that it will consider providing an additional dedicated line of credit for the project, the Indian Embassy said in a statement.
Published: 06-08-2015 08:38