The Kathmandu Metropolitan City (KMC) is planning to issue an operating lease contract to a private firm to run the Old Bus Park-based City Market.

Though the KMC authority was initially planning to move its own office to the City Market complex, the Public Accounts Committee of Parliament had thwarted its plan, saying that it will put hundreds of people out of business. The KMC is looking for a office building after its previous office at Bagh Durbar in Sundhara was severely damaged in the April 25 earthquake. The KMC office is currently based at Rastriya Sabha Griha in Bhrikutimandap.  

“After the parliamentary directive, we thought it best to use the City Market as an income-generating source for ourselves,” said Dhurba Kafle, the KMC revenue department chief.

The City Market, located adjacent to Old Bus Park, was constructed in 2000 by a private developer, Surendra Dahal, under build-operate-transfer model. As per the terms of the contract, Dahal was to operate the mall for nine years and nine months, paying Rs 650,000 per month as rent to the KMC. But Dahal started defaulting on payments. According to Kafle, Dahal still owes over Rs 20 million to the KMC.

After the deal expired, the KMC had renewed it without going into competitive bidding process. The metropolis, however, was forced to scrap the deal with Dahal on November 1, 2014 after the Commission for the Investigation of Abuse of Authority intervened,

KMC then started operating City Market on its own and found that they could earn Rs 1.25 million if they collected rent from individual tenants by themselves.

“We have learned that City Market generates twice the amount paid by the former contractor to us,” Kafle said. “As per the CIAA’s directive, we will now go for competitive bidding process for selecting a new contractor. And this time, we will negotiate a better term with the contractor.”

Meanwhile, Dahal has filed cases against KMC at the Supreme Court and the Kathmandu District Court after his contract was cancelled.

According to Kafle, KMC will have to wait for the decisions from the courts before starting the process to call tender for operating City Mall.