The Supreme Court (SC) on Thursday quashed a writ filed by two advocates seeking the court’s intervention against the previous government’s efforts to hand over the Kathmandu-Nijgadh Fast Track project to an Indian developer.

The court stated the writ is no longer relevant given the incumbent government’s announcement to develop the project on its own.

The court verdict has paved the way for the government to go ahead with its plan to develop the national pride project. The government has allocated Rs10 billion for the project for this fiscal year.

Advocates Purna Bahadur Rai and Bhairaja Rai had filed a public interest litigation (PIL) against the previous government’s efforts 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.

The apex court had earlier issued a stay order in the name of the government, preventing the handover.

Acting Chief Justice Sushila Karki and Justice Jagdish Sharma quashed the writ stating, “Since the government has shown its commitment to develop the project on its own through its policies and programmes, there is no relevance of the previous agreement.”

The SC decisions adds: “One should not doubt the country’s ability to develop such a project, and also, the government has allocated Rs10 billion to develop the project through it annual budget. So the writ is quashed.”

The Ministry of Physical Planning and Works and IL&FS had signed a memorandum of understanding (MoU) and were in the final phase of negotiations. The agreement landed in controversy given the government’s decision to offer revenue guarantee and subsidised loans to Indian developer. Irked by the court decision, IL&FS has indicated it would take the government to the international court and claim compensation for the time and efforts it have given to the project.

“We were selected through a global tender to prepare the detailed project report (DPR) and our DPR was approved by the government. In the process, we have invested around Rs500-600 million,” said a Nepal-based agent of the Indian company. “Under these circumstances, if the government unilaterally decides to develop the project itself and the SC approves the government’s decision, our only option now is to knock the door of the international court.” Legal experts, however, say since the final contract has not been signed, the government could only be liable for the claims that IL&FS may have under the MOU signed with Ministry of Physical Planning.

There has been controversy regarding the modality of the project development, with some favouring public-private partnership, while others preferring government financing.

Stating “extremely high” cost, CPN-UML and CPN (Maoist Centre) leaders had been demanding a review of the agreement with the Indian firm. They had been arguing the country should not bear a huge cost in minimum revenue guarantee. The government had also promised the developer Rs75 billion loan at just 3 percent interest and Rs15 billion equity investment.

According to an estimate, a minimum of 23,858 passenger car units (PCU) should ply the road a year for the government not to pay any amount in minimum revenue guarantee. The PCU is calculated on the basis of a car, while a bus is considered two cars, truck as three cars and motorcycle as half a car.