Bidders for Fast Track road seek consent to issue bonds

KATHMANDU:

Indian firms that have submitted their request for proposal (RfP) to build Kathmandu-Tarai Fast Track road have asked the government to allow them to collect at least 30 per cent of investment required for the project from the local market. In this regard, the government is planning to set a limit to issue the bonds.

India’s Oriental Structural Engineers and a consortium IL&FS Transportation Network, IL&FS Engineering and Construction and Suryavir Infrastructure Construction have submitted technical and financial proposals to undertake the project. The Ministry of Physical Infrastructure and Transport (MoPIT) is preparing to pick a responsive bidder within a month and start negotiations.

Tulasi Prasad Sitaula, secretary at MoPIT, said that based on the request of bidders that they be allowed to collect resources from the local market, they will hold discussions during the negotiation phase about provision of bonds, ceiling and right time for issuance.

“On one hand, this provision gives opportunity for investment in project from within the country, and on the other hand, also reduce investment burden on the developer,” he added.

As per the government set rules, it is mandatory to seek permission from Securities Board of Nepal (Sebon) to issue securities (shares, stocks, bonds, debentures or debenture stocks). Securities Registration and Issue Regulation 2008 states that a body incorporated as a public limited company or if incorporated in other form enabled to raise funds through the issuance of securities to the general public, shall be required to get its securities registered with the Sebon before issuance of the securities.

Earlier in 2011, the Parliamentary Public Account Committee (PAC) had also directed the government to ensure to ensure the Nepali investors had 10 per cent of local investment in the project. MoPIT is currently evaluating the financial proposals submitted by both bidders. The 76 km expressway is estimated to cost Rs 100 billion and construction works will be completed within five years after signing of the concession agreement.

Going by the RfP term, the bidder to be selected for the project will have to make financial closure within four months after signing concession agreement. As per MoPIT officials, the agreement will be signed within March this year.

Meanwhile, locals of Khokana, Lalitpur have put forth 21-point demand to the government to give their land for the Fast Track road project. Demands include from ensuring equity share in the project, building hospital to higher compensations.

Around 6.5 km stretch of the Fast Track falls on Khokana and the government has failed to acquire land since last five years due to the demands of the locals for higher compensation.

MoPIT officials said that they would provide the compensation for land as per the rate to be fixed by the concerned authority and address other genuine demands. They also said that if the locals want equity share or invest in the project, it will be possible after the government gives permission to issue the bonds.

Source: THT