BoK, HBL seek interim order to stop payment to Melamchi project

ShareSansar, October 20:

The Bank of Kathmandu (BoK) and Himalayan Bank (HBL) have once again moved the court to withhold payments to Melamchi Water Supply Development Board (MWSDB).

The BoK had issued advance payment guarantee, risk losing US $6.62 million to pay as counter guarantee amount to MWSDB after their client — China Railway 15 Bureau Group Corporation — failed to complete the construction of the tunnel of MWSDB.

Likewise, Himalayan Bank stands to lose $6.2 million for guarantee made for the Chinese contractor’s performance bond.

As MWSDB continue to press the two banks for immediate payment, they have sought an interim order from the Kathmandu District Court that allows them to make payment to the Melamchi project only after the Chinese company pays back.

The two commercial banks are in an apparent crisis after the Chinese company declined to make the payment, citing “a local court order”.

This has been a matter of concern for the shareholders of the two banks.

It may be noted here that the banks and the shareholders had heaved a sigh of relief after Nepal Rastra Bank last month approved 14 percent bonus shares proposed by the BoK to its shareholders from the net profit it earned last fiscal year.

Issuing a public notice today, the Bok has stated that it is holding its Annual General Meeting on October 28, which, among other things, will distribute the offered dividend.

The BoK has also announced the book closure for the dividend from October 4 to October 28.

Earlier this year, the BOK and Himalayan Bank (HBL) had moved the court to withhold making payments to MWSDB.

This had worried the shareholders as it might affect the distribution of dividends offered by the banks as they might have to provision the due amount.

Meanwhile, MWSDB has decided to evaluate the construction work carried out by China Railway 15 Bureau Group Corporation at the Melamchi project site.

This is part of the MWSDB’s plan to seek compensation for the losses caused due to the delay of the project due to the Chinese company.

The evaluation process will be carried out with the help of the new contractor CMC Cooperativa Muratori e Cementisti di Ravenna of Italy and the project consultant Poyry Infra Company of Finland.