BOOT Act, PAC directive confusing government

KATHMANDU, MAR 11 -

Although the government has categorised the Kathmandu-Tarai Fast Track under the national pride project, it has failed to invite bidders for its construction for the last one year.

The bidding process has not moved ahead since the parliamentary Public Accounts Committee (PAC) directed the government in March, 2011, to ensure at least 10 percent local investment in the project.

The PAC directive’s contracdiction with the Act related to the build-own-operate and transfer (BOOT) model, which does not have a compulsory provision for ensuring Nepali firms involvement in a BOOT project, has confused the government.

Also, the provision in the Private Financing in Build and Operation of Infrastructures Act 2006 and its Regulations 2007, which says only the firms having experience in carrying out BOOT projects can participate in the bidding, has made it difficult for Nepali firms to take part in the bidding.

“We are not against local investment in the Fast Track project,” said Tulasi Prasad Sitaula, secretary at the Ministry of Physical Planning and Works (MoPPW). “But the contradiction of PAC directive with the Act has confused us, delaying the project.”

The government had to cancel its call of Expression of Interest (EoI) last year after the PAC directive. The first EoI called in 2008 is still valid and those participating in the first EoI can be selected for final evaluation. “Despite the contradiction of PAC directive with the Act, we can still ensure participation of Nepali investors through a Cabinet decision,” said Sitaula.

The ministry is now waiting for a clear way out from PAC to break the impasse. The government’s Immediate Action Plan for Economic Development and Prosperity’ announced on Jan 26 has targeted to call investment proposals for the project by mid-July.

A total of seven international firms, including Gammon India, Land Mark Worldwide of South Korea and Reliance Infrastructure of India, had applied in the two EoI calls in 2008 and 2011.

This time, the ministry plans to call EoI that would also allow Nepali firms to submit application in consortium with international firms. The private sector, including the Non Resident Nepalis (NRNs), has been expressing interests in investing in the project that is estimated to cost around Rs 80 billion.

Situala said they would publish a four-month notice after PAC and the Cabinet find a clear way out.

PAC was scheduled to give its decision early this week, but it is yet to meet on this issue. It is likely to come up with a concrete decision within a week.

PAC Secretary Som Bahadur Thapa said the committee would hold a meeting within this week.

Source: Kantipur