Construction of tunnel highway to begin soon

KATHMANDU:

Cash-strapped Nepal Purbadhar Bikas Company Ltd (NPBCL) has spent around Rs one billion on Kathmandu-Kulekhani-Hetauda Tunnel Highway so far. However, the company is still not in a position to start construction due to resource crunch.

Officials of NPBCL, the developer of the tunnel highway, said that they are carrying out all preparatory works like design and pre-construction works of the project. The main construction work is likely to start from March this year, if Canadian companies agree to finance 80 per cent cost of the project by February.

“As we are in the phase of collecting required fund, majority of expenses we have met are payable for operational and project costs like design and consultancies,” said Subarna Lal Bajracharya, corporate chief of the company, while addressing a press meet organised to inform about the second annual general meeting (AGM). As per him, they have received commitment from 1,772 Nepali shareholders to invest Rs two billion, of which Rs 300 million has been collected so far.

NPBCL convened its second AGM on Wednesday. It incurred losses to the tune of Rs 11.78 million in the last fiscal year 2013-14. The 58-km tunnel highway is estimated to cost Rs 35 billion and will link the Capital with Hetauda within one-hour drive.

After the developer failed to attract investors from the local market, it is working out to take loan from Canadian firms to finance 80 per cent of total project cost or Rs 28 billion.

A master agreement in this regard had been signed in August last year and a Canadian consultant exp Services Inc is reviewing the project technically and financially to fund the highway. Canadian firms — Infrabanx Corporation, Shej Global Canada and Global Financial Services Canada — have agreed in principle to finance the tunnel highway and make credit available for a minimum period of 15 years.

The Ministry of Physical Infrastructure and Transport (MoPIT) had signed concession agreement with NPBCL 20 months back to complete the project within December 2016. Since construction will take at least three years, if the developers start the construction in March this year, it will be complete by March 2018.

Kush Kumar Joshi, chairman of the company, said the project had been delayed as gathering resources had taken longer than anticipated. “We will be making financial closure by this month and the Canadian consultant is slated to complete its report within February. We will then proceed with construction,” he added.

Financial closure means the developer has adequate resources to undertake project. Based on terms of condition, the developer had submitted financial closure document in May last year to MoPIT. But, a technical committee of MoPIT after studying the plan had concluded that the closure was not convincing. The agreement condition also allows the government to provide extra time for financial closure if there are valid reasons to do so.

Talking about plan of 20 per cent local funding in the project, Joshi said that they have sought permission from the Securities Board of Nepal to issue pre initial public offering (IPO) of Rs two billion and IPO of Rs three billion later during the construction phase. “And, Rs two billion will be invested from promoter shareholders.”

‘Milestone for Nepal’

The Kathmandu-Kulekhani-Hetauda Tunnel Highway has been listed in the world’s top 100 infrastructure projects and tagged under the category of ‘exceptional ones’ in the Infrastructure 100 World Market Report. The report is prepared by KPMG, known as the largest global network of professional firms providing audit, tax and advisory service. Listing the tunnel highway under pioneering public private partnerships, it says that the identified 100 of the world’s most inspirational and innovative infrastructure projects are expected to transform the way the world’s populations interact with their cities, governments and environment. The tunnel highway will be ‘a milestone for Nepal if it goes ahead with a build, operate, own and transfer model’, as per the report.

SOurce: THT