Tourism Ministry seeks $215m loan to build for Pokhara airport
KATHMANDU, JUNE 23 - The Tourism Ministry has asked the Finance Ministry to arrange a soft loan of $ 215.96 million from China Exim Bank to build the long-planned regional international airport in Pokhara.
The Civil Aviation Authority of Nepal (Caan) had sent a loan request to the Tourism Ministry immediately after the contract for the airport was awarded to China CAMC Engineering Co on May 22.
Earlier, the government had planned to borrow $ 145 million from the bank to build the airport. However, the loan amount was revised in line with the recent contract agreement signed between Caan and China CAMC. The new airport, which has been in the works for 39 years, is proposed to be built at Chinnedanda, 3 km to the east of the existing domestic airport.
“We have sent all the documents asked by the Finance Ministry to get a concessional loan from China Exim Bank ,” said Ranjan Krishna Aryal, joint secretary at the Tourism Ministry.
The Tourism Ministry said that it had sent the Environmental Impact Assessment report, Caan’s audit reports for three years, commercial agreement documents signed between Caan and China CAMC and the loan form to the Finance Ministry last week.
“We will be sending the feasibility study report of the airport soon, which is in the final stages of completion,” Aryal said. All the documents will be forwarded to the Chinese bank through the Finance Ministry, and the bank will review them before approving the loan requested by the Nepal government, he added.
After the bank okays the proposal, the Finance Ministry will go ahead to sign the loan agreement with China. Aryal said that the contractor would conduct a detailed drawing and design of the project after the necessary funds were arranged.
It will take at least a year to complete the design and drawing survey of the project. After the completion of the survey, the contractor will submit the survey details to Caan for its approval, and then the construction work will start which is scheduled to be completed in two years.
On April 7, a Caan board meeting chaired by Tourism Minister Bhim Acharya approved the project under the revised cost of $ 215.96 million. The price tag had been recommended by a three-member independent panel formed by the government.
The airport will be built under the Engineering Procurement and Construction (EPC) model. The EPC contract binds the contractor to deliver the project at a stipulated time at the predetermined price regardless of any increase in costs that the contractor may incur after the contract is signed.
Caan had invited bids for the project on Feb 9, 2012. The airport project has been on hold since July 2012 after the lowest bidder China CAMC quoted a price of $ 305 million, which is 85 percent higher than the government’s estimate. The government had expected the project to cost around $ 166 million.
Subsequently, in January 2013, China CAMC wrote to the Tourism Ministry expressing its willingness to build the project at the government-estimated cost.
Things became more complicated after China Airport Construction Company, a consultant appointed by China CAMC, submitted another study report to Caan quoting a price of $ 264 million.
Adding 16 percent price escalation and 13 percent VAT, the estimated outlay would come to around $ 300 million, nearly equal to the original cost quoted by China CAMC. Another three-member independent cost evaluation panel recommended a price of $ 215.96 million.
The ministry then presented a proposal with the latest estimated cost to the Cabinet, but the then Khil Raj Regmi-led government put the project on the backburner.
The project was revived by Tourism Minister Acharya under the Sushil Koirala administration.
(Source: The Kathmandu Post)
