90 pc of Rs 317m collected already spent

Liability of Rs 200m to Full Bright Consultancy in dispute

KATHMANDU, Feb 6: Nepal Purwadhar Bikash Company Limited (NPBCL) has spent about 90 percent of the amount it collected from 1,800 investors, including 1,200 from low-income groups in the project areas of Makwanpur and Kathmandu. Sizable spending has been incurred on different studies including Detailed Project Report, surveys, Environment Impact Assessment and Detailed Engineering Design, on reviews of the same studies by Canadian companies, and on staff salaries, among other things.

Financial information of the last three years provided by the company to Republica shows that it has so far collected Rs 317 million and spent Rs 282 million. The three years have elapsed, but the company is yet to start work in the field and garner equity investment of Rs 7 billion to reach financial closure for the ambitious project that aims to reduce travel time to Hetauda to one hour through a tunnel highway.

A payment of Rs 90.7 million went to Full Bright Consultancy promoted by Lal Krishna KC, an independent technical director of NPBCL, and for a Detailed Project Report (DPR) and Environment Impact Assessment (EIA), as well as advance payment for the Detailed Engineering Design of the project.

Likewise, a combined amount of Rs 54 million has been paid to Canadian company Infrabanx Corporation and Exp. Services, another company hired by Infrabanx, for the desk study and review of all the technical documents including DPR and all other reports prepared by Full Bright Consultancy.

Infrabanx Corporation is interested in investing in the project and, according to corporate chief of NPBCL Subarna Raj Bajracharya, NPBCL had signed a memorandum of understanding with Infrabanx in August 2014 for financing the company.

Likewise, NPBCL has paid Rs 20.4 million as advances to Mahadev Khemiti and High Himalayan-JV for preparing an access road. But the bill settlement has yet to be made.

Likewise, other large expenses incurred are Rs 28.2 million in staff salaries and Rs 9.08 million for office rent over the three years. Monthly rent for the current office at Jwagal, Lalitpur is Rs 150,000. The rent was Rs 250,000 when the office was at Trade Tower, Thapathali before the April earthquake. Bajracharya also said that the expenses of company chairman Kush Kumar Joshi while visiting different countries in 2013 and 2014 to mobilize investment are being borne by Joshi himself and there is no liability for the company.

The company now has Rs 21 million in its bank account while its payables amount to Rs 2.9 million, according to the financial statement provided by the company to Republica. One of the investors, who has invested Rs 1 million, said the payment to the Canadian company and another company hired by it is not rational as the interested investment companies should assess on their own the project and company they wish to invest in. The investor did not wish to be named.There is also a dispute about additional liabilities to Full Bright Consultancy.

Issuing a press statement on the resignation of Joshi as chairman of the company following long-running protests by some of the investors, the company says it does not have any further liabilities to the consultancy as an amount of 90.7 million (excluding VAT) has already been paid.

Talking to Republica, Full Bright promoter KC said the consultancy is one of the key stakeholders of NPBCL and the company owes an additional Rs 200 million approximately. "The consultancy has worked on the detailed design engineering, survey and investigations and should be paid," added KC. If KC is to be believed, the company seems to be running a huge loss and if not there could be a serious row over its liabilities. KC further said the chairman in last year's audit report had acknowledged the additional payments for the engineering works.

Asked about KC's possible conflict of interest in giving the NPBCL job to the consultancy where he is director, KC tried to come clean saying the consultancy is a major stakeholder in NPBCL and that the service was provided at the time the company was being established.

The company's statement also said KC does not have any investments in NPBCL. KC said to Republica, however, that he was designated an expert-director and so it was not necessary for him to invest as per the company's laws. "I am ready to be the investor of any amount and there were also several forms filled for that purpose but I was not given investor status despite my repeated pleas," said KC.

The press statement further said that KC and Subhash Chandra Thakuri, another board member, have now shown non-cooperation to the company. KC and Thakuri have backed a protest by a struggle committee led by former board member Rajuman Maharjan. Joshi resigned as chairman on Sunday after over a month of protests by the struggle committee. The company's official press statement on Wednesday said Joshi resigned under threats by the protestors.

The company's third annual general meeting has been delayed and Bajracharya of NPBCL has blamed delays in the audits. "The next AGM is likely to be held in April," added Bajracharya.

Two years ago, Promoter of Kalika Construction Company Bikram Pandey had walked out as board member of the company, citing lack of a corporate culture and opacity in payments to different organizations including Full Bright Consultancy.