Govt opts for BOOT model for Fast-Track, inks DPR

Experts warn of long-term implications

KATHMANDU, March 17: Even though experts have been saying that the Kathmandu to Tarai Fast-Track highway should not be constructed under a Public Private Partnership (PPP) and build-own-operate-transfer (BOOT) model, the government has finally decided to go for the BOOT option, and without any concrete plans.

With a view to constructing the Fast Track on the BOOT model, the government on Monday signed an agreement with an Indian company, Infrastructure Leasing & Financial Services Limited (IL&FS), for the preparation of a detailed project report (DPR).

“The government has ignored the negative impact and losses for the country in signing the DPR with a foreign company,” said a high-ranking official at the Ministry of Physical Infrastructure and Transport (MoPIT).

Speaking at a meeting of the parliamentary Development Committee, former finance secretary Rameshore Khanal and infrastructure expert Surya Parasad Acharya suggested not to construct the Fast Track under a PPP and BOOT model, pointing out that this would have long-term implications for the country. However, MoPIT and the Ministry of Finance said there should not be any backtracking over this issue as the DPR and BOOT process has already moved ahead.

Prime Minister Sushil Koirala, for his part, said that foreign companies should not be discouraged as the government’s policy is to bring in foreign investment and knowhow.

The government has projected the maximum cost of the Fast Track to hover around Rs 130 billion, but IL&FS has said that the project cannot be completed at less than Rs 317 billion.

Though Koirala said that the cost proposed by IL&FS is not scientific and that Nepali experts and engineers should finalize the costs, he added that the DPR process should not be stopped. As the prime minister’s view contradicts that of experts, it is alleged the government is entrusting the responsibility to the Indian company for the sake of commissions.

Responding to the views of various experts, Finance Minister Ram Sharan Mahat said that construction work on the Fast Track should be given to the private sector as the government does not have enough resources of its own. “As the government has already initiated the process of working with the private sector it should not be stepping back,” said Mahat adding that “If the DPR prepared by IL&FC is not satisfactory then only will the government take on the work itself.”

Bimlendra Nidhi, Minister for Physical Infrastructure, said that the Indian company will prepare the DPR free of cost and the government does not have to bear a single penny.

But a joint secretary at MoPIT said, “Though the Indian company has said that it will prepare the DPR free of cost, the government will have to bear that cost when the construction work begins.” There should be no illusion that the DPR will come free of cost, he added.

The parliamentary committee, which said on Sunday that the government itself should construct the Fast-Track, has now changed its position and says the DPR procedure should move ahead.

Government signs MoU with Indian firm for DPR

The government on Monday signed a Memorandum of Understanding (MoU) with Indian infrastructure development company, Infrastructure Leasing & Financial Services Limited (IL&FS), for the preparation of a detailed project report (DPR) for the Kathmandu-Tarai Fast Track highway.

Satyendra Shakya, joint secretary at the Ministry of Physical Infrastructure and Transport (MoPIT) who is also the Fast-Track project director, and Mukund Gajanan Sapre, executive director of IL&FS, signed the MoU.

The Indian company will prepare the DPR for the 76-km road connecting Kathmandu to Nijgadh. As per the project design, the company will also have to calculate the cost of upgrading 18 km of road from Nijgadh to Pathlaiya. The Fast Track will have four lanes.

The government will learn about the cost of the project and will decide whether it is viable or not once the DPR is complete. It is expected to be completed within four months.

While the government has only signed a MoU for the DPR, the Indian company has been saying that it should be entrusted with the construction work as well.