KATHMANDU, OCT 08 -Amid uncertainty over the future of the Kathmandu-Tarai Fast Track Road Project after prospective foreign investors moving away from the project, experts have said the expressway could be developed with domestic resources.
After all three selected Indian companies which were supposed to take part in bidding for the request for proposal (RFP) refrained from applying for the project, the future of one of the ‘National Pride Projects’ has remained uncertain.
Reliance Infrastructure, Infrastructure Leasing & Financial Services (IL&FS) and Larsen and Turbo (L&T) were shortlisted to take part in the RFP. After they failed to submit a proposal for the RFP, the government is yet to make any decision regarding its future.
Former Finance Secretary Rameshwor Khanal said that it had been over 15 years since the government envisaged the of building the Fast Track Road, and it should not be delayed due to foreign investors not undertaking the project. “As much as time passes, the investment cost of the project goes up and it becomes increasingly difficult to fund the project,” he said.
However, he suggested that an Infrastructure Development Fund could be established, through which Rs 8 - 10 billion could be spent annually for the project. The projected total cost of the project is Rs 100 billion, which the government planned to develop under the build, own, operate and transfer (BOOT) modality.
Khanal had himself pushed for establishing such a fund when he was the finance secretary. The proposal regarding this remains pending in the cabinet. The idea of the fund emerged against the backdrop that the capital budget was not being fully spent and that unspent budget could be put into such a fund without allowing them to freeze.
“The project can also be developed by taking loans from institutions like the Employee Provident Fund, like in the case of the Upper Tamakoshi Hydropower Project,” Khanal said.
Projected low traffic volume, the government’s failure to assure prospective investors about risk sharing mechanisms and the country’s unstable political system means it would be hard to attract the foreign investors, according to experts. They said that the since the initiative of five years went in vain for the negligence of the government to assure its commitment and full support, now investors are less likely to apply without at least 30 percent investment from the government.
A High-level Committee, that prepared the bidding document for the Fast Track Project, recommended the government to make a provision of 15 percent equity share in the name of government, to assure the foreign investors that the government is committed to sharing the risk. However, the government remained mum over the issue.
In the pre-bid meeting, the Indian short listed firms had also urged the government to increase the government’s equity stake to 20 percent. “If the government is really serious on attracting foreign developers, there must be a provision of viability gap funding of at least 15 percent,” said Birendra Bahadur Deuja, coordinator of the high level committee that was formed to draft the procurement document of the Fast Track Road. The viability gap funding means that the government will provide financial support, in the form of grants, to infrastructure projects undertaken through public/private partnerships, making them commercially viable.
Deuja, who is also a former government secretary, added that the project could also be developed with the domestic resources if the government is committed to invest at least Rs 2-3 billion each year. “The resources can also be generated from the EXIM banks of China and India,” he added.
After the Indian firms turned away from the Fast Track Road, the government is mulling over options to develop the road, which is the vital to link the capital with the proposed Second International Airport in Nijgadh, Bara and boosting trade via Birjung.
“The Steering Committee of the Fast Track Project will decide on adopting ways for constructing this road,” said Tulasi Prasad Situala, secretary at the Physical Infrastructure Ministry. He said that the meeting had not been set so far.
No comments:
Post a Comment