Govt signals awarding tunnel road to NPBCL under BOOT

The government has indicated it is to award construction of the multi-billion rupee Kathmandu-Hetauda Tunnel Highway to the Nepal Purbadhar Bikas Company Limited (NPBCL) under the built-own-operate-transfer (BOOT) model.
The Ministry of Physical Planning, Works and Transport Management (MoPPTM)-- the implementing ministry, after a study of the detailed project report (DPR) prepared by NPBCL, is mulling over signing an agreement with NPBCL and giving it the go-ahead to initiate construction of the project.
"An agreement between the government and NPBCL, awarding the project to the latter, is likely to be signed soon," Tulasi Prasad Sitaula, secretary at MoPPWTM, told Republica.
"We are satisfied with the source of funding and cost of the project proposed by the company," he said.
MoPPWTM, which is overseeing the project, had asked NPBCL to demonstrate strong financial sources and commented on the project DPR.
"NPBCL has presented the financial sources from all different sources," Sitaula said.
Additionally, the company also increased the estimated cost of developing the project from Rs 23 billion to Rs 34 billion.
"NPBCL revised the projected cost after we expressed concern over the previous cost estimate," Sitaula said.
The ministry facilitating the development of the 50-km tunnel highway for connecting Kathmandu and Hetauda had made three comments on the DPR. These concerned sources of financing, cost estimate and project operation period.
NPBCL had asked for a 35-year period to operate the project. But the BOOT Act doesn´t allow the developer more than 30 years for project operation.
The company had submitted its report, claiming that it would generate money from sources such as public investment, a consortium of business groups, investment by non-resident Nepalis (NRNs) and share issue to workers and contractors in return for labor.
According to Lal Krishna KC, vice chairman of NPBCL, the company is also working on generating institutional financing from both the public and private sectors.
The company, which is claiming that it would complete the project within four years, has responded to the government´s concerns. "The ministry will, most likely, take a decision this week," Sitaula said.
Meanwhile, a team of government officials led by Sitaula has visited India to study the effectiveness of projects developed under the public-private-people (PPP) model.
"We visited India to see some of the projects and their viability in India as we don´t have experience of developing such projects in this country," Sitaula said.