October 10, 2011
KATHMANDU, Oct 10: The government is preparing to open all Public Private Partnership (PPP) modalities by scrapping the existing Build Operate and Transfer (BOT) modality in a bid to remove legal complications and ensure involvement of Nepali investors in the Kathmandu-Tarai Fast Track Road.
“We are weighing pros and cons of all possible modalities for executing the 76-km expressway because we can´t ensure involvement of Nepali investor under BOT as per the existing Private Financing in Build and Operation of Infrastructure Act 2006,” said a high-level source at the Ministry of Physical Planning and Works (MoPPW).
The Act has specified different options — BOT, Build Operate Own and Transfer (BOOT), Build-Own-Operate (BOO) Lease Operate Transfer (LOT), Lease Build Operate and Transfer (LBOT) and Develop Operate Transfer (DOT) — to implement the project under PPP.
“Participation of more investors, including Nepalis, will be possible once we open new investment modalities, as the Act has different options for the implementation of such mega projects under PPP,” the source added.
The MoPPW had last year called international tender inviting investors having experience of implementing six-lane highway costing at least $900 million to implement the fast track road project under the BOT system. It, however, had canceled the process of selecting bidders on March 15 as per the instruction of the parliamentary Public Accounts Committee (PAC). PAC had directed the ministry to ensure at least 10 percent domestic investment, irrespective of the experience of local investors, in the project.
PAC´s direction had contradicted with the existing Private Financing in Build and Operation of Infrastructure Act 2006 and its regulations that require investors to meet certain work experience requirements to implement projects under the BOT system. It had also directed the ministry to provide at least four months for filing tender to ensure participation of higher number of aspirant firms in the bidding process.
To implement the PAC instruction, the ministry was earlier preparing to amend the Act. It had also sought necessary instruction from the high-level Project Coordination Committee of the National Planning Commission (NPC) on the implementation of the PAC´s direction.
However, the committee did not respond to the ministry´s request.
As per the Asian Development Bank´s revised estimation of 2008, the mega project costs $800 million.