Tunnel highway project in quandary

The instruction has come at a time when NPBCL has been facing criticism of being unable to collect resources for the project and show reliable sources for funding. Based on concession agreement clause, NPBCL had submitted financial closure to Ministry of Physical Infrastructure and Transport (MoPIT) two months ago.

A technical committee under MoPIT has been going through the documents to ensure that the firm has resources required to undertake the project. MoPIT said that the developer planned to pool in resources through 20 per cent local funding and 80 per cent foreign investment. The 58km tunnel highway project is estimated to cost Rs 35 billion.

"After going through the company's financial closure, the committee sought some clarifications regarding the funding flow last week," said Tulasi Prasad Sitaula, secretary at MoPIT, adding the NPBCL has been asked to come up with its explanations within two weeks.

MoPIT will make its decision after the committee completes its study. Sitaula said that if NPBCL fails to make the funding plans more transparent, they will have no other option but to terminate the contract.

As per the concession agreement reached between MoPIT and NPBCL in May last year, the government can scrap the permission issued to build the tunnel highway in case it is unsatisfied on any grounds after giving chance to the developer to provide clarification. MoPIT officials said that even as the project was so big, the NPBCL documents that were submitted two months ago show that it had managed to collect only around Rs 300 million.

The tunnel highway project, aimed at linking the capital with Hetauda within one hour drive, is the first of its kind being implemented after enactment of the BOOT Act eight years ago.

To build the tunnel highway, NPBCL is planning to sign loan agreement for NPR 28bn (USD 290M) with a Canadian infrastructure development company and also issue initial public offering (IPO) of NPR 5bn (USD 52M)

"We've already signed a preliminary agreement with the Canadian party for loan and its representatives are arriving in a month for final agreement," informed Jayram Lamichhane, member of the NPBCL Board, adding they have also sought permission from the Ministry of Finance to issue IPO.