NPBCL submits financial closure for Kathmandu highway project
21 May 2014Nepal Purbadhar Bikas Company Limited (NPBCL), which is building the high-priority Kathmandu-Kulekhani-Hetauda Tunnel Highway, has submitted its financial closure document to the government after reducing the equity of the promoters and public to 20 per cent from the earlier 50 per cent.
NPBCL officials said that they slashed the equity portion and increased the loan portion after finding it difficult to manage adequate equity at the begining. The estimated cost of the project is NPR 35bn (USD 373M).
NPBC Chairman Kush Kumar Joshi said that the new debt-equity ratio is more practical. "We have also received concrete assurances of loans from international financial institutions to cover the loan portion of the outlay," he added.
Earlier, the company had planned to put together NPR 10.46bn in share investments from promoters and the local people of Kathmandu, Makwanpur and Hetauda and around NPR 18bn in debt financing. Similarly, it has been planning to make an IPO worth NPR 6.97bn.
With the reduced equity portion, share investors including promoters will now have to put in NPR 7 billion. NPBCL submitted the report on 13 May, a day before the deadline set by an agreement with the government.
Tulasi Prasad Sitaula, secretary of the Ministry of Physical Infrastructure and Works, confirmed that the ministry has received the document, but said that he is yet to go through it.
The planned four-lane highway will be 58km long and will allow travellers to reach Hetauda from Kathmandu in an hour.
Hetauda is an industrial and transportation hub in the south of the capital. Currently, travellers have to drive 133 km on the Tribhuvan Highway or 227km on the Prithvi Highway to reach Hetauda which takes more than 8 hours. NPBCL has targeted completing the expressway by December 2016.
According to NPBCL Chairman Joshi, the company has so far collected Rs 300 million. The project's promoters will be investing around Rs 1 billion. Recently, TBI Holdings, a group promoted by non-resident Nepalis, announced that it would be pouring NPR 1bn into the project.
"There is a good chance of Nepalis residing abroad investing NPR 2bn, and we have already collected around NPR 50M from them," said Joshi. Likewise, Nepali merchant bankers have pledged to collect NPR 2bn for the project, according to him.
The company has joined hands with five merchant banks--Citizen Investment Trust, Nabil Investment Banking, Vibor Capital, NMB Capital and NCM Capital--to raise capital from local and international markets to build the tunnel highway.
"Resources will also be collected from the initial public offering (IPO) later," Joshi added. The company has recently started pre-construction work at the project. "We are in the process of land acquisition," said Joshi. "We will soon be issuing a notice regarding this."
