Nepal fires Spanish contractor for non-performance

The Spanish contractor for the USD 92-million Tribhuvan International Airport (TIA) improvement project in Nepal has been fired for non-performance.

The Civil Aviation Authority of Nepal (CAAN), the executing agency for the Asian Development Bank (ADB) funded project, officially issued a 'notice of termination' to Constructora Sanjose on Saturday, reports the Kathmandu Post.

"We have seized the Rs 600-million performance bond deposited by the contractor as it failed to perform its obligations under the contract," said CAAN director general Sanjiv Gautam.

The Spanish company had been given two deadline extensions and a number of 'notice to correct letters', but it showed no interest in moving the project forward.

A CAAN board of directors meeting last Friday had recommended that the agreement with Constructora Sanjose be cancelled as the project had achieved only 17 percent physical progress in the last six years.

The decision was forwarded to the ADB for its consent before the deal was cancelled. "The official termination was done after receiving the go-ahead from ADB headquarters," said Gautam.

The ADB has provided USD 80 million in loan and grant and the government has put up USD 12 million for the scheme which has since been renamed as air transport capacity enhancement project.

Gautam said that CAAN had decided to invite fresh tenders to resume the runway extension and terminal building works within one and a half months.

After the completion of the project, TIA will be able to handle more than 5.85 million passengers annually and accommodate bigger aircrafts.