Ex-Nepal PM opposes giving road project to Indian consortium

Former prime minister Baburam Bhattarai has opposed the government's plan to hand over the Kathmandu-Nijgadh Fast Track Road Project to an Indian consortium, terming the move against Nepal's national interest.

Nepal government is preparing to award the contract to an Indian consortium -- comprising Infrastructure Leasing and Financial Services Transportation Networks, IL&FS Engineering and Construction and Suryavir Infrastructure Construction with Nepal's Physical Infrastructure Ministry -- after the two sides wrapped up negotiations on Sunday.

Bhattarai, a senior Unified CPN (Maoist) leader, on Wednesday held a public consultation, inviting leaders and experts and urging them to oppose the project.

The Kathmandu-Nijgadh Fast Track Road Project is considered as one of the shortest routes to link Kathmandu with the southern plain of Nepal that has a 1,700-km border with India and that also links Kathmandu with the second international airport to be built in Nijgadh town.

The consortium is the same that conducted a detailed project report (DPR) of the project.

Media reports in Nepal suggest that the Nepal government and IL&FS consortium are in the final stage for project negotiations for the $980 million project, excluding value added tax (VAT).

"Can you imagine paying Rs.800 (Indian Rs.500) for plying a motorcycle on the road," said Bhattarai at the consultation, adding it is going to be a huge injustice for Nepalis. "So I urge that the Nepal government should construct the project on its own," he added.

According to officials, negotiations were based on the assumption that the government will finance $750 million -- or 76 percent of the cost -- as credit to the Indian developer while the remaining amount will be borne by the Indian company.

Bhattarai wrote on Facebook that he was worried about the Nepali Congress-led government's preparations to award the contract to "a foreign company going against Nepal's national interest".

"Providing Rs.75 billion credit at 3 percent interest to the company out of Rs.100 billion line of credit Nepal will be receiving from India and allowing the company to collect expensive toll for 30 years and committing to pay billions in traffic guarantee are shameful," wrote Bhattarai on the social networking site.

In 2011, Bhattarai had faced criticism from his own party for signing the Bilateral Investment Protection and Promotion Agreement with India to attract Indian investment.

Bhattarai said he saw a strong possibility of developing the project with domestic resources involving Nepali technicians and companies while taking some help from outside.

"Doing so would create jobs within the country, people would not have to pay a toll or pay little and Madhesi people would get special benefits, besides other economic benefits," wrote Bhattarai.

"Despite this possibility, awarding the contract to a foreign company is mysterious."

Several engineers, experts and politicians who were gathered in the Bhattarai's programme opposed the move.

The government is considering to provide soft loans received from India to the developer as credit.

Although the finance ministry is yet to finally agree to finance the project, negotiations wrapped up after the ministry assured credit at 3 percent interest, according to Tulasi Prasad Sitaula, secretary at the Ministry of Physical Infrastructure and Transport.

"The cheaper loan will keep the project cost down instead of the developer taking commercial loans at a high interest rate," said Sitaula.

According to the officials involved in talks, the government will bear the risk of traffic flow, leaving other risks to the developer.

If the road gets more than the minimum traffic assured, the earning from the additional flow will be shared at an 80:20 ratio between the government and the developer. The developer will operate the Fast Track for 30 years post-construction.