Two Indian firms in fray for big Nepal road project

Indian investments in Nepal are set to get another boost with two Indian firms -- an Infrastructure Leasing and Financial Services (IL&FS)-led consortium and Oriental Structural Engineers -- getting in the fray to construct a major road project seen as one of the Himalayan country's national pride.

The proposed Kathmandu-Tarai Fast Track road project, linking Kathmandu and the southern plains of Nepal, will ultimately become a direct link to India, and the shortest route connecting Kathmandu with the Indian border.

The Indian firms have already submitted their technical and financial proposals to Nepal's ministry of physical infrastructure and transportation. The ministry is going to open the financial proposal Tuesday,.

The estimated cost the 76-km-long expressway is over Nepali Rs.100 billion (Indian Rs.60 billion).

If all goes well, the ministry and the selected Indian firm will sign a concession agreement in February for the construction.

The ministry said that it would take five years to complete the project and would also provide Rs.15 billion as grant to the firm that wins the bid as equity and other concessions.

It said that this would be the first project to be built on BOOT (build, operate, own and transfer) model with an initial survey showing "maximum revenue or traffic guarantee".

Guaranteeing a minimum traffic, the government has put forward a condition that if vehicular movement is greater than the fixed level, the developer will have to share the income on a 50:50 basis.

In case traffic is less than expected, the developer will be compensated based on the toll fee determined in consensus with the government.

The project involves survey, design, engineering, financing, procurement, construction, operation, maintenance and transfer of the approximately 76-km-long Kathmandu-Nijgadh expressway and an 18-km long additional two-lane expressway on the existing two-lane road (making a four-lane expressway) of the Nijgadh to Pathlaiya section of the East West Highway which was also built by the Indian government.

Nepal is also planning its second international airport in Nijgadh, near the Indian border which is likely to boost trade and commerce in the near future.

According to the ministry, land acquisition is 90 percent complete, and 80 percent of track opening work is over.

(Anil Giri can be contacted at girianil@gmail.com)