Home Business FinMin Seks Soft Loan From Chinese Bank

FinMin Seks Soft Loan From Chinese Bank

281
0

KATHMANDU, 11 NOV 2014 – The Finance Ministry has asked China Exim Bank for a soft loan to build a regional international airport in Pokhara. The credit request follows the Cabinet’s go-ahead on October 27 to construct the much-delayed project with Chinese funding. The proposed airport will be built at Chinnedanda, 3 km east of the existing domestic airport in the lakeside city.

“We have sent a request letter to the bank seeking $ 215.96 million in soft loans,” said Madhu Kumar Marasini, chief of the International Economic Cooperation Coordination Division at the ministry.

Before this latest request, the ministry had twice applied to the bank for a loan. Earlier, it had requested $ 145 million when the project cost was valued at $ 166 million. However, the projected outlay was revised after the short listed bidder China CAMC Engineering Co quoted a price tag of $ 305 million. This time, the ministry had requested for $ 278 million from the bank.

The project subsequently encountered a snag over its cost variation. It has been immobile since July 2012 after the lowest bidder China CAMC quoted a price of $ 305 million, 85 percent higher than the original estimate.

Ministry officials said that representatives of China Exim Bank were scheduled to visit Nepal to inspect the project before releasing the loan. On May 22, the Civil Aviation Authority of Nepal (Caan) had awarded the construction contract to China CAMC.

An independent cost evaluation panel led by a former registrar of the Supreme Court had estimated a price tag of $ 215.96 million. The ministry then presented the proposal with the latest estimate to the Cabinet, but the Khil Raj Regmi-led government put it on the backburner.

The project was revived by former Tourism Minister Bhim Acharya of the Sushil Koirala-led government. On April 7, a Caan board meeting chaired by Acharya approved the project with a revised cost of $ 215.96 million.

However, the project hit another roadblock after the ministry questioned its estimated cost calling it “unrealistic”.

Last June, the Finance Ministry asked the Tourism Ministry to explain the project’s cost after it requested funding immediately after awarding the contract to the Chinese company. As the government needs to provide funding to the project’s developers within 28 days of signing the construction contract, the agreement will be activated immediately after the loan is approved, Finance Ministry officials said.

The Finance Ministry was convinced after a high-level panel formed by the government and consisting of experts from the Institute of Engineering, Pulchok showed that the project would cost more than $ 216 million.

Caan had invited bids for the project on February 9, 2012. The project will be built under the engineering procurement and construction (EPC) model. An EPC contract requires the contractor to deliver the project at the stipulated time at the predetermined price regardless of any cost overruns.

In 1975, the government acquired more than 3,106 ropanis of land to build the airport.

Source: eKantipur

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.