NPBCL submits fresh financial closure report

KATHMANDU:

Nepal Purbadhar Bikas Company Ltd (NPBCL) has submitted financial closure report to the government once again to build the Kathmandu-Kulekhani-Hetauda Tunnel Highway. This time, the closure includes master agreement and re-commitment letters of Canadian firms to finance up to 400 million Canadian dollars (CAD) in the tunnel road.

After the first financial closure made in May last year was rejected by the government stating the funding plan for the project was not convincing enough, the developer of the tunnel highway on Monday submitted a new financial closure. A technical committee under the Ministry of Physical Infrastructure and Transport (MoPIT) is scheduled to start evaluating the closure from next week.

Financial closure means the developer has adequate resources to undertake the project and normally the documentations include details on the cash the developer has and loan agreements to invest in the project. “We waited for NPBCL to submit its financial closure again for a long time and this time we will decide whether to continue with the firm or not,” said Tulasi Prasad Sitaula, secretary of MoPIT. He added if the documents are really convincing, they might give a go-ahead to company by next week.

The closure will be evaluated by the technical committee headed by MoPIT Joint Secretary Rabindra Nath Shrestha. The committee includes experts — Birendra Bahadur Deuja and Bhesh Raj Dhakal — among other concerned officials of MoPIT.

As per the concession agreement reached between MoPIT and NPBCL nearly two years ago, the government can scrap the permission issued to build the tunnel highway in case it is unsatisfied on any ground after giving a chance to the developer to provide clarification.

The proposed 58-km tunnel highway, which will link Kathmandu with Hetauda within an hour’s drive, is estimated to cost Rs 35 billion. The developer needs to get its financial closure approved from MoPIT before it can commence the construction of the project.

“If the government has any doubt about our project financing plan, it can even verify with the Canadian firms,” said Subarna Lal Bajracharya, corporate chief of NPBCL.

In agreement, NPBCL had agreed to complete the project by December 2016 and MoPIT had allowed collection of toll charge ranging from Rs 180 to Rs 4,250 per vehicle, depending on its type. After being unable to gather resources required for project from domestic market, NPBCL had decided to rope in financers from abroad.

Canadian firms — Canadian Crown Corporations and Shej Global Canada — have signed master agreements to finance the tunnel road project, while Infrabanx Corporation will manage the whole project. Currently, a Canadian consultant, exp Services Inc is preparing the due diligence audit report of the tunnel highway project, which is expected to be completed within May.

Bajracharya said that apart from investment from Canadian firms, there will be 20 per cent local investment in tunnel highway in the form of pre-initial public offering (pre-IPO), IPO and promoter shares.

Immediately after getting the government’s approval for the closure, NPBCL is planning to correspond with the Canadian firms to sign ‘turnkey agreement’, a detailed agreement on project development, operation and revenue sharing. The developer is now aiming to complete the project by December 2018 if it gets the green signal from MoPIT.

Source:THT