Monday, October 1, 2012

Pokhara regional int’l airport row: Govt likely to issue fresh tender

The government is likely to go for a fresh tender issuance for the construction of the much-talked-about regional international airport in Pokhara, government officials who arrived from their Beijing visit on Sunday evening told the Post.
The officials indicated two alternatives — either issuing a fresh tender or giving continuity to the existing process through a government-to-government deal between Nepal and China. But the government is likely to adopt the first option (starting a fresh process) as the Civil Aviation Authority of Nepal (CAAN) has no mandate to negotiate the project cost under the existing process, in which the lowest bidder quoted 85.5 percent more than the estimated project cost. “Most likely, the old process will be scrapped,” said a highly-placed government official, who was a member of the government team that visited Beijing.
However, the Nepal government can also continue the old process if it enters into a direct negotiation with the Chinese government, the official added. “The Nepal government should talk to the Chinese government to reduce the cost of the
project, as the China Exim Bank has agreed to provide soft loans for the construction,” said the official.
The five-member team led by Tourism Secretary Yajna Prasad Gautam went to Beijing last Wednesday to resolve complications in the proposed airport. Work on the project has stalled after three shortlisted bidders quoted much higher cost than the government estimates. Since then, Pokhara locals have been staging a string of strikes to pressure the government to take a decision immediately.
Although the government team refused to divulge much about their meeting with Chinese officials, the team members were confident that the project will be constructed in Pokhara sooner than later. According to them, their visit was in some way fruitful as it was particularly concentrated on the discussion with the China Exim Bank over the soft loan.
Gautam who headed the government team to Beijing said the bank suggested removing complexities in the process, expressing its readiness to sanction the committed loan anytime. The bank also informed the Nepali delegation that its involvement in the project (signing of the loan agreement) will only start after the appointment of a project contractor. “The bank is positive on providing loan for the project anytime,” said Gautam.
The government was scheduled to sign a loan agreement with the China Exim Bank on August 20 after selecting a contractor for the airport construction. However, the project ran into controversy over its spiraling cost.
As per government estimation, the cost of airport to be developed under the engineering, procurement and construction (EPC) contract stand at around $180 million. The China CAMC Engineering Co quoted the lowest — $305.13 million — among the three Chinese bidders. CAAN sources said if a new process is initiated, the government needs to sign a memorandum of understanding (MoU) with the Chinese government to move ahead with the project without hurdles.
The government had previously signed an MoU with CAMC Engineering Co, on September 20, 2011, but the deal was reached behind the doors. The pact, which was terminated later, was signed by Finance Minister Barsha Man Pun on behalf of the Nepal government. “Signing of an MoU with the Chinese government is a must, but the signing process should be transparent,” a CAAN official said.
The CAAN had invited the bid for the project on February 9.

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