SC tells govt to put on hold plans to award Fast Track project – My Republica

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KATHMANDU, Oct 9: The Supreme Court Thursday told the government to put its plans regarding awarding of the Kathmandu-Tarai Fast Track project to an Indian company on hold.

A single bench of Chief Justice Kalyan Shrestha directed the government not to proceed with awarding the contract and to keep it as it is until further decision.

Following a hearing on Thursday on a writ petition filed by advocates Purna Bahadur Kunwar and Bhairaja Rai, the court issued the direction to hold off implementing the contract award until October 28.

The two lawyers had filed the writ petition on Wednesday. The Supreme Court said it will reach its final decision after discussing with both sides. The defendant — the Government of Nepal — has been invited for discussion at the next hearing through the Office of the Attorney General. It has been told to furnish essential documents including the financial proposal by the developer.

The defendant was also asked to clarify its decision-making process.

Despite criticism from all the quarters, the plan to award the project to a consortium of Indian companies is under consideration at the cabinet.

At least two cabinet meetings have discussed the proposal but could not be convinced that it [the award] would profit the country. Another discussion was organized on Tuesday at the official residence of the Prime Minister, where former prime ministers, and heads and senior leaders of the three major political parties were also invited to. They also decided to put the project on hold.

The plan to award the US$ 1.12 billion expressway and toll road project under a Build, Own, Operate and Transfer (BOOT) model has been drawing flack due to clauses and conditions in the concession agreement documents that have been widely criticized by experts.

A parliamentary committee has said the clauses were 'against national interest.'

The two advocates, in the writ petition, argued that the project requires huge resources and also creates a huge financial burden on the state coffers as well as the general public, who are the users of the road.

The court said it decided to put the project on hold on the basis of information filed by the petitioners and a recommendation made by the project's review panel.

"The document lacks information about investment proposal made by the Indian company, the royalty to be paid to the Government of Nepal, and the proportion of investment and returns," an excerpt of the SC order reads.

Paying the annual minimum revenue guarantee of US$ 150 million for the whole concession period of 25 years without any certainty of the traffic flow and revenue collection from the toll road, providing soft loans of US$ 750 million and the project cost as in Detailed Project Report by the consortium led by IL & FS are the controversial clauses in agreement document.

Even ministers from the government's coalition partner CPN-UML have said the clauses deviate from the BOOT model. The government is taking all the business risk while the profits will be earned by the Indian company, they say.

Experts and even ministers argue that there is no point of looking up to any private firm if the government plans to provide soft loans to the developer as an investment.

The Finance Committee of the parliament last week submitted its report to the government asking it to stop the bidding process. The government itself should develop the project by awarding contracts to private contractors, it said.

Private parties were invited for developing the project as the government did not have the resources to inject considering the scale of the project, but government officials and experts have stressed that even though the project may not be financially viable, it is highly important for the country's economy so the government should invest on its own.

The SC has asked the government to bring documents to clarify the financial proposals and investment plans. The SC also argued that the projects should be put on hold as per a review panel report on the project.

 

Published on: My Republica (Oct 9, 2015)