INDIAN INTEREST IN BIG PROJECTS

VIJAY DEVKOTA/KEDAR DAHAL

KATHMANDU, July 7

Interest by India in three big projects, that could not be constructed despite being in priority for a long time, has created ripples. An Indian team has come to Nepal and started observation of project sites after Indian Minister of External Affairs Sushma Swaraj during her Nepal visit for Donors’ Conference on June 25 expressed interest to develop Kathmandu-Nijgadh Fast Track and Nijgadh International Airport.

Nepal has already handed responsibility for detailed study of the fast track to Indian company International Leasing & Financial Services (IL&FS) in April. Airport Authority of India is now intensifying meetings with politicians and government leadership showing interest for expansion of the Tribhuvan International Airport (TIA) and construction of the proposed second international airport in Nijgadh. The Indian team went to visit the project site in Nijgadh on Tuesday. The team will meet tourism, physical planning and finance ministers after returning back from Nijgadh.

“The Indian team is seriously active about the TIA and Nijgadh Airport, and has left for visit of project site. Many foreign companies see the market for construction in Nepal. India may also have showed interest seeing the market,” Secretary at the Ministry of Culture, Tourism and Civil Aviation Suresh Man Shrestha said. He revealed that the Indian group claimed that it will complete work in time if given responsibility for expansion of the TIA and construction of Nijgadh Airport.

The government has already decided to hand over comprehensive study for expansion of the TIA and construction of Nijgadh Airport to the International Finance Corporation (IFC) after longstanding dispute and discussions about model and process for construction. The ministry said the IFC will study about investment system and business, and the government will decide whether to construct through public private partnership (PPP) model, government investment or other means after the study is completed.

The second international airport is envisioned to make Nepal a transit hub in the South Asia. The government wants to move the airport and fast track together feeling that the airport’s importance will be reduced in lack of the fast track. The TIA is currently being expanded as per the master plan from 2010-2028. A total of US$ 600 million will be spent on that. The first stage of expansion has already been started now.

The detailed project report (DPR) submitted by South Korean company LMW four years ago has put the cost of constructing Nijgadh Airport at Rs 670 billion including Rs 65 billion in the first stage, Rs 255 billion in second and Rs 350 billion in third. There will be six boarding gates, 34 check-in counters, six security check, 35 immigration and eight customs counters at the airport. Similarly, departure terminal will be on the first floor and arrival on the ground floor.

Reasons for Indian interest

Failure by Nepal to take decision about the big projects: Experts during the meeting of the Development Committee of parliament on March 15 had claimed that domestic projects have not moved forward despite internal capacity to build them due to weak government capacity to take decisions. But Physical Infrastructure and Transport Minister Bimalendra Nidhi signed agreement with an Indian company with conditions a day later despite the experts advising to develop the project through domestic resources. “That is the reason for recent urgency of India. India has come forward to develop the project as Nepal has not taken decision to construct it even though there is market, and not been able to spend even the credit line extended by India,” expert of infrastructure policy Dr Surya Raj Acharya said.

Failure to spend the credit line of Rs 100 billion: The government has not been able to select projects to mobilize the credit line of Rs 100 billion announced during the Nepal visit of Indian Prime Minister Narendra Modi last August. India had announced to convert Rs 40 billion out of that into grant during the Donors’ Conference due to inability of Nepal to take any decision about spending the amount. India is trying to channel the grant amount and the remaining Rs 60 billion to the fast track and Nijgadh Airport. India will have ownership over the debt and also have opportunity to construct while doing so.

Indian companies looking for more profitable projects: Indian infrastructure companies had taken work beyond their capacity due to good infrastructure market until 2007. These companies suffered losses and failed to even repay debts taken from international financial institutions as the projects did not move forward in lack of investment. Almost half a dozen companies, that have received license for developing hydropower projects in Nepal, themselves are facing financial crisis, and taking initiative for partnership with companies from China and other countries. The IL&FS, that is currently preparing DPR for the fast track, has already stated that the government must give it Rs 300 billion even though government study has put the cost of construction at Rs 100 billion.