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After 24 yrs, still no-go for international airport in Pokhara, Nepal
Publication Date : 13-09-2013
The Civil Aviation Authority of Nepal (CAAN) has said that the decision whether or not to move ahead with the development of a regional-international airport in Pokhara, Nepal's second largest city, will depend on negotiations with the project’s lowest bidder - China's CAMC Engineering Co.
The China Airport Construction Company (CACC), a consultant appointed by CAMC Engineering Co, submitted its draft feasibility study report to CAAN recently with a revised estimated cost of US$264 million. The study proposed an additional 16 per cent in price escalation cost - raising the total cost for the airport to more than $300 million - causing negotiations to come to a standstill, as the price exceeded the Nepal government's estimated cost.
The Cabinet of Nepal had previously given the green light for the project, after CAMC agreed to carry it out for $166 million. Following this, CAAN had, through a five-point agreement, assigned CMAC to carry out a detailed study on the project.
As per the agreement, CAAN and CMAC were scheduled to revise and finalise the project at the end of August this year.
“We failed to meet these two deadlines as the consultant hired by CAMC failed to submit a complete report,” said a CAAN official.
Meanwhile, government officials said that both parties are scheduled to meet for negotiations this week. It was also agreed that after the study report is approved, a commercial agreement of the updated loan proposal for the project and other documents to evaluate the project for the China EXIM Bank would be forwarded through the Nepalese finance ministry by the end of September.
The China EXIM Bank has pledged soft loans worth $145 million for the development of the airport. The agreement with the bank also says that the Chinese side will release the funds for the project by the end of October.
Some officials said that the project is facing technical glitches again and that a number of legal clauses would have to be cancelled if the project is to be awarded to the same company under the current circumstances. “Technically, the government has no alternative but to go for a re-tender,” they said.
In the first week of August, an EXIM Bank delegation was in Kathmandu to discuss the status of the new Pokhara airport as part of its final assessment to finance the project. However, meetings between government officials and the bank’s delegation had ended without a concrete outcome.
On 9 Feb 2012, CAAN had invited bids to build the airport under the Engineering Procurement and Construction model. However, it was forced to extend the deadline twice due to intervention by the Commission for Investigation of Abuse of Authority. On 18 July 2012, CAAN’s tender evaluation committee had opened the financial proposals for the project.
Subsequently, the project was dragged into controversy with CAAN unions opposing the deal, arguing it was not economically viable under the authority’s existing financial status.
A detailed study of the project conducted by the Nepalese government in 1989, in association with the Japan International Cooperation Agency, had proposed building a 2,500-metre long and 50-metre wide runway, a terminal and a cargo building. The construction of the airport, expected to be completed in four years, was estimated to cost $39.6 million then.