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Tourism News & Highlights

Pokhara intíl airport project gets govt nod

KATHMANDU, OCT 28 - The Cabinet on Monday gave a go-ahead for the construction of a regional international airport in the tourist city of Pokhara after the Tourism Ministry convinced the Finance Ministry that the estimated $215.96 million cost was realistic.

pokhara The decision has paved the way for the government to formally request a soft loan from the China EXIM Bank to develop the project. The bank has agreed in principle to provide a loan to the government to build the new airport, which has been in the works for 39 years, at Chinnedanda, 3km east of the existing domestic airport.

In June, the Tourism Ministry had been asked to explain the project’s cost after it approached the Finance Ministry to arrange funds immediately after the construction contract was awarded to China CAMC Engineering Co on May 22.

The Finance Ministry had initially expressed reservations about the project cost and termed it “unrealistic”. But its doubt was cleared after a high-level panel from the Institute of Engineering, Pulchowk formed by the government showed the project would cost over $216 million.

“We had submitted the panel’s report to the Finance Ministry and it was convinced this time,” said Tourism Ministry spokesman Mohan Krishna Sapkota. The project cost was then tabled at the Cabinet. Madhu Kumar Marasini, chief of the International Economic Cooperation Coordination Division at the Finance Ministry, said the EXIM bank would be approached after receiving the Cabinet notes.

The Commission for Investigation of Abuse of Authority had even seized documents related to the tender process suspecting financial irregularities. The investigation has been put on hold.

The project has been idle since July 2012 after the lowest bidder China CAMC quoted a price of $305 million, 85 percent higher than the estimate. The government had expected the project to cost around $166 million.

In January 2013, China CAMC wrote to the Tourism Ministry expressing its willingness to build the project at the government estimate. Things became more complicated after China Airport Construction Company, a consultant appointed by the China CAMC, submitted its study report to the Civil Aviation Authority of Nepal (Caan) quoting $264 million. Adding 16 percent price escalation and 13 percent VAT, the estimated outlay would come to around $300 million, nearly equal to the original cost quoted by the China CAMC.

An independent cost evaluation panel led by former registrar of Supreme Court estimated the price at $215.96 million. The ministry then presented the proposal with the latest estimated cost to the Cabinet, but the Khil Raj Regmi-led government put it on the backburner.

The project was revived by former Tourism Minister Bhim Acharya of the Sushil Koirala-led government. On April 7, a Caan board meeting chaired by Acharya approved the project with the revised cost of $215.96 million. Caan had invited bids for the project on February 9, 2012. The project will be built under the Engineering Procurement and Construction model. The EPC contract binds the contractor to deliver the project at the stipulated time with predetermined price regardless of any increase in costs that it may incur after the contract is signed.

In 1975, the government acquired more than 3,106 ropani land for the infrastructure. As per the feasibility report, the airport will accommodate medium category jets like Boeing 757 and Airbus 320.

Source: 2014-10-28 08:50

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