China EXIM bank team to review 2 projects

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    KATHMANDU, AUG 04 –

    China-Exim-BankA high-level delegation of the Export-Import (EXIM) Bank of China is scheduled to arrive in Kathmandu on Tuesday to review the status of two tourism-related projects it is willing to fund.

    The projects are the Regional International Airport in Pokhara and Nepal Airlines Corporation’s (NAC) plan to purchase Chinese aircraft. The team will also review the progress of the Trishuli 3A Hydropower Project where it has lent $90 million, sources at the Finance Ministry said.

    The bank has pledged soft loans worth $145 million for the development of the airport in Pokhara and another $35 million for NAC, which plans to buy four Chinese aircraft. The proposed airport is located at Chinnedanda, some 3-km east of the existing domestic airport in Pokhara.

    According to government officials, the delegation will study the two tourism-related projects as part of its final assessment to fund them.

    It will also review the progress of Trishuli 3A, which is currently facing locals’ obstruction.

    Senior officials at the Civil Aviation Authority of Nepal (CAAN) said China’s CAMC Engineering Co, which has been entrusted to carry out the feasibility study of the airport, submitted its report on Wednesday. “We are studying the report,” said Suman Shrestha, deputy director general at CAAN. The CAAN is in the process to sign a commercial agreement with the company by August.

    The bidding process for the airport had been put on hold since July 2012 after CAMC quoted 85 percent higher than the government-estimated cost.

    However, the project was given a go-ahead by the Cabinet after the company showed willingness to construct the project at the government-estimated cost of $166 million.

    After the government’s go-ahead, CAAN has assigned the lowest bidder to carry out the detailed study of the airport. On February 9, 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.

    A detailed study of the project conducted by the government in 1989 in association with Japan International Cooperation Agency had proposed a 2,500-m long and 50-m 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. The project has been in limbo since 1975 when the government acquired more than 3,106 ropanies of land.

    The government also plans borrowing soft loans to buy four Chinese aircraft for NAC. China has pledged providing a 19-seater Harbin Y-12e and a 58-seater MA60 turboprop in grant and the government plans to buy four other aircraft — three Harbin Y-12e and an MA60 — by taking soft loans from the EXIM bank.

    The Ministry of Finance had dispatched a letter to the Chinese bank five months ago, requesting for a loan to procure the aircraft for NAC. Currently, NAC possesses one twin otter to serve the domestic market.

    As per a commercial agreement signed between NAC and AVIC International Holding, the maker of the planes on November 29, 2012, the Chinese side has given a five-year grace period for loan and interest repayment. The provision is expected to enable NAC to enjoy earnings for at least five years.

    Similarly, as per the signed commercial agreement, the interest rate on the loan is expected to be below 1.75 percent per annum. The Nepali side had also proposed a 30-year payback period for the loans.

    On August 7, 2011, NAC had written to the Finance Ministry, requesting it to purchase eight aircraft with foreign grants. In November 2011, the ministry requested China to provide the aircraft either under grant or soft loans. The Chinese side responded positively, expressing their readiness to provide some aircraft under grant and some under soft loans.

    ADB team to arrive on Aug 14

    A delegation of the Asian Development Bank (ADB) will visit Nepal on August 14 to release additional funds for the upgradation of Gautam Buddha Airport in Bhairahawa into a regional international airport, government officials said.

    According to the Ministry of Culture, Tourism and Civil Aviation, preparations are in final stages to invite bids for the construction of the airport. The project hit a roadblock due to lack of resources after a fresh study showed that another $53 million will be required to complete it. A survey carried out by the ADB four years ago had estimated that the upgradation would cost around $36 million. The revised project cost stands at $90.6 million. The first phase of construction at Gautam Buddha Airport was originally planned to start by the end of 2011. It is expected to be completed within three years. The project will be financed by loan and grant of $ 42.96 million and $12.75 million, respectively, from the ADB under the South Asia Tourism Infrastructure Development Project. The OPEC Fund for International Development, as a co-financing arm of the ADB, is providing $15 million loans. The Nepal government will contribute $ 29.17 million to the project.

    Source : The Kathmandu Post