Bidders demand minimum traffic guarantee

KATHMANDU-TARAI FAST TRACK The demand for the minimum traffic guarantee came as the firms feared a decline in traffic due to possible protests and road blockades, and the development of the Kathmandu-Hetauda Tunnel Highway WITH the deadline for submitting the request for proposal (RFP) nearing, two Indian firms shortlisted for the Kathmandu-Tarai Fast Track have demanded the government guarantee a minimum traffic volume on the proposed expressway. Reliance Infrastructure, Infrastructure Leasing _ Financial Services (IL&FS) and Larsen and Turbo (L&T) Infrastructure Development Projects are currently in race for the 76-km highway project contract. The three Indian firms have been given until September 21, 2013, to submit the RFP for building the road under the build-own-operatetransfer (BOOT) modality. Among the three, IL&FS and L&T have made the aforementioned demand. Officials at the Ministry of Physical Infrastructure and Transport (MoPIT) say they are positive on the concern expressed by the Indian firms. “We are positive on fixing the minimum traffic threshold. But we have also asked the firms to submit their complete proposals first,” said Tulasi Prasad Sitaula, secretary at the ministry. The demand for minimum traffic guarantee came as the firms feared a decline in traffic due to possible protests and road blockades, and the development of the Kathmandu- Hetauda Tunnel Highway, according to the ministry officials. The tunnel highway is being developed parallel to the Fast Track. A study conducted by the Asian Development Bank (ADB) about three years ago showed around 7,000 vehicles would ply on the Fast Track road daily. Saroj Man Shrestha, former Fast Track project manager, said the Indian firms might have asked for minimum traffic guarantee to share possible loss with the government. “The 7,000 vehicles a day are not that a loss-making traffic movement. Also, the number of vehicles will grow every year,” he said. Sitaula said if the Indian firms proved the tunnel highway would reduce the traffic on the Fast Track, the government could also extend the operation period of the road. According to the BOOT Act, firms developing infrastructure such as roads in private financing can operate them until 30 years and then hand them over to the government. The long-planned expressway project links Kathmandu with Nijgadh of Bara in Tarai and is estimated to cost over Rs 80 billion. Even though the three Indian firms are shortlisted for submitting the RFP with a detailed study on the project, only IL&FS and L&T are making preparations, according to the ministry. As part of the bid submission, the firms will have to provide detailed descriptions about the approximate construction cost, average annual maintenance and operation cost, likely construction period and traffic and revenues forecast and feasibility. In June, the ministry had extended the RFP submission deadline by three months based on the request of IL&FS and L&T, with the firms stating they had to carry out traffic study and impact after the government permitted the private sector to build the Kathmandu-Hetauda Tunnel Highway.