KATHMANDU, Sept 27: The government on Wednesday dispatched a high-level delegation led by Finance Minister Barshaman Pun to China to "fix" the problems it faced in executing the Pokhara regional international airport (PRIA) due to strikingly high price quoted by the Chinese bidder.
The official visit, interestingly, was arranged abruptly. Surprising enough, even the top bureaucrats denied that any such delegation was visiting China.
Such a reaction by the top officials and attempt of the government to keep the visit secret, meanwhile, has raised suspicion over the intention of the government.
Yes we are going on an official visit to Beijing. Everything is arranged by the Ministry of Finance (MoF), hence, I have no idea about the agendas. If you want to know more ask the MoF: This is how Tourism Secretary Yagya Gautam retorted prior to the departure when Republica repeatedly inquired.
Reliable sources, nonetheless, disclosed that the purpose of the visit was to hold bilateral talks on PRIA and trade facilitation.
“They might also dwell on cases of poor performance by the Chinese contractors in Nepal, including Tuesday´s ouster of a Chinese contractor from Melamchi Drinking Water Project. But that is not in the agenda,” said an official requesting anonymity.
Sources too expressed surprise over the abruptly arranged visit, for the problem with the PRIA was related with higher bidding by the contractor, and has nothing to do with the Chinese government.
“Chinese government has already committed soft loans, irrespective of the volume of loans amount, through the Exim Bank. In such a context, we wonder what the FM will negotiate with his Chinese counterpart,” said the source, questioning the motive of the visit.
The team that left for Beijing via Guangzhou on Wednesday night includes Finance Secretary, Tourism Secretary, joint secretaries from different ministries along with Director General of Civil Aviation Authority of Nepal (CAAN), among others.
Issues of PRIA
PRIA -- planned to be built with soft loans of the Chinese Exim Bank, for which the two sides have already agreed in principle -- had landed into uncertainty after price quoted by the lowest bidder, China CAMC Engineering Co, stood 86 percent higher than initial estimates.
The government and even a Chinese technical team that visited the site of the PRIA last year had reckoned that the total cost of developing the project under Engineering, Procurement and Construction (EPC) contract could stand at around US$ 165 million.
But when the Civil Aviation Authority of Nepal (CAAN) actually invited the bid, China CAMC quoted $305.13 million for the work. The other two Chinese firms had quoted still higher $337.82 million and $349.28 million respectively.
The quotation had surprised the CAAN officials, for they reckoned such a huge variation rendered the project economically unviable.
China CAMC, on the other hand, justified its quotation, saying the design it has proposed was more advanced than what the authority discussed initially. But CAAN officials held viability was important than design.
As Chinese Embassy in Kathmandu wrote to the government backing the China CAMC, four trade unions at the CAAN strongly opposed possible awarding of tender to China CAMC. They even warned of shutting down the airports nationwide indefinitely if the government went on with the deal.
But residents of Pokhara put their weight behind the project and have been launching various protests since August 14 in a bid to pressurize the government to move the project ahead.
Officials at the Tourism as well as Finance Ministry tagged Pun´s visit as mysterious referring that it has been held just two days after UCPN Maoist Chairman Pushpa Kamal Dahal in his address to the agitating locals of Pokhara committed that he would soon send a high-level team to China to pave the way for the earliest execution of the project.
Furthermore, FM Pun was the person who had signed a memorandum of understanding (MoU) with China CAMC, committing to support it win the tender, even before the CAAN invited the tender.
The MoU that lawmakers disclosed at the Public Accounts Committee of the Parliament in last February had committed that "the government of Nepal shall provide CAMC the solid and substantial support" in a tender that CAAN would call for EPC contract for the regional international airport.
The MoU signed on September 20, 2011 at Ministry of Finance in Singh Durbar was undersigned by Pun on behalf of Nepali government and Lui Shengcheng, regional general manager of China CAMC Engineering. Energy Minister Posta Bahadur Bogati and Chinese Ambassador to Nepal Yang Houlan have also signed it as witnesses.
It was following the deal that MoF had instructed CAAN to invite the bid for developing the regional airport.