The estimated construction cost of Kathmandu-Tarai Fast Track Road has been raised by $200 million, from $800 million estimated by Asian Development Bank two years ago, mainly due to delay in implementation of the mega project.

As per the ADB´s fresh study the estimated cost of the multi-million dollar project stands at $1000 million for four-lane roads and $400 million for two-lane roads. The estimated cost two years before was $800 million and $360 million for four-lane and for two-lane road respectively. The cost estimated two years ago as based on prices of March, 2008.


“Uncertainty in the implementation of the highway has not only delayed completion of the project at least by a year but also pushed up the cost significantly,” said a source at the Ministry of Physical Planning and Works (MoPPW).

After the recent survey report, ADB has been pressing the government to make substantial investment in the four-lane project, stating that private sector may not be ready to invest in the mega project under the Built-Operate-Own-Transfer (BOOT) model.

Ministry sources said ADB officials are insisting that the government investment would be necessary if four-lane road is to be built.

“The revised feasibility study report states that the private sector won´t be interested in the project because of chances of low return due to low traffic movement estimated in the report,” the source said.

In its latest report, ADB has estimated the number of vehicles plying on the road to 5,000 a day, down from 8,000 a day estimated in 2008.

“The fresh report discourages investors from putting their money in the project under the BOOT model,” the source said.

According to a ministry source, ADB officials have expressed their interest to involve in designing the Request for Proposal (RFP) to be submitted by the interested companies.

The fresh report also suggests the government to reduce the number of bridges by constructing tunnels. A total of 90 bridges costing Rs 25 billion have been estimated on the proposed road project.

ADB had conducted new feasibility survey after Public Accounts Committee (PAC) of the parliament directed the MoPPW to cancel the existing bidding process which, according to PAC, had failed to attract more companies to develop the project originally scheduled to be completed by 2014.

Responding to the PAC decision, MoPPW has restarted the process to invite Expression of Interest from interested parties. “We have made a fresh bidding process to ascertain whether or not the private sector is interested in the project,” the source said.

MoPPW had short-listed Landmark Worldwide Company and Reliance Infrastructure to construct the mega road project.

Three companies -- Gammon India, Landmark Worldwide Company of South Korea and Reliance Infrastructure of India -- had submitted their Expression of Interest (EOI) to construct the project under the BOOT concept as per the Private Financing in Infrastructure Development and Operations Act.

Source: PRABHAKAR GHIMIRE (2010),"Fast Track estimated cost up by $200m",My Republica, 28 June 2010