Submit your Article

On Aug 15, a Cabinet meeting decided to revise the detailed project report of the Kathmandu-Tarai Fast Track Project. No explanation was given. In the updated DPR, the project’s length was reduced from 72.5 km to 70.97 km. 

Minister for Physical Infrastructure and Transport Prakash Jwala said as the length of the highway has been shortened, the project cost will come down by Rs 2bn.

But notably, the new DPR has increased the number of tunnels and bridges, which contradicts the minister’s claim of reduced project cost. Initially, there were three tunnels at Mahadevtar (3.355 km), Dhedre (1.63 km), and Lane Danda (1.43 km). The revised DPR includes three additional tunnels at Debichaur (1 km), Sisautar (0.39 km), and Chandram Bhir (2.25 km), bringing the total number of tunnels to six. 

Likewise, the fast track originally also featured 87 bridges, but this number has now increased to 89. 

Tunnels and bridges are expensive to build, and infrastructure development experts say they don’t know where Minister Jwala got the idea that the project will save Rs 2bn by reducing the length of the fast track by a mere two kilometers and adding three more tunnels and two extra bridges. 

Aslo read: Fast track: Destroyer of civilization?

“Besides minor alignment changes, modifying project designs midway through construction is considered less than ideal,” says infrastructure expert Surya Raj Acharya, development and infrastructure policy expert. “Project designs should not be altered without a thorough and well-founded study that acknowledges their significance.”

In 2008, the Asian Development Bank had estimated the project cost at Rs 70bn. A South Korean company that prepared the DPR in 2019 raised the cost estimate to Rs 112bn. When the Nepal Army took over the project again raised the estimated project cost toRs 175bn. 

Once again, the Army and the Ministry of Physical Infrastructure and Transport have raised the estimated project cost to Rs 211bn. The project cost could further increase if there are more delays.

The new deadline of the project is April 2027. The project has already undergone four deadline revisions in six years. The latest deadline is likely to be extended again, as the Army has only completed 26.14 percent of the work to date. 

Experts say it is impossible to complete the remaining work (around 75 percent) of the project in the next four years, given the amount of challenges ahead, from securing funds to land acquisition to lengthy contract and bidding process.

The financial progress of the project so far stands at 28.11 percent.

Acharya says that the Nepali Army is not the ideal institution to construct this kind of project. 

“If the fast track project continues to be managed in its current manner, it not only risks missing its next deadline but could potentially become another ‘white elephant’ project akin to the Melamchi Drinking Water Project,” he says.

The Nepal Army officials have often cited budget crunch as a major hindrance to the timely progress of the project. 

The previous governments had not provided enough budget for the expressway. This time, however, the army sources say they are hopeful about securing sufficient budget to make significant progress with the project.

The project contract was handed over to the Army during the previous tenure of Prime Minister Pushpa Kamal Dahal. With Dahal once again in power, the Nepal Army officials are hopeful that the fast track project will get the much-needed attention and priority 

Also read: What’s driving up land prices along the fast track?

“Soon after assuming the office, Prime Minister Dahal conducted an inspection of the project site,” says Brigadier General Krishna Prasad Bhandari, spokesperson of Nepali Army. “We are hopeful that we won’t face a budget crunch under this government.” 

Out of the 13 packages that comprise the project, construction work is currently underway in only seven. The remaining six packages have yet to commence. According to the Army, around 95 percent of the project’s tasks are either in the construction phase or in the midst of the bidding process.

However, data shows the design work and contract process for three tunnels and nearly half of the total bridges has not been completed. Even with the ongoing construction of three tunnels, the overall physical progress stands at just 41.57 percent.

Another major challenge lies in the Khokana area, which is an ancient Newa town renowned for its rich culture and heritage. Residents of Khokana are expressing opposition to the expressway project due to concerns that its construction might result in the loss of their cultural heritage. As of now, the Army has not commenced the land acquisition and bidding processes in this area.

The Army says land acquisition process in Khokana has been halted over a compensation row. But the ground reality is different. The halt has more to do with the cultural significance of the area than land issues.  

The project’s Environmental Impact Assessment (EIA) had hinted at the challenges of securing land for the 6 km-stretch of the expressway in Lalitpur. As the area is part of the ancient Newa heritage and a site of various cultural and religious ceremonies, the EIA report had given a heads-up to the project developer. 

As anticipated, there was fierce pushback from the residents of Khokana when the time came to open a track for the expressway. 

Out of the total land requirement of 15,416 ropanis for the project, 10,244 ropanis are government-owned, and the remaining are privately owned. Within the 5,172 ropanis of private land, there are still 406 ropanis awaiting acquisition, and these parcels are situated in the Khokana area.

Major General Kamal Bikram Shah, the project head, says the government,  the National Planning Commision, and other stakeholders are doing their best to resolve the Khokana dispute.

“The Army will start working soon after this issue is settled,” he says.

Also read: Fast track: National pride or another white elephant?

The idea of constructing the Kathmandu-Tarai fast track, an alternate highway connecting the Kathmandu valley with the Tarai region, was originally conceived during the Panchayat era. However, the project remained in the planning and incubation stages for an extended period.

In 1992, two years following the restoration of democracy, the National Planning Commission collaborated with the Danish Development Cooperation to conduct a feasibility study for the fast track. Four years later, in 1996, the government invited expressions of interest from companies. Despite these initial steps, there was little to no progress for over a decade.

It wasn’t until 2008 that the fast track project was revitalized, thanks to the Asian Development Bank which prepared a feasibility report and preliminary design. That same year, the government proposed an alternative to Kathmandu’s Tribhuvan International Airport in Nijgadh, Bara, further bolstering the prospects and importance of the expressway.

Features of the expressway

• Total length: 70.977 km
• Width: 25 meters in the hills, 27 meters in the plains
• Start point: Khokana
• End point: Nijgadh
• Areas: Lalitpur, Kathmandu, Makawanpur, Bara
• Tunnels: 6 (10.055 km)
• Bridges: 89 (12.885)
• Interchange: 3 (Khokana, Budune, Nijgadh)
• Toll Plaza: 3 (Khokana, Budune, Nijgadh)
• Deadline: April 2027

Progress

• Physical progress: 26.14 percent
• Financial progress: 28.11 percent
• Tunnels: 2,667 meters out of 6,415 meters
• Bridges: 2 out of 89
• Trees felled: 28,646 out of 38,664
• Trees planted: 643,695 out of 709,850

Amidst the country’s economic downturn, there has been a sharp upswing in banking offense cases in the last fiscal year. Both large and small businesses, along with individuals, have encountered difficulties in meeting their financial responsibilities on time, which according to Nepal Police has resulted in a rise in banking offense cases. 

The statistics of Nepal Police show such cases increased by 124 percent in terms of number and 386 percent in terms of amount in FY 2022/23. A total of 12,128 cases of banking offenses with the amount equal to Rs 69.15bn were registered in the last fiscal year. 

The majority of banking offense cases were related to cheque bounce, followed by denial by cooperatives to withdraw depositors' money.

Out of all the banking offense cases, an overwhelming 99 percent were associated with bounced or dishonored cheques. According to the Banking Offense and Punishment Act of 2008, failing to honor a written check three times due to insufficient funds in the account is considered a banking offense. Police records indicate that a staggering 12,030 cases were filed for bounced cheques, involving a total sum of Rs 47.50bn.

The second-highest number of registered banking offense cases pertains to cooperative institutions, where depositors have faced difficulties accessing their deposited funds. A total of 53 cases related to cooperative fraud have been recorded, involving a substantial amount of Rs 18.82bn.

The data reveals a significant spike in both bad check cases and cooperative fraud cases in the last fiscal year compared to the preceding one. In FY 2021/22, there were 5,370 cases involving bad cheques, amounting to Rs 6.71bn, and 15 cases related to cooperative fraud, totaling Rs 7.39bn.

In most cooperative fraud cases linked to defaults, promoters have gathered deposits by enticing depositors with the promise of substantial returns. They then invested these funds in unproductive sectors such as real estate. When depositors sought to retrieve their money, the promoters were unable to fulfill their obligations.

Out of the 32,000 cooperatives operating in the country, the bulk of the problematic ones belong to the category of savings and credit cooperatives. The Department of Cooperatives has identified issues in approximately 125 cooperatives.

Thousands of individuals who entrusted their hard-earned money to these cooperatives are now facing difficulties as the operators have become unreachable. In cases where contact is still possible, depositors are being informed that an immediate return of their deposits cannot be facilitated.

Experts link the increase in banking fraud to the ongoing economic turmoil. The market has experienced a disruption in the circulation of money, primarily due to an extended liquidity shortage and a decrease in overall demand. Furthermore, the higher interest rates imposed by banks and financial institutions have had a severe impact on small businesses.

Companies and individuals issue cheques of a certain date to settle their business and personal transactions. However, due to the recent downturn in business, the ability of companies and individuals to pay their creditors has weakened. People often issue bad cheques to their creditors to avoid a difficult situation.

.Both companies and individuals commonly use dated cheques to settle their commercial and personal transactions. Nevertheless, owing to the recent decline in business conditions, the capacity of both companies and individuals to meet their financial obligations has diminished. As a means of circumventing a challenging predicament, individuals frequently end up issuing insufficient funds checks to their creditors. Nepal Police Spokesperson Kuber Kadayat said that the number of banking fraud cases has increased due to the recent economic crisis.

According to police data, cases related to banking fraud have been increasing every year. There were only 755 banking offense cases registered by the Nepal Police in FY 2017/18 which continued to surge in the next two fiscal years. However, there was some decline in the registration of fraud cases in FY 2020/21. However, in the last two years, banking offense cases have again started to increase. Along with the cases, the monetary amount of banking fraud has also surged.

According to police statistics, instances of banking fraud have been on a consistent upward trend over the years. In the fiscal year 2017/18, Nepal Police recorded just 755 banking offense cases, but this number steadily rose over the following two fiscal years. However, there was a slight reduction in the incidence of fraud cases during FY 2020/21. Nevertheless, over the last two years, the occurrences of banking offenses have once again started to climb, and concurrently, the monetary value associated with these fraud cases has also surged.

Banking Offense Cases

The price of gold has increased by Rs 600 per tola in the domestic market on Friday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 111, 800 per tola today. It was traded at Rs 103, 500 per tola on Thursday.

Meanwhile, tejabi gold is being traded at Rs 111, 250 per tola. It was traded at Rs 110, 650 per tola.

Similarly, the price of silver has increased by Rs 10 and is being traded at Rs 1,395 per tola today.

The Millennium Challenge Corporation (MCC) Nepal Compact hit a roadblock after the Finance Ministry raised concerns about the elevated cost of the transmission line project. Finance Minister Prakash Sharan Mahat has expressed dissatisfaction over the financial proposals, which have exceeded the estimated cost. 

According to the Finance Ministry sources, discussions have started to call for the tender again for the construction of the transmission lines. Mahat, on Monday, discussed with MCA-Nepal executive director Khadga Bahadur Bisht about issuing the tender again. 

Six Indian companies had submitted bids to construct the power line which will be constructed in three separate packages. An association of Megha Engineering and Infrastructure Ltd and Power Mech Projects Ltd along with Kalpataru Power Transmission Limited, KEC International Ltd, Transrail Lighting Ltd, Tata Projects Ltd, and Larsen & Toubro Ltd participated in the bid. 

MCA-Nepal has prepared an estimated cost of constructing the transmission line at $226m. However, when financial proposals were opened, the total cost of the three packages stood at $365m, a staggering 66 percent increase over MCA Nepal’s initial estimates. With the huge difference between the initial estimates and financial proposals, the Finance Ministry is inclined to initiate a fresh bidding process for the construction of the transmission lines.

“The amount quoted in the financial proposals is unusually higher than the estimated cost,” said a senior official of the Finance Ministry. “Even if we were to accept the lowest bid, it would pose a significant budgetary challenge for us. We have no alternative but to initiate a fresh tender process.” Amid the Finance Ministry’s reservation over the pricing, the MCA Nepal has not made any official statements or disclosures regarding the matter.

MCC, the US aid agency has committed to provide $500m while the government had earlier pledged $197m to implement the transmission line and road improvement projects under the MCC Nepal Compact. Since the MCC will not provide an additional amount, the Finance Ministry believes it has to bear the additional financial burden if it accepts the financial proposals.

According to Finance Ministry officials, should these financing proposals be accepted, half of the total budget would have to be allocated to the transmission lines, potentially leaving insufficient funds for other critical components of the Nepal Compact. Initially, the government had planned to invest $130m, but an additional $67m had been contributed for the Nepal Compact. 

A 315-km high-capacity transmission line will be built and a section of the East-West Highway upgraded under the $500m US aid. Five segments of transmission lines to be built are—New Butwal-India Border (18km), New Butwal-New Damauli (90km), New Damauli-Ratmate (90km), Ratmate-New Hetauda (58km), and Ratmate-Lapsephedi (59km). Three substations will be built in Ratmate, Damauli, and Butwal.

Once completed, these transmission lines are expected to provide a vital missing link for power projects of different river basins to the existing high-voltage grid in Nepal.

The government has allocated Rs 10.84bn for the MCA-Nepal for the current fiscal year. While Rs 9.27bn had been set aside for the entity in the last fiscal year, only Rs 4.11bn was spent, according to the Finance Ministry.

Six years after Nepal signed an agreement with the MCC, the much-debated MCC Nepal Compact entered into the implementation phase on Aug 30. The execution of the Nepal Compact will span a precise five-year duration from its initiation, at which point the responsibility for the projects will shift to Nepal. Once this five-year period concludes, the funding from the MCC for the execution of the MCC Compact initiatives will cease.

Initially, the Nepal Compact was supposed to enter into the implementation stage on 30 June 2020. However, the delay in the ratification of the compact by Nepal’s Parliament amid a controversy threw the US assistance into uncertainty. The Nepal Compact finally moved ahead after the parliament endorsed it in Feb 2022. 

Price quoted by bidders