Nepal Purbadhar Bikas Company (NPBC), which is building the high-priority Kathmandu-Kulekh-ani-Heta-uda Tunnel Highway, has cancelled the Rs 1 million ceiling set for institutional investors as it goes into fund-raising mode with the deadline for the financial closure approaching. 

The company expects to attract greater investments from prospective local and international financiers with the cap off as it has been having a hard time finding money for the Rs 35-billion project. 

Company officials said that they had collected Rs 150 million from its promoters so far. As per the agreement signed with the government in May last year, Nepal Purbadhar has to complete the financial closure by May 2014. Financial closure means making sure that there is adequate funds to go ahead with the project.

The company has also requested the Securities Board of Nepal (Sebon) to amend the Securities Registration and Issue Regulation to allow its promoters to trade their shares whenever they wish so that potential investors will be attracted to sink money in the project.

As per the existing regulation, promoters are not allowed to sell their shares for three years from the date of allotment of public shares. Nepal Purbadhar has also asked the stock market regulator to make a provision allowing its promoter shares to be listed on Nepse before it has made its initial public offering (IPO). Currently, shares are listed on Nepse only after the companies have conducted their IPO.

Meanwhile, chairman of Nepal Purbadhar Kush Kumar Joshi said that its partner merchant bankers were facing difficulties 

in carrying out promotional 

activities nationally and internationally to attract investors due 

to the constraints in the Sebon regulation 

The company has joined hands with five merchant banks—Citizen Investment Trust, Nabil Investment Banking, Vibor Capital, NMB Capital and NCM Capital—to raise capital from local and international markets to build the tunnel highway. 

“We will complete the financial closure on time as we still have more than three months left,” said Joshi. He added that they would give the first priority to local investors. “We also have the option of bringing “bulk investors” as project financiers from outside the country in case we fail to collect adequate resources from local investors,” he added.   

Originally, the project had targeted collecting Rs 10,000 each from the local people, Rs 100,000 each from promoters and Rs 1 million each from institutional investors. The company said that since the ceiling had been scrapped, interested private sector companies could invest as much as they desired. 

Nepal Purbadhar had planned to put together Rs 10.46 billion in share investments from promoters and the local people of Kathmandu, Makwanpur and Hetauda and around Rs 18 billion in debt financing. 

Similarly, it has been planning to make an IPO worth Rs 6.97 billion. The District Development Committees of Makwanpur and Lalitpur and Makwanpur Municipality have agreed to invest Rs 10 million each as institutional investors.

The local village development committees of Makwanpur and Lalitpur districts are also investing Rs 1 million each, according to the company.

Meanwhile, the final design and drawings of the main infrastructure, namely roads, bridges and tunnels have to be completed by May this year. The proposed highway will have three tunnel passes at Chobhar in Kathmandu, Kulekhani and Bhainse in Makwanpur.

Nepal Purbadhar has not got its designs for the main infrastructure approved, but it has started construction of the access roads leading to the tunnel openings. 

The tunnel highway is being developed as a 4P initiative—private, people, public and partnership under Private Financing in Build and Operation of Infrastructures Act. The proposed highway will be 58 km long and link Kathmandu with Hetauda, an industrial and transportation hub in the south.