Finance Minister Ram Sharan Mahat said on Friday that the cost estimate of the proposed regional international airport in Pokhara was “unrealistic”, and told the concerned ministry to proceed with the project by calculating a reasonable outlay.

Mahat added that the scheme’s estimated cost was “outrageous” compared to the regional international airport being constructed in Bhairahawa.

Pokhara’s much-talked-about airport project has been on hold since July 2012 after the lowest bidder China CAMC Engineering Co quoted a price of US$ 305 million which was 85 percent higher than the government-estimated cost. The government had expected the project to cost around US$ 166 million.

Subsequently, in January 2013, China CAMC wrote to the Civil Aviation Ministry expressing its willingness to build the project at the government-estimated cost.

Things became more complicated after China Airport Construction Company, a consultant appointed by China CAMC, submitted another study report to the Civil Aviation Authority of Nepal (Caan) which quoted an estimated price of US$ 264 million (excluding 16 percent price escalation cost and 13 percent VAT). After including the price escalation cost as per the study, the estimated outlay would come to around US$ 300 million, nearly equal to the original cost quoted by China CAMC.

So a three-member independent panel was formed to calculate the cost again, and it came up with the figure of US$ 220. Tourism Ministry officials said that a project proposal with the latest estimated cost was sent to the Cabinet which put it in deep freeze. On Friday, during a priority project review meeting, Minister Mahat asked the concerned officials why the Pokhara airport’s price tag was more than three times higher than the cost of the regional international airport in Bhairahawa.

Purna Chandra Bhattarai, joint secretary of the Civil Aviation Ministry, said, “We have also

realized that it is an ‘unnatural cost’ and have taken the issue

seriously.”  

The government had planned to borrow around US$ 145 million in soft loans from the Export-Import Bank of China to fund the project.

A detailed study for the airport project, conducted by the government in association with the Japan International Cooperation Agency in 1989, had proposed a runway 2,500 m long and 50 m wide, a terminal and a cargo building. The construction of the airport, expected to be completed in four years, was estimated to cost US$ 39.6 million at that time.

The project has been in limbo since 1975 when the government acquired more than 3,106 ropanis of land to build it. The government has earmarked Rs 1 billion for additional land acquisition. A fresh study has shown that another 500 ropanis would be required for the project.

Meanwhile, amid ongoing uncertainty over the development of the Kathmandu-Tarai Fast Track road, Minister Mahat said that if the project failed to attract investors under the Built-Operate-Transfer (BOT) modality, the government should build it with its own resources. “The project can be developed on cost-sharing benefit with donor agencies too,” he added. Mahat directed the ministry concerned to talk with any donor agency willing to fund the project. “If not, we should mobilize our own resources as it is a most-needed project.” He added that building both the proposed Fast Track and Kathmandu-Hetauda Tunnel Highway was not viable as they would be linking the same destinations.

Mahat also asked the Ministry of Physical Infrastructure and Transport to focus on Bailey bridges in rural areas as they were more cost-effective compared to concrete structures. “The government can save up to 50 percent if Bailey bridges are built in rural areas.”

He also directed the Ministry of Physical Infrastructure not to waste time on small projects costing less than Rs 500,000 and transfer such tasks to the district development committees.