Despite an existing memorandum of understanding with France on setting up a state-of-the-art security printing facility in Nepal, a competing bid from Germany has placed the government in a fix, just as Prime Minister KP Sharma Oli prepares to visit France on Saturday.

Both France and Germany’s proposals will cost Nepal Rs32 billion, but their funding modalities are different. France has proposed a mixed model of a soft loan of 100 million euros along with technology transfer while Germany has offered a complete soft loan of 260 million euros at 2 percent interest to build the printing facility at an information and communication park in Banepa, Kavre.

In May, Nepal and France had signed two separate Memorandums of Understanding—one of which concerns the security printing facility with French assistance—in Paris, during the official visit of Information and Communication Minister Gokul Prasad Baskota.

The other MoU signed in May regarded the operation and management of Nepal’s own satellite in an orbital slot provided by the International Telecommunications Union. The two deals with France were significant because they were supposed to mark the 70^th year of diplomatic relations between the two countries.

Two top government officials confirmed that a German firm had proposed building the security printing facility. Last year, a similar deal with the German firm Bundesdruckerei and its holding company Veridos fell through.

“I can confirm that we have received a proposal from Germany,” said Bikal Poudel, head of the security printing division at the Ministry of Information and Communication Technology.

Every year, Nepal loses nearly Rs 5 billion on security printing, prompting the government to seek the establishment of a domestic printing facility. Nepal and France had agreed to continue to hold negotiations on a funding modality and technical details before Oli’s trip to France. But the German proposal has thrown a spanner in the works and the anticipated deal with France is now in limbo, multiple government sources told the Post.

After signing the MoU with France, the ministry has started formulating the required laws to set up the printing press as well as procuring related logistics. An expert team had been formed, a detailed project report of the architecture at Banepa’s IT park had been prepared, and a Rs 650 million budget allocated to carry out the logistical and other preparations.  

The French government is expected to extend a soft loan of more than Rs 50 billion to set up the printing facility and to install Nepal’s satellite. But there are concerns from some sections that the soft loans offered by both countries overshoot the project and that the interest rate is also high.

“Nepal takes a soft loan at upto one percent or less with major donors like the World Bank and the Asian Development Bank,” said a senior official at the Information Ministry.

Foreign Minister Pradeep Gyawali confirmed to the Post that both deals have yet to be finalised so details are forthcoming.

“There have been no significant developments in negotiations with the French,” said Gyawali. “The concerned ministry [Ministry of Information and Communication] is working on the terms, delivery time, phase and interest rate.”

Government officials are currently weighing both proposals, said officials who have been closely following the developments.

Diplomatic sources told the Post that a team from Groupe Imprimerie nationale, a French government undertaking, was in town last week to hold negotiations with the Communication Ministry over the printing facility. A deal, however, wasn’t finalised. The French company had offered a deal similar to the one that Germany is proposing. But now that the deal fell through, none of the representatives from the Ministry of Communication and the National Security Printing Division are the part of prime minister’s Europe delegation.

Prime Minister Oli’s a week-long visit to Europe, which begins on Saturday, was supposed to have finalised the deal with France, where he will go after stopping in Geneva, Switzerland and in Oxford, England.

While negotiations with the French side are ongoing, there has been no agreement on the terms and conditions of the soft loan and it is unlikely that a deal will be reached with France during Oli’s Europe sojourn, said officials privy to the development.

The security printing division has estimated that it will require over Rs 32 billion to set up a dedicated printing press to handle the printing of several high-end documents like passports, banknotes, stamps, identity cards, visas, and driving licences.