Public Private Partnership
The newly elected Constituent Assembly of Nepal has expressed a commitment to developing infrastructure through private participation. Some of the projects under consideration for possible private participation include “Fast-Track” North –South Corridor linking Kathmandu with Terai, an east-west rail corridor in Terai, and two north-south corridors linking China with India.
However, with the notable exception of the Fast-Track project, all the above projects are yet to be clearly defined or examined. In 2008, the Asian Development Bank (ADB) completed a feasibility study of the Fast-Track project, a 76 km corridor with an estimated cost of $500-900 million. When completed this project is expected to reduce the journey time by 4 hours. The study included financial and economic evaluation for a preferred alignment and highlighted a number of key issues and project risks including: technical risks relating to project design in unstable geological conditions, land acquisition issues, lack of institutional structure for managing contractual arrangements, financial risks relating to costs and toll rates and overall political risk.
The Government of Nepal requested the World Bank assistance to help build capacity to decide on an appropriate structure for the transaction. ADB will also provide some assistance for further development of the project including preparation of bidding documents and environmental and social impact assessments.
Recognizing the need for quickly increase capacity to undertake more PPPs, the Government is currently engaged in discussions with donors to identify the level of technical assistance that might be needed.