AfDB blacklists major Chinese construction companies

The Asian Development Bank (AfDB) blacklisted three major Chinese construction companies for violating integrity rules and banned them from participating in Nepal’s key airport infrastructure development project, multiple sources said. of the case.

The AfDB’s Anti-Corruption and Integrity Office threw the book on the three state-backed companies – China CMC engineering Company, Northwest Civil Aviation Airport Construction Group, and China Harbor Engineering Company – for various offenses.

Nearly two dozen companies had purchased tender documents to compete for the Rs10 billion Tribhuvan International Airport Ultimate Development Project in Kathmandu, but only four Chinese companies submitted them.

Among the four nominees are two of the companies blacklisted by the Manila-based multilateral finance agency: China CMC Engineering Company and a joint venture of Northwest Civil Aviation Airport Construction Group and China Harbor Engineering Company, a senior official at the Nepal Civil Aviation Authority. , the Post said.

China CMC Engineering Company, which is currently building Pokhara International Airport, was placed on the AfDB’s sanctions list in April 2022. The company was blacklisted in an AfDB-funded project in Pakistan.

China CMC Engineering won the contract for the construction of the Pokhara airport project in May 2014, and work began in July 2017. The government signed a low rate loan agreement of $ 215.96 million with the China EXIM Bank in March 2016 to finance the airport built on an engineering and construction contract. model.

The Northwest Civil Aviation Airport Construction Group, which is currently working on Gautam Buddha International Airport in Bhairahawa, has been put on an open sanctions list, meaning no release date. sanctions were not mentioned, the anonymous official said.

Northwest was blacklisted for submitting “fraudulent” documents in 2015 during the construction of the airport, the official said. The Nepal Civil Aviation Authority awarded the Rs 6.22 billion civil works component, the first package, to Northwest in November 2013.

China Harbor Engineering Company was on the sanctions list until 2023. The government of Bangladesh blacklisted China Harbor in 2018 for trying to bribe a roads secretary.

“These companies are blacklisted under the AfDB integrity directive and have been placed on the sanctions list for projects financed by the AfDB,” said the head of the Aviation Authority. Civilian of Nepal.

Sanctions, however, will not be applied to ongoing projects that companies are currently undertaking, officials said.

The other shortlisted Chinese companies are a joint venture of KDN Airport Engineering Co and China Civil Engineering Construction Corporation and China Overseas Engineering Group or COVEC, a subsidiary of China Railway Group.

With potential builders surrounded by controversy, the planned infrastructure development at Tribhuvan International Airport in Kathmandu was postponed.

As part of the ultimate development of Tribhuvan International Airport by 2028, AfDB is investing Rs 10 billion as part of the “Airport Capacity Building Sector Development Program”, which includes the extension of the track. parallel taxiing to runway 02 or on the Koteshwor side, and the construction of two aprons to move the Nepal Airlines and Nepal Army hangars to the west side of the runway.

“ADB wrote about the development to Nepal’s civil aviation body at the end of October and corresponded about it in November,” the official said. The AfDB and the Nepalese government signed a concessional loan of $ 150 million to improve the capacity of Tribhuvan International Airport and Gautam Buddha Airport in Nepal in December 2020.

“After the latest developments, the Nepal Civil Aviation Authority will seek permission from the AfDB to start the process of appointing a project developer from among the two remaining candidates according to its directive,” the official said. “After the AfDB sends a letter of no objection, the aviation body will nominate the lowest bidder. The project, which is expected to start by October 2021, will be delayed.

According to a public procurement expert who wished to remain anonymous, companies have only been blacklisted for projects financed by the AfDB.

“But if the AfDB informs the Nepalese government procurement monitoring office of their misconduct and how they were put on the sanctions list, it will be easy for Nepal to blacklist them as well. The project integrity rules are universal rules.

Under Nepalese public procurement laws, at least three companies are required to participate in the tender. But the aviation authority said AfDB rules state that two companies may be eligible in a bidding process.

Nepal plans to upgrade Kathmandu Airport, which is currently the only international airport.

ADB documents indicate that taking into account the infrastructure planned for final development, the maximum capacity of the runways at Tribhuvan International Airport will be able to accommodate 42 aircraft movements per hour in mixed mode on runway 02, allowing 187,000 movements. planes per year.

To enable the improvement of runway capacity and create space for additional international aprons, the Airport Capacity Improvement Sector Development Program has considered extending the taxiway and move the hangars of Nepal Airlines and the Nepalese army.

The construction and relocation of the two hangars will cost $ 75 million while $ 65 million has been estimated for the construction of a dedicated domestic apron.

As there is no taxiway on the southern part of the runway, planes must occupy the runway for an additional 2-3 minutes for take-off and landing, especially during peak hours. The number of parking spaces on the aprons (international: 11 and domestic: 17) is not sufficient to meet the demand for parking during peak hours, resulting in unnecessary waiting time for allocation places, says the document.

Combined with limited airspace in the Kathmandu Valley, insufficient capacity of airside facilities forces planes to stand by in the sky, causing frequent flight delays. For city-side facilities, the current international terminal handled 4.3 million passengers in 2018, exceeding its annual capacity of 3.2 million.

Heavy congestion and a lower quality of services are observed at peak hours; the international terminal handled more than 2,200 passengers per hour, around 70% more than its hourly capacity of 1,350. The number of international passengers is expected to increase further to 6.1 million by 2028.

The Civil Aviation Authority has said it will start construction of a new international terminal after relocating hangars and national aprons to clear the planned construction site which will require funding of around $ 400 million. dollars.

In April 2019, Nepal submitted a request to the ADB to finance the construction of the new international terminal. The AfDB said the new project was being prepared as a separate project, for review in 2021 or later.

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