Private Financing in Build and Operation of Infrastructures

The Regulations

On

Private Financing in Build and Operation of Infrastructures,

2064 (2007)

Date of Publication in Nepal Gazette

2064/06/03 (20 September 2007)

In exercise of the powers conferred by Section 49 of the Act on Private Financing in Build and Operation of Infrastructures, 2064 (2007), Government of Nepal has framed the following rules.

Chapter-1

Preliminary

1.Short title and commencement: (1) These rules may be citied as the "Regulation on Private Financing in Build and Operation of Infrastructures, 2064 (2007)".

(2)This Regulation shall commence at once.

2.Definitions:Unless the subject of the context otherwise requires, in this Regulation,-

(a)"Act" means the Act on Private Financing in Build and Operation of Infrastructures, 2064 (2007).

(b) "Evaluation committee" means the Expression of Interest and proposal evaluation committee formed pursuant to Rule 24.

Chapter-2

Provisions Relating to Project Approval

3.To maintain updated details of project:(1) The Ministry shall, on suggestion of the Committee, maintain updated details of the projects to be implemented pursuant to Section 3 of the Act.

(2)While updating the details pursuant to sub-rule (1), the Ministry may also specify the priority of projects, as per necessity.

4.To cause the project to be approved: If the Ministry deems appropriate to implement any project, it shall make a submission, setting out the following details, to Government of Nepal for the approval thereof.

(a)Name of the project;

(b)Matter as to which of the modes mentioned in Section 3 of the Act is to be applied to implement the project;

(c)Whether or not the project is included in the approved policy, annual programme or current five-year plan of Government of Nepal;

(d)Whether or not the project can be implemented by Government of Nepal; if not, the reasons thereof;

(e)Grounds showing possibility and appropriateness to implement the project on private financing;

(f)Whether or not any kind of assistance is sought from a donor agency for the implementation of project; if sought, whether or not such an assistance is received;

(g)Whether or not the project has been surveyed; and if surveyed, the estimated cost thereof;

(h)If any project, which is already built or is in under construction, is to be operated on private financing; the existing situation thereof;

(i)If more than one project of the similar nature are to be implemented, the priority thereof;

(j)Other necessary matters.

5. To approve project: (1) If the project, received pursuant to Rule 4, deems possible and appropriate to implement on private financing, Government of Nepal shall approve such a project to do so.

(2)If it is, while making approval pursuant to Sub-rule (1), deemed appropriate to implement more than one project of the same nature under any Ministry, Government of Nepal shall also specify the priority of such projects.

(3)Prior to giving approval to implement the project pursuant to Sub-rule (1), Government of Nepal may, if it deems necessary, inquire the Ministry about additional matters pertaining to the project.

(4)Government of Nepal shall, if it deems necessary to study additional matters pertaining to any project, correspond the same to the concerned Ministry.

(5)If the project is approved by Government of Nepal pursuant to Sub-rule (1), the Ministry shall publish a notice thereof in at least two leading newspapers to be published in Nepal for information to general public and such a notice should also, to the extent possible, be put in the website.

Chapter-3

Provisions Relating to Expression of Interest and Proposal

6. Requiring the documents relating to Expression of Interest and proposal to be prepared:Before inviting the Expression of Interest and proposal, the Ministry shall prepare the documents on the following matters:

(a)Details of the project;

(b)Concept on the minimum design of the project, operational standards and specifications;

(c)Short details of the survey or any other kind of study thereof, if any;

(d)Detailed grounds for the evaluation of the Expressions of Interest and proposals;

(e)Instructions to be given to the person submitting the Expression of Interest and proposal;

(f)Main terms of the agreement to be made with the proponent for the implementation of the project,

(h) Other necessary matters.

7.To invite an Expression of Interest: For the implementation of the project approved pursuant to Rule 5, the Ministry shall invite an Expression of Interest by publishing a notice, setting out therein the following matters, in a leading newspaper within Nepal, and such a notice should, to the extent possible, also be put in the website.

(a)Short details of the project;

(b)Matter as to which of the modes mentioned in Section 3 of the Act is to be applied to implement the project;

(c)Qualifications of the person submitting the Expression of Interest;

(d)The Ministry where the documents relating to the Expression of Interest may be purchased from and the fees to be charged therefor;

(e) The manner, deadline, time and place for the submission of the Expression of Interest;

(f) The date, time and place for the opening of Expression of Interest;

(g)The grounds for selecting the Expression of Interest;

(h)Expected date for making decision on the Expression of Interest;

(i) Other necessary matters.

8.Purchasing fees for Expression of Interest documents: Twenty thousand rupees shall be charged as fees while purchasing the Expression of Interest documents.

9.To submit Expression of Interest: (1) A person who intends to submit the Expression of Interest shall purchase the Expression of Interest documents bearing the seal of the Ministry and the signature of the concerned official and submit to the Ministry a sealed Expression of Interest, by filling up therein the details as mentioned in the documents and also setting out, inter alia, the matters mentioned in Sub-section (2) of Section 4 of the Act.

(2)If the Expression of Interest is received pursuant to Sub-rule (1), the Ministry shall register the Expression of Interest and give a receipt thereof to the person submitting the Expression of Interest.

10.Selection of the persons submitting Expressions of Interest: (1) While selecting the person submitting the Expression of Interest by the Ministry, selection shall be made on the grounds of the technical and financial capacity and experience of such a person. For that purpose, a total of 100 marks shall be taken as the full marks, which shall be divided on the following basis:

(a)For the technical capacity40 marks

(b)For the financial capacity40 marks

(c)For the experience20 marks

(2)The technical and financial capacity and the experience as referred to in Sub-rule (1) shall be evaluated as follows:

(a) While evaluating the technical capacity of the person submitting the Expression of Interest, whether any machine, equipment or human resource is required for the implementation of that project, if so, on the grounds whether or nor that person has such a machine, equipment or human resource;

(b)While evaluating the financial capacity of the person submitting the Expression of Interest, on the grounds of such financial capacity of that person as required for the survey, operation, repair and maintenance of the project, and in the case of company submitting the Expression of Interest, on the grounds as to how much amount is proposed to be borne from the assets of the company for the project or how much amount and which process is proposed to borrow a loan, as the case may be.

(c)While evaluating the experience of the person submitting the Expression of Interest, on the grounds as to whether or not that person has experience in the construction of infrastructure, build and operation of infrastructure on private financing or in the implementation of any other similar nature of project for which the Expression of Interest has been invited for the implementation thereof.

(3)From the evaluation made pursuant to Sub-rule (2), the persons submitting the Expressions of Interest securing at least sixty marks shall be selected. If, on such evaluation, at least two persons securing sixty marks cannot be selected, the other persons who secure at least fifty marks shall also be selected.

11.To re-invite Expression of Interest: Upon invitation of Expression of Interest pursuant to Rule 7, if only one Expression of Interest is received or if at least two persons submitting the Expressions of Interest cannot be selected from the evaluation made pursuant to Rule 10, as the case may be, the Ministry shall re-invite the Expression of Interest, after fulfilling the procedures as referred to in Rule 7.

(2) While inviting the Expression of Interest pursuant to Sub-rule (1), the person selected pursuant to Sub-rule (3) of Rule 10 shall be retained, if s/he so desires.

12.To prepare a short list: (1) After selecting the persons submitting the Expressions of Interest pursuant to Rule 10, the Ministry shall prepare a short list thereof.

(2) No later than seven days after the preparation of the short list pursuant to Sub-rule (1), the Ministry shall give written information thereof to persons included in that list.

13.To invite proposal:After preparing the short list pursuant to Rule 12, the Ministry shall invite proposals, setting out therein the following matters, from the persons included in that list.

(a)The Ministry where the proposal documents may be purchased from and the fees therefor;

(b)The manner, deadline, time and place for the submission of the proposal;

(c)The date, time and place for the opening of the proposal;

(d)The grounds for the evaluation of the proposal;

(e)The expected date for making decision on the proposal;

(f)Other necessary matters.

14.Purchasing fees for proposal related documents: (1) Twenty thousand rupees shall be charged as fees while purchasing the proposal documents.

(2) Notwithstanding anything contained in Sub-rule (1), the Ministry shall, if the proponent asks for a duplicate copy of the study report made on the project, provide the same to the proponent with free of cost.

15. To submit proposal: (1) A person desirous to submit a proposal shall purchase the proposal documents bearing the seal of the Ministry and the signature of the concerned official and submit, by filling up therein the details as mentioned in the documents, to the Ministry, the proposal in a sealed envelope containing the technical and financial proposals in two separate sealed envelopes.

(2)The proponent shall set out the matters mentioned in Sub-section (2) of Section 6 of the Act in the technical proposal as referred to in Sub-rule (1).

(3) The proponent shall set out the following matters in the financial proposal as referred to in Sub-rule (1):

(a)The proposed fees to be collected while implementing the project and other necessary matters pertaining thereto;

(b)If any kind of royalty or amount is to be paid to Government of Nepal while implementing the project, the rate of such a royalty and installment figure of the amount to be paid;

(c)Proposed term of the agreement.

(4) While submitting the financial proposal pursuant to Sub-rule (3), the proponent may submit more than one alternative proposals in respect of Clauses (a), (b) and (c) of that Sub-rule.

(5)After submission of proposal pursuant to Sub-rule (1), the Ministry shall register the proposal and give a receipt thereof to the person submitting the proposal

16.Provisions relating to invitation of proposal for a project already surveyed: In order to implement a project already surveyed pursuant to Sub-section (3) of Section 6 of the Act, the Ministry may invite a proposal directly from the persons included in the list as referred to in Rule 12. While so inviting the proposal or submitting the same, the provisions and procedures as referred to in Rule 13, 14 and 15 should be followed.

17.To select a proposal:(1) After receipt of the proposals pursuant to Rule 15 or 16, the Ministry shall first open the technical proposals and evaluate them on the following grounds:

(a)The financial status of the proponent;

(b)The technical capacity and experience of the proponent;

(c)The efficiency and experience of the proposed human resources;

(d)The organizational provision, implementation modality and schedule of works on the implementation of the project;

(e)The engineering design of the project;

(f)The environmental study report of the project and measures to be adopted to mitigate the possible adverse impacts on the environment;

(g)The financial source for the implementation of the project and plan pertaining thereto;

(h)The other alternative proposals submitted to make the project more viable and useful.

(2) While evaluating the technical proposals pursuant to Sub-rule (1), the Ministry shall select the proposals of the proponents securing at least sixty percent marks. The Ministry shall, if at least two proposals not securing sixty percent marks cannot be selected from the selection, approve technical proposals of other proponents securing at least fifty marks.

(3) After approving the technical proposal pursuant to Sub-rule (2), the Ministry shall specify the date, time and place for opening the financial proposal and give a notice thereof to the proponents whose technical proposals are approved.

(4) The Ministry shall, if the technical proposal is not approved pursuant to Sub-rule (2), notify the person submitting such a proposal to take the financial proposal back. The Ministry shall give the financial proposal to the concerned person if that person has come to take such a proposal back within thirty days from the date so notified.

(5) The financial proposal shall be evaluated on the following grounds:

(a)Proposed fees to be received from users while implementing the project;

(b)Proposed royalty or other types of amounts to be paid to Government of Nepal and the time and modality for the payment of such amounts;

(c)Proposed duration of agreement.

(6) After evaluating the financial proposal pursuant to Sub-rule (5), the Ministry shall select such proposal, which deems to be most appropriate.

(7) While evaluating the financial proposal pursuant to Sub-rule (5), the Ministry shall, if more than one proposal appears to be appropriate, specify the priority thereof and select alternative proposal.

(8) No later than seven days after the selection of the proposal pursuant to Sub-rule (6) or (7), the Ministry shall give information thereof to the concerned proponent.

18.Project may be implemented by alternative proponent: After selection of the proposal pursuant to Rule 17, if the concerned proponent declines to furnish the amount or bid bond within the time limit referred to in Rule 20 or if the proposal is void pursuant to Section 12 of the Act or if the agreement concluded with the proponent is void pursuant to Sub-section (2) of Section 13 of the Act, the Ministry may cause the project to be implemented by the alternative proponent; If the project is to be so implemented, information thereof shall be given to the concerned alternative proponent.

19. Provisions relating to implementation of project by negotiations: (1) A person desirous to implement a project by negotiations shall submit to the Ministry an application setting out the following matters:

(a) The name and address of the applicant;

(b) If the applicant is a company, the name and address of such a company, year of its incorporation, organizational structure, ownership and main area of business;

(c) The name of the project intended to be implemented, modality and short details thereof;

(d) The details relating to the utility and feasibility of the project;

(e) The details relating to the financial and technical capacity and experience of the applicant to implement the project;

(f) The machine, equipment and human resource of the applicant to implement the project;

(g) The reasons for the implementation of the project by negotiations.

(2) The Ministry may, if it deems necessary on examination of the application received pursuant to Sub-rule (1), ask additional documents or details from the applicant.

(3) Upon examination of the application received pursuant to Sub-rule (1), if it deems that the proposed project appears to be useful and feasible and the applicant has the financial and technical capacity and experience to implement the project and that the project is suitable for being implemented by negotiation as referred to in Sub-section (3) of Section 9 of the Act, the Ministry shall, along with its opinion, forward the details with the received application to the Committee.

(4) The Committee shall examine the details along with the application received pursuant to Sub-rule (3) and send to the Ministry its opinion as to whether or not it is appropriate to implement that project by negotiations.

(5) If the opinion is received from the Committee to implement the project by negotiations pursuant to Sub-rule (4), the Ministry shall submit the project details to Government of Nepal for the approval of that project.

(6) Upon examination of the project details received pursuant to Sub-rule (5), if it deems to be reasonable to implement the proposed project by negotiations, Government of Nepal shall give approval to implement that project by negotiations.

(7) If Government of Nepal gives approval to implement the project by negotiations pursuant to Sub-rule (6), the Ministry may specify the time limit and invite a financial proposal along with the details from the applicant pursuant to Sub-section (2) of Section 6 of the Act; and the applicant shall submit within the specified time limit the details and the financial proposal to the Ministry as referred to in Sub-rule (3) of Rule 15.

(8) Upon examination of the financial proposal along with the details received pursuant to Sub-rule (7), if it deems reasonable to give permission to the applicant to implement the project, the Ministry shall make decision to that effect and give the information thereof to the concerned applicant.

20.To furnish amount or bid bond:(1) No later than fifteen days of the selection of the proposal pursuant to Rule 17 or of the receipt of information on the implementation of the project pursuant to Rule 18 or Sub-rule (8) of Rule 19, the proponent shall furnish with the Ministry the amount to be set by 0.1 percent of the cost estimate of the project and such amount as specified by the Ministry in the case of a project of which cost estimate has not been made or a security equivalent thereto or a bid bond (security) issued by a commercial bank, as the case may be.

(2) The security furnished pursuant to Sub-rule (1) shall be forfeited in the following circumstances:

(a) Where the proposal has been submitted by a joint venture, any person gives information to the Ministry that s/he has detached from such a venture and the remaining persons alone do not seem able to implement the project or they fail to include another person having the same qualifications in that venture;

(b) Where the memorandum of understanding or preliminary project agreement has been concluded pursuant to Section 10 of the Act, the proponent does any act in contravention of the memorandum of understanding or preliminary project agreement;