Fast Track: Army approves blacklisted Indian firm

The Nepali Army has reportedly approved the participation of a blacklisted Indian firm in the bidding process for one of the packages of the Kathmandu-Tarai/Madhes Expressway, following a thorough review of its technical proposal.

KMC Construction Ltd, an Indian firm, is among the three companies shortlisted for the financial proposal stage after passing the technical proposal evaluation. Consequently, the army will proceed to award the contract based on the financial proposals submitted by these three companies. The other two companies that have qualified for the financial proposal stage are Poly Changda Engineering Co Ltd of China and RVNL-ABL Joint Venture, based on the assessment of their technical proposals.

Currently, the Kathmandu-Tarai/Madhes Fast Track Road Project is in the process of evaluating financial proposals for Package 8-B of the expressway, with an estimated project cost of approximately Rs 19bn. Despite the Chinese firm bidding over Rs 28bn for the package, RVNL-ABL Joint Venture bidding Rs 17bn, and KMC Construction Ltd bidding Rs 14bn, the project must be awarded to the lowest bidder in accordance with the Public Procurement Act and Regulations. Therefore, the blacklisted Indian firm is expected to secure the project.

It’s worth noting that the Insolvency and Bankruptcy Board of India has initiated the Corporate Insolvency Resolution Process for KMC Construction. Reportedly, KMC Construction secured a bid guarantee through Citizens Bank International Ltd of Nepal, as Indian banks declined to provide a bank guarantee due to the firm being blacklisted by Exim Bank.

The Nepali Army’s decision on the fast-track project has faced criticism. Responding to a 2019 query from the Department of Roads about the banking status of the Indian firm, the Indian Embassy recommended canceling the tender awarded to a joint venture between KMC and Tundi Construction of Kathmandu and opting for rebidding. Additionally, India’s National Highways and Infrastructure Development Corporation Ltd placed KMC Construction on the ‘negative list’ in 2021, and the Indian Enforcement Directorate is reportedly investigating the company.

Another Indian bidder, RVNL-ABL JV, brought attention to the project chief regarding the qualification of KMC Construction, labeling it as “highly irregular and a miscarriage of transparency and justice in an international bidding procedure.”