Bhutan’s Education City Project, an ambitious scheme incepted two years back is finally moving forward with the project bid further ratified by the Cabinet as per the Private Participation in Infrastructure (PPI) framework policy.
The bid has been awarded to the consortium bidders, Infinity Infotech Parks ltd and ILFS (Infrastructure Leasing & Financial Services limited).
Now, with the negotiations finally concluding, the contract agreement will be formulated and signed sometime within this month. The Detailed Project Report (DPR) study will immediately begin after the signing of the draft concessional agreement.
According to the DHI-INFRA, the government will be working on the ancillary infrastructure works such as access road, power and water supply, and telecommunication to the site.
The estimated cost that will be borne by the government will amount to about Nu 500mn.
The DHI-INFRA’s CEO, Kinga Tshering, said following the awarding of the works, the bidders are mandated to follow the primary obligations of carrying out the DPR in nine months.
He said the bidders should invest a minimum of Nu 1.00bn in Phase I, extending to five years and by Phase II, which is for 15 years, the amount should be Nu 15-20 bn. This is to be submitted and paid to the government or DHI-INFRA.
Other payments will be in the form of the performance security for Phase I.
The pay project development fee is to be Nu 30 mn.
Speaking on the bidders being able to execute such a complex project, Kinga Tshering, said the ILFS is a pioneer in PPP projects across India. He said, DHI-INFRA was happy that the consortium led by the ILFS brought forth a very credible and strong set of skills and financial capacity, along with the expertise to develop and execute the project.
Kinga Tshering added that for the Bhutan Education City project the performance requirements were very stringent and the project milestones were now being defined. “Any delay by the bidders on some critical milestone will cause a penalty of Nu 100,000.00 per day in accordance to the draft concession agreement.” Last January, the DHI had managed to get a consortium of bidders of ILFS and Infinity after which by the end of February 2012, the Empowered Group (EG) had approved the award to the consortium bidders.
The EG comprises of the works and human settlements minister, the economic affairs’ secretary, the cabinet secretariat’s secretary, the education secretary, the secretary of the GNH Commission, Thimphu Mayor, and the CEO of the DHI-INFRA.
Earlier, the EG had approved in principle the report submitted by the bid evaluation committee on the consortium bidders to take up the project. The evaluation was divided into two requirements: technical and financial qualifications.
The ILFS-Infinity consortium had met the requirements of having a minimum net worth of Nu 1bn, the actual consortium net worth being Nu 22bn. Added to these were experiences in the field of developing townships and education experiences with revenues over Nu 200mn per annum.
The consortium also offered a 2.1% revenue share to the government, an annual lease rent of Nu 10mn, and a project development fee of Nu 30mn in addition to making an investment of Nu 1bn in Phrase I.The Education City covering 1,000 acres of land at Wangsisina, Thimphu will be leased out for 90 years.
The Education City project had earlier become controversial as the sole bidder at one time was Infinity a company represented in Bhutan by the Prime Minister’s nephew and son. This is first project in Bhutan for which a separate bill has been put up in Parliament.