South Korean company ignores government’s call to negotiate payment

A South Korean company Landmark Worldwide (LMW) which prepared a detailed feasibility study of the proposed second international airport (SIA) in Nijgadh, Bara snubbed the government’s call to come and hold a discussion with the tourism ministry about payment.

LMW was assigned the work to prepare the Detailed Feasibility Study (DFS) report in 2010. As per the agreement with LMW and government, the ministry needs to pay 350 million rupees for DFS report and it also stated that the government would give first priority to the company to build the airport.

As the agreement stated that the ministry had to tell the company whether or not it will be awarded a contract for building the report within three months of receiving the report and if it was denied  the government had to pay the South Korean firm Rs 350 million for the DFS report. However it has not been the case and the company has not received payment as it has already been six years of completion of the study.

Due to the delay in payment, the company asked the ministry to pay Rs 670 million, including interest rate and other fees.

The company had threatened to drag the ministry to the court for delaying payment earlier. So in the last week of December, Ministry of Culture, Tourism and Civil Aviation (MoCTCA) had provided the company 21 days to come into contact and negotiate the payment. However, the company has not replied to the ministry’s notice as the 21-day period expired last week.

The ministry had formed public auditing committee to provide the evidence and costs incurred in the preparation of the DFS report. The committee has also asked the South Korean firm to submit their documents and other evidence but the South Korean company had not submitted any of documents.

MoCTCA official agreed company was not paid on time but the demand of 670 million rupees was not justifiable he stated. The government has proposed to the South Korean firm to finalize the fee and penalty on the basis of mutual understanding and offered to pay Rs 400-450 million via Nepali agent.

The ministry is preparing to send a final warning letter to the company and if they do not respond then the ministry will be taking necessary decision as per the international practice.

Currently, the ministry has proposed two development modalities to the Ministry of Finance and National Planning Commission to prepare a preliminary report of the SIA project. The ministry has submitted Public Private Partnership (PPP) and Engineering, Procurement, Construction and Finance (EPFC) models for construction of the airport. This airport will be spread over 3,000 hectares land and will have the capacity to handle 15 million passengers annually.


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