KATHMANDU, DEC 24 - 2012
China Construction Bank, which has given a bank guarantee to the ex-contractor for Melamchi Water Supply Project, has finally responded to Nepali counter guarantor banks assuring them it was ready to release guaranteed amount as per the international banking norms.
The Chinese Bank has also clarified that it stopped releasing the guarantee amount due to stay order of a local court. After the termination of contract with China Railway 15 Bureau Group for the tunnel construction, the project has been seeking release of the bank guarantee amount from local banks that gave counter guarantee.
Himalayan Bank Limited (HBL) and Bank of Kathmandu (BoK) had provided the Chinese bank a performance security of $6.62 million and guarantee for advance payment of $6.62 million and 1.4 million euros.
“Despite initial dillydallying to respond on the issue, the Chinese bank has finally responded to us last week promising to act as per the international banking norms,” said Ahoke Rana, chief executive officer of Himalayan Bank.
In a SWIFT message to the Nepali banks, the Chinese bank has stated it would fight the court battle against the contractor for the release of the bank guarantee amount.
BoK CEO Ajaya Shrestha said that the Chinese bank had sought Nepali bank’s cooperation in generating enough documents to ensure release of the bank guarantee amount. The Chinese Bank had earlier informed the Nepali banks about its inability to release the amount due to local court’s order. The Nepali banks then responded back, warning that failure to release the guarantee amount would put the China Construction Bank’s reputation at stake.
Chinese bank’s response has come at a time when both Nepal Rastra Bank and the government have stepped up their efforts to get the bank guarantee amount released. On Thursday, a high-level Financial Sector Coordination Committee headed by Finance Minister had decided to make a diplomatic effort to secure the release of the amount from the Chinese bank.
A team of Nepal Rastra Bank had also been to China recently to discuss on the issue with the Chinese central bank, among other things to enhance relations between the central banks of the two countries. The Chinese bank’s response has convinced Rana that the amount would be released. “Failure to release the amount may cost the Chinese companies dearly here as Nepali banks will be reluctant to give counter guarantee to Chinese banks,” said Rana, referring to the Nepal Bankers’ Association recent decision to adopt maximum caution, while giving counter guarantee to Chinese banks.
Krishna Prashad Acharya, director general of Melamchi Water Supply Development Board, the Melamchi project’s implementing agency, said that the Chinese bank was in “a damage control” mode amidst growing concerns about its role.
After the government terminated the tunnel construction contract with China Railway 15 Bureau Group, the Chinese company had filed a case in the local court asking for a stay order on the release of the money.
Source: The Kathmandu Post
China Construction Bank, which has given a bank guarantee to the ex-contractor for Melamchi Water Supply Project, has finally responded to Nepali counter guarantor banks assuring them it was ready to release guaranteed amount as per the international banking norms.
The Chinese Bank has also clarified that it stopped releasing the guarantee amount due to stay order of a local court. After the termination of contract with China Railway 15 Bureau Group for the tunnel construction, the project has been seeking release of the bank guarantee amount from local banks that gave counter guarantee.
Himalayan Bank Limited (HBL) and Bank of Kathmandu (BoK) had provided the Chinese bank a performance security of $6.62 million and guarantee for advance payment of $6.62 million and 1.4 million euros.
“Despite initial dillydallying to respond on the issue, the Chinese bank has finally responded to us last week promising to act as per the international banking norms,” said Ahoke Rana, chief executive officer of Himalayan Bank.
In a SWIFT message to the Nepali banks, the Chinese bank has stated it would fight the court battle against the contractor for the release of the bank guarantee amount.
BoK CEO Ajaya Shrestha said that the Chinese bank had sought Nepali bank’s cooperation in generating enough documents to ensure release of the bank guarantee amount. The Chinese Bank had earlier informed the Nepali banks about its inability to release the amount due to local court’s order. The Nepali banks then responded back, warning that failure to release the guarantee amount would put the China Construction Bank’s reputation at stake.
Chinese bank’s response has come at a time when both Nepal Rastra Bank and the government have stepped up their efforts to get the bank guarantee amount released. On Thursday, a high-level Financial Sector Coordination Committee headed by Finance Minister had decided to make a diplomatic effort to secure the release of the amount from the Chinese bank.
A team of Nepal Rastra Bank had also been to China recently to discuss on the issue with the Chinese central bank, among other things to enhance relations between the central banks of the two countries. The Chinese bank’s response has convinced Rana that the amount would be released. “Failure to release the amount may cost the Chinese companies dearly here as Nepali banks will be reluctant to give counter guarantee to Chinese banks,” said Rana, referring to the Nepal Bankers’ Association recent decision to adopt maximum caution, while giving counter guarantee to Chinese banks.
Krishna Prashad Acharya, director general of Melamchi Water Supply Development Board, the Melamchi project’s implementing agency, said that the Chinese bank was in “a damage control” mode amidst growing concerns about its role.
After the government terminated the tunnel construction contract with China Railway 15 Bureau Group, the Chinese company had filed a case in the local court asking for a stay order on the release of the money.
Source: The Kathmandu Post
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