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Kathmandu Sunday February 24, 2002 Falgun 12, 2058.
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NRB to invite ICC Bank for NBL
Post Report
KATHMANDU, Feb 23: In latest development of the
long running saga of the handover of management of Nepal Bank Limited (NBL), one of the
two largest ailing banks, the Nepal Rastra Bank is preparing to invite ICC Bank Ireland
for final negotiations.
According a source at the central bank, the
ICC team would be invited next week for the final takeover negotiations. Though
PriceWaterHouseCoopers has quoted the lowest price demanding US$ 4.95 million in its
financial bid, a serious inconsistency in its financial and technical bid disqualified it
to enter into the final take over negotiation. Three companies were vying for the
management takeover of NBL, the last one being Ernst and Young International.
Earlier, an evaluation team led by a top NRB
official was formed to evaluate the bids of the competing firms but the team could not
make any recommendation due internal squabbling. Another team of independent experts then
was formed, which put PriceWaterHouseCoopers in the number one position and recommended
inviting it for final negotiations.
However, the recommendation soon engulfed
into controversy after the World Bank, the principal lender to the whole project, raised
serious questions labelling the overall process as ‘a faulty evaluation
procedure’ and asked to re-evaluate the bids.
The latest decision to invite the Irish ICC
Bank was based on the re-evaluated recommendation of the team of independent experts,
informed the source. The ICC had demanded US$ 4.98 million for the management take-over
for the period of two years. Ernst and Young International, the third competitor, had
quoted US$ 8.69 million.
Earlier, a series of meetings were held
between the World Bank and the central bank to sort out the differences on the report of
the first evaluation of the team. The WB had even threatened to retract its financial
assistance commitment if its concern not addressed properly and the overall process is not
completed by February 15.
The WB had said that if the process is not
completed within the stipulated time, it would be difficult for it to get the final
approval from the bank’s board meeting slated for July.
However, the WB has clarified that the final
decision of issuing loan will depend upon the nature of agreement between the NRB and the
bid winner. "The WB has said that the project would be financed only if it is
convinced that the deal was good and fulfils all requirement of ‘procurement
guideline’ of the WB," said the source.
The board of the WB is scheduled to approve
the loan assistance worth Rs 830 million during its board meeting. All the expenditures
required before final approval are being made available through a WB fund for Project
Preparation Facility.
Earlier, the WB had pointed out the need to
add some clauses in the agreement to prevent an easy way out of the contract winner after
the completion of the contract period. According to an NRB source, World Bank had argued
if the contractor makes an easy way out just by recommending for liquidation of the bank,
there will be no use of investing Rs 830 million.
The latest development comes as a step ahead
in the government’s financial reform programme. Earlier, the central bank had signed
an agreement with Deloitte Touche Tomatsu, an international consultant, for the management
takeover of RBB, another ailing bank.
The company’s bid, with US$ 5.9 million
as a consultant fee, was the lowest among the bidders. The nearest rival Arthur &
Anderson had quoted US$ 8.1 million for the two-year management contract of RBB. |
