HBL and BoK get Rs 1.5 billion back from Chinese bank
By Republica
Published: August 23, 2022 07:30 PM

The Nepali banks have received the amount which they had kept as guarantee amount of Melamchi Water Supply Project

KATHMANDU, August 23: Himalayan Bank Limited (HBL) and Bank of Kathmandu (BoK) have got back their secured performance security and advance payment guarantee amounts from China Construction Bank (CCB). These banks maintained the guarantee amount for the construction of the Melamchi Water Supply Project (MWSP).

These Nepali banks received the amount after a Chinese High Court, three weeks ago, ruled in their favor, according to officials of HBL and BoK. The case was under purview at the Chinese court for the past one decade.

HBL and BoK fell in a financial logjam after the Chinese construction company - China Railway 15 Bureau Group Corporation and China Machinery Industry Group Corporation Inc Joint Venture - left the work midway, stalling the MWSP.

After the contract with the Chinese company was canceled, the company had secured its performance security and advance payment guarantee from the CCB while agreeing to the construction contract.

Nepal’s HBL and BoK were its counter guarantors. After the Chinese company left in the middle of the construction, their contract was canceled and USD 6.65 million as performance security and EUR 1.41 million as advance payment guarantee were confiscated from the two Nepali banks.

After the Chinese bank failed to reimburse the Nepali banks, the dispute went to a district court of China and then to the high court.

 

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