US embassy cable - 03KATHMANDU313

UNCLAS SECTION 01 OF 02 KATHMANDU 000313 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR SA/INS AND EC/CBA/MAGARCIA 
NEW DELHI FOR COMMERCIAL SERVICE 
 
E.O. 12958: N/A 
TAGS: BEXP, BBSR, ETRD, EINV, NP, U.S-Nepali Relations 
SUBJECT: NEPAL: INFORMATION ON U.S. MISSION ASSISTANCE TO 
BUSINESSES 
 
REF: A. A. STATE 29441 
 
     B. B. 2002 KATHMANDU 2286 
     C. C. KATHMANDU 138 
 
 
1.  (U) This message contains business sensitive information; 
please handle accordingly. 
 
2.  (U) AmEmbassy Kathmandu welcomes the efforts of EB and H 
in highlighting Embassy initiatives to promote American 
business.  The mission submits the following four key efforts 
and successes, as requested in Ref A. 
 
A.  (SBU) American Life Insurance Company (ALICO), P.O. Box 
11590, Kamaladi, Kathmandu, Nepal, Phone: 977-1-425038, Fax: 
977-1-420948 
-- American International Group (AIG), Inc. 
-- Value:  U.S. investment of USD 680,000 in working capital. 
-- Content: Not applicable. 
-- Efforts:  Since 1998, when ALICO applied to the Insurance 
Board for an operating license, the Embassy has met 
repeatedly with Government of Nepal (GoN) officials on its 
behalf.  After years of delay, the Embassy assisted in 
obtaining a Supreme Court decision to allow ALICO entry into 
Nepal's insurance market.  Since then, the Embassy has 
continued to support the company in expanding its line of 
insurance products and assisting ALICO's expatriate employees 
in receiving the appropriate business visas.  In FY 2003, the 
Embassy intervened with the Insurance Board to address delays 
in licensing ALICO's product line and secured a long-term 
business visa from the Department of Immigration for ALICO's 
country director. 
 
B.  (SBU) Bhote Koshi Power Company (BKPC) Pvt., LTD, P.O. 
Box 15135, Tahachal, Kathmandu, Nepal, Phone: 977-1-270027, 
Fax: 977-1-273516 
-- Parent Company:  Panda Energy International, Inc., 4100 
Spring Valley, Suite 1001, Dallas, TX 75244, U.S.A., Phone: 
972-980-7159, Fax: 972-980-6815 
-- Value:  Export of services valued at USD 21 million by TDA 
estimate.  Total investment of USD 94 million with USD 23.2 
million in American equity and operations providing estimated 
gross sales of USD 17 million per year. 
-- Content:  Little to no U.S. content.  The project was 
built with U.S. engineering and financial services. 
-- Efforts: The USG provided $500,000 in TDA funding for a 
feasibility study in 1994 and 1995 (highlighted by TDA as a 
success story).  The Embassy supported the licensing and 
operation of the facility with regular meetings with GoN 
officials from 1995 to 2000.  In 2002 and 2003, the Embassy 
and USAID-Nepal supported BKPC in two contractual disputes 
with the GoN.  First, the GoN levied higher Customs duties on 
replacement parts than agreed under contract. The Embassy, by 
intervening with the Ministry of Finance, prevailed upon the 
GoN to recognize the terms of the contract (Ref B).  Second, 
USAID-Nepal and the Embassy worked together to address over 
USD 1.5 million in payment deductions by the GoN.  The GoN 
cited a number of justifications for these extra-contractural 
deductions, which may force BKPC to pursue expensive 
international arbitration.  The intervention of USAID-Nepal 
and the Embassy with the GoN's Ministry of Finance, the 
Ministry of Water Resources, and the Department of Energy 
Development are assisting BKPC to resolve the payment dispute 
at the lowest possible level in order to avoid the expense of 
arbitration. 
 
C.  (SBU) Bottlers Nepal LTD/Bottlers Nepal (Terai) LTD, P.O. 
Box 2253, B.I.D. Balaju, Kathmandu, Nepal, Phone: 
977-1-350602, Fax: 977-1-350227 
-- The Coca-Cola Company, P.O. Box 1734, Atlanta, GA 30301, 
U.S.A., Phone: 404-676-2610, Fax: 404676-8086 
-- Value:  Original investment of USD 15 million, current 
market estimated value of investment stands at USD 30 million. 
-- Content:  Only flavoring syrup and some mixing equipment 
was purchased from the U.S. 
-- Efforts:  In 2002, Bottlers Nepal LTD, the makers of 
Coca-Cola in Nepal, were struck by Maoist bombs on three 
occassions and received repeated extortion demands.  In 2003, 
the Embassy and its Regional Security Officer provided 
continuing support to Bottlers Nepal LTD by meeting with 
appropriate GoN security officials, requesting increased 
police protection at the company's two plants, and 
coordinating with The Coca-Cola Company's corporate security 
office in Atlanta (Ref C). 
 
D.  (SBU) Raytheon Aircraft Credit Corporation (RACC), P.O. 
Box 85, Wichita Kansas, 67201-0085, U.S.A., Phone: 
316-676-7540, Fax: 316-676-4636 
-- Value:  Estimated at USD 1.8 million/year in aircraft 
leases, the aircraft are valued at USD 1.1 million to USD 1.3 
million each. 
-- Content:  The aircraft on lease are Beech 1900C Airliners, 
assembled in Kansas. 
-- Efforts:  In FY 2003, RACC representatives approached the 
Embassy requesting assistance in grounding and returning two 
1900C airliners from bankrupt Mountain Air Pvt. LTD. of 
Nepal.  The airlines had stopped lease and engine maintenance 
payments in violation of their contract and had built up 
landing, parking, and taxi fees with the Civil Aviation 
Authority of Nepal (CAAN) in excess of USD 200,000.  RACC had 
requested assistance from CAAN, but with little result.  The 
Embassy held meetings with the Director General of CAAN, 
convincing him that his agency had both the authority and 
means to act in returning the aircraft to the owners.  The 
first aircraft has now been returned, while the second is 
back in RACC's hands and awaiting repair parts for its 
return.  RACC has now approached the Embassy about the 
impending return of two additional 1900C airliners from 
struggling Necon Air Pvt. LTD.  The Embassy will again be 
required to support RACC with the CAAN to ensure the 
aircraft, parts, and logs are returned. 
MALINOWSKI