NEPAL: INFORMATION ON U.S. MISSION ASSISTANCE TO

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 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