The document discusses methods for analyzing the costs and revenue generation of infrastructure projects such as shopping malls. It identifies key factors that determine initial project costs, including the project specification, location, procurement method, site characteristics, whether it is new construction or improvements, and tax liabilities. Revenue is generated through leasing land and facilities to businesses through lease agreements that can last 30 years or more. The main sources of funding discussed are land-based financing methods like leasing or selling public land, land pooling, land development fees, property taxes, and capital gains taxes.

1. Paper by:
Amit Pokharel
M.Sc. Urban design and Conservation(MSC06908)
Khwopa Engineering College
Bhaktapur
(Statuary Publication: This document is the sole publication of the Author. Any misuse and the
mis-interpretation of this document by anyone, author does not take the responsibility for the
same.)
Identify the project cost together with maintainence and operation cost of any
newly built complex (such as World Trade Centre, City mall, Kathmandu mall or
any other complex) as well as the revenue generation. Also, identify the sources
of funding for construction, revenue generation at present and condition of lease
(if any) before forecasting the project return?
Abstract:
Investment decisions are at the core of any development strategy. Economic growth and welfare
depends on productive capital, infrastructure, human capital, knowledge, total factor productivity
and the quality of institutions. All of these development ingredients imply - to some extent -
taking the hard decision to sink economic resources now, in the hope of future benefits, betting
on the distant and uncertain future horizon. The economic returns from investing in trade
development or shopping mall infrastructures or in roads will be enjoyed by society after a
relatively short time span following project completion. The source of income is by the revenue
generation which can be gained by leasing and by giving rent to the business sectors. Investing in
trade, business and development is helpful for the cities economy.
Investing in primary education means betting on the future generation and involves a period of
over twenty years before getting a result in terms of increased human capital. Preserving our
environment may require decision-makers to look into the very long term, as the current climate
change debate shows. Every time an investment decision has to be taken, one form or another of
weighting costs against benefits is involved, and some form of calculation over time is needed to
compare the former with the latter when they accrue in different years. Private companies and
the public sector at national, regional or local level make these calculations every day. Gradually,
a consensus has emerged about the basic principles of how to compare costs and benefits for
investment appraisal.

2. The paper reviews models and practices in financing the development and operation of the urban
infrastructure in developing countries and sheds lights on the Kathmandu challenges and
opportunities with preliminary reform suggestions. The main findings include: (i) cities need
more resources to cope with urbanization; (ii) Revenue opportunities include income tax
surcharge, business tax, property and property transfer tax, and capital gain tax; but also
development fee or betterment tax to extract private benefits for financing infrastructure. (iii)
Diversifying infrastructure financing instruments by using ring-fenced project financing,
municipal enterprises, or public-private partnerships could expand the funds available for
infrastructure development. (iv) Debt financing in form of borrowing or bond issuance are
among the most immediate options for the Kathmandu valley cities. .
Key words: Investment, costs and benefits, revenue generation, lease, rent, Financing
1. Introduction
Rapid urbanization is the most substantial growth trend in the developing world in
today’s century. Rural urban migration and the inherent growth of the cities and particular
expansion of the larger cities are driven by socio-economic factors. Good plans for
developing the urban infrastructure include a vision and broad understanding of the needs
and priorities in both recurrent and capital spending, that can be translated into budgets.
Cities often formulate capital improvement plans with specific priority projects and
actions.
In this rapid urbanization, the pattern of urban growth in Nepal is quite astonishing in the
form of physical infrastructure development. The pattern of developing the land by
infrastructures is the commonest rule around the world, but in Nepal in today’s context
the pattern of development is on the LDO and BOT model. Lease development and
operate and Built operate and transfer is the succesful model in Nepal. There are many
structures newly built in the form of shopping mall, complexes and super structure for
trade, business and development. There are many such cases found in Kathmandu valley
that, public lands are given in lease for shopping complex, trade centres development and
other physical infrastructure development from the BOT model and is quite success in
Nepal. This is the basic idea of Build-Operate-Transfer (BOT).
The local budget is the most traditional and common source for financing local services
and physical infrastructure development in both the developed and developing world.
Operating services and managing the built assests has four critical interlinks with the
local infrastructure planning. The first and most obvious among is Operating and
Maintainence. Because the operation of a new infrastructure includes costs, sometimes
quite substantial. Operation expenses could amount annually about 5 to 7% (or as per the
contract lease document and ranges from 5 to 15%). The second interlink is accounting.
The third, the proper operation requires systems and procedures for operation and

3. maintainence i.e. technical and managerial capacities for timely repair and refurbishment
of the asests. Finally money paid to cover unnecessary costs of services reduces the
current budgets of the firm or organizations, hence reduces the operation surplus and the
funds for future investment.
The case taken to study is of the United World Trade Centre. United Builders Pvt. Ltd.
made an agreement with Tribhuwan University to construct a business complex, the
United World Trade Center (UWTC), making it an important project under the BOT
model. The concession period for the UWTC is 30 years. And the lease agreement
between United Builders Pvt.Ltd and Tribhuwan University was deal in NRS 500 Million
as a land lease in FBOT model for 30 years. Similarly the Kathmandu mall was also a
form of BOT model which was been signed for 30 years as a lease contract from
Citizen’s investment fund with the concerned parties.
The aim here is to communicate to the key intellectual underpinings of investment project
evaluation, as widely practiced by international organizations, governments, private
sector, builder, financial actors and managerial team world-wide. The development of
infrastructure projects is a complex and resource-intensive process. It is possible,
however, to analyze all projects in terms of a common life-cycle which comprises a series
of stages. The stages are illustrated in diagram1.
Diagram 1: The Project Development Cycle
Project Specification and Feasibility
Outline Design
Consent and Land acquisition
Detail Design
Construction
Handover
Procurement of
Contractor
Finance

4. 2. Financing oppurtunities
There are new financing instruments that have been tested in the developing world in the
last decades; including land-based financing and output based aids (OBA). Of these, the
land-based financing plays very substantial role in some countries (Bhutan, China, India,
Ethiopia, Nepal, Turkey, and the European transition economies), while OBA only
supplement the mainstream financing forms. Some of the techniques are listed here.
a. Land-based financing
The Land-based financing includes various instruments when land-related rights
or fiscal or regulatory power is transferred for funding public infrastructure; many
of these provide on-budget funds, others are more implemented in off-budget
arrangements like via municipal enterprises. The significance of land-based
financing arises from the fact that well performing developing countries boost
public and private investments in urban areas that in turn appreciate land value in
extreme scale (10 to 30 fold increase of land value is not uncommon). Most of
these benefits are realized by the private players with little or no financial benefit
for the public entities that played great role in land value appreciation. Thus,
value capture that is extracting a fair portion form the private benefits to the
public budget is an utmost important action the local governments should take in
developing countries
b. Leasing or Selling Land
The Chinese model: The astonishing development of Chinese megacities like
Shanghai offers one model when the state-owned land is leased out for private
development often for 99 years. The success of this model requires: a strategic
development plan with long-term vision of the city development; a corresponding
development program; the right of the cities to use land for development freely
that includes power for drastic removal of structures and people to clear the sights
for new development (virtually impossible to implement in many countries); and
a municipal enterprise like the Chengtou Corporation.
It is a development and investment company established by Shanghai local
government for managing the land-lease, borrowing against the lease revenues,
and investing the proceeds for developing basic infrastructure including
highways, bridges, water and sanitation, etc. The lease fee is estimated based on
demand and the future value of land after the development.

5. c. Selling public land
Selling public land has funded substantial development in many countries. Land-sale has
a great and double potential: first, it generates bulky one-time revenues for development;
second if well done, it accelerates adoption and implementation of large urban
development or modernization programs. This model works when the local
government owns sizable land for development or manages to transform
agricultural land to urban land development. Adequate urban development plan,
reliable asset management, and accounts on government owned land are key
preconditions for using land-sale strategically for infrastructure financing. But
land records are often vague or nonexistent in cities in the developing world.
Successful land-sales in the developing world include, Mumbai and Bangalore in
India and Alexandria and Cairo in Egypt. For instance, Cairo adopted a
development plan and then auctioned a desert land for new towns that generated
$3.1 bn.; and with this single transaction generated over 100 times larger amount
than the total (generally low) annual property tax collection of the country. These
cities can sell land, but face less liberal rights than China for moving the people,
for instance Mumbai has paid high compensation and had to pool public and
private land for implementing large development project.
d. Land pooling
Land pooling has been successfully tested in many Asian developing countries
including India, Nepal, and Bhutan. This model supports urban expansion and
development in areas with scattered private or public and private land ownership.
The primary objective is the same: urban development increase land values
manifold (20-30 fold is not uncommon); with that in mind the local government
adopts a detailed town-plan with streets, public spaces, commercial and
residential zones and then forms a development partnership with the incumbent
land owners.
The Ahemdabad case: Ahmadabad, India offers a successful case, but there are
many smaller land-pooling schemes in Nepal and Bhutan too. The process starts
with adoption a town-plan and completion of a detailed valuation for fair
compensation of the owners. The government does not acquire land from the
owners/farmers, but still the town plan often manage to retain about 40-50 percent
of land for public places (roads, parks, schools, health, culture, and trunk
infrastructure). The scheme assigns an agreed small plot back to the initial
owners. Finally, the surplus land is sold in open market auctions and proceeds are
used for compensating the owners and financing infrastructure. The results are

6. very positive in terms of creating new liveable urban places and providing houses
for thousands of families; but the process is very lengthy and requires great
negotiating skills, political support, and strong legal, financial, and technical
expertise in the local governments.
e. Land development fee
Land development fee is a special one-time charge of the developers to cover the
cost of on-site or off-site infrastructure development. A huge office or shopping
complex requires high capacity trunk network connections, increases traffic
substantially, but also generates negative effects like air or water pollution, or
noise. Needless to say there are huge positive impacts too, including employment,
taxes, economic development in the area nearby, and increased land and real
estate value. Land development fees are charged for extracting public share from
private gains, for funding the required on- and off-site infrastructure. This is a
standard practice in the developed countries, since the basic premise is that user
should pay.
f. Property tax
Property tax is a natural way of extracting private gains for public benefits, and
public infrastructure has proven to increase value of the adjacent land and real-
estates substantially. It is crucially important for cities to revalue the real-estates
adjacent to the large public infrastructure development projects and collect higher
property tax after completion. Cities in developing countries often fail to benefit
from this opportunity.
g. Property transfer tax
Property transfer tax is another instrument to tap private benefit at the event of
transferring properties from one owner to another. This tax is easy to collect
because both the sellers and buyers want obtaining land titles and ready to pay a
fair transfer tax (often in the range of 1-3% of contracted land sale value. This tax
may not work in countries where land transactions are not properly registered.
Local governments in Pakistan collect more revenues from transfer tax than from
property tax (not a good policy). An excessive transfer tax may aim more
revenue, but in fact may discourage fair registering transfer transactions or true
price of the sold properties.
h. Capital gain tax
Capital gain tax on land and real-estate (improvements) is another good source for
local governments. This works well if the property transfers are well recorded.

7. This tax aims extracting private gains from real estate speculation and quick
gains. The tax base is the difference between the sales price and the initial
purchase/investment price of the property reduced by the verified subsequent
improvements made by the last owner. The capital gain tax (often in the range of
20 – 30 %) is typically levied if the property is divested within 10 years following
the purchase and maybe less or nil when the property is held over 10 years. This
tax could provide substantial revenues for the local governments, while taxes and
discourages speculative investments.
3. Methodology Adopted for Cost analysis and Revenue generation
There are different methodology for cost analysis and revenue generation. The methods
are adopted to know the initial project costs and varying cost factors which will make
immense affect on the source of revenue generation. The key determinants of initial
project cost are enlisted below:
a) Key determinants of initial cost
No two infrastructure projects will cost the same amount of money no matter
how similar they are. Apart from basic technical factors, the wide range of
economic and institutional conditions in different member states will itself always
lead to variations. Nevertheless, the fundamental project costs are based on the
actual cost of the land, materials, equipment and labour in the region where the
project is being procured. This section first focuses on the factors that determine
initial project costs and then examines some of the more important determinants
of cost changes over time. These basic costs will vary depending upon a number
of factors which are discussed below. Diagram 2 summarizes these factors.
 The Project Specification
The specification defines the physical attributes of a project. For buildings, the
required function and expected occupancy rate will lead to a specification of
total floor space and floor plate size, height, internal and external appearance,
floor loadings, heating and lighting requirements etc. Generally, the more
detailed the specification and the larger the project, the more expensive it will
be.
 Location
Location affects project costing via institutional factors and through geographical
realities. Institutional factors can affect initial project cost estimates in a number
of ways. Allowance for the costs involved in sustaining a long public
consultation exercise is an example. Where major projects are likely to be
strongly opposed on environmental grounds, more cost may have to be allowed
for environmental mitigation measures.

8. In geographical terms, construction and material costs, land costs and design
standards vary widely across the Nepal because of the varying distances from
suppliers, climate and weather conditions, and general market conditions. Even
within a country, variations will exist depending on whether a project is being
implemented in a peripheral or central area, or in an urban or rural context.
Generally, the more remote a project is, the more expensive it will be because of
the cost of transporting construction materials and equipment to the site. In an
Urban location, land costs are usually much higher.
 Form of Procurement/Contract
The form of procurement and contract used by the project sponsor can alter the
estimated cost of a project. Cost savings may be made by means of lump sum
contracts although these are usually marginal in relation to the total project costs.
DBFO contracts, which seek to transfer most of the risk of cost over-run from
project sponsor to contractor, may in some circumstances yield savings.
 Site Characteristics
A site can be affected by soil and drainage conditions and access restrictions
which can affect the original cost estimates. The amount of excavation, piling
and foundation activities required are particularly affected by poor ground
conditions. Where there is uncertainty about ground conditions, accurate project
costing cannot be achieved unless a soil survey is undertaken. This may require
the sinking of boreholes to obtain soil samples at different levels beneath the
surface.
 New Build or Improvements
Generally, the construction of new infrastructure is more expensive than
improvements to existing infrastructure, or the refurbishment of buildings. This
is primarily because the “non-building” costs such as land purchase,
foundations, services provision etc. do not have to be included when simply
upgrading existing structures.
 Tax Liabilities
An organization will be liable to pay tax on its purchases. Some organizations
and types of project are not liable to pay taxes, or else these can be reclaimed.
Local government projects and infrastructure for public use are examples. Some
public or quasi-public sector companies, voluntary and private sector
organizations can be liable and these tax costs can have a significant impact on
gross construction costs.
 Timescale
Generally, the longer a project takes, the greater the project costs will be. Project
timescales are dependent on the specification of a project. Usually, the larger a

9. project is the longer it will take to implement. This is not always the case; if
substantial additional resources are used, project implementation can often be
accelerated.
In some cases, work on a project may take a lot longer than expected because its
phasing is dependent upon other, linking projects or public finance programmes.
A project which involves non-continuous phases is usually more expensive than
one undertaken without interruption because of the additional costs involved in
re-mobilizing plant and contractors.
 Inflation
The longer the expected construction period, the more account will need to be
taken of expected inflationary price increases over time. This is particularly
important where a public authority’s expenditure programme is involved. Initial
cost estimates will need to allow for the value that will need to be paid at the time
the project actually goes ahead. Levels of inflation vary amongst member states
and can be as low as 1-2% or as high as 10% per annum.
Diagram 2: Key Determinants of Costs
4. Demand Analysis
Demand forecasting is an important step in the feasibility study of a project, as it allows us to
assess how much of a good or a service will be requested in the future, as well as the revenues
that can be expected from the sale of that good or service.
Location Specification Tax
Liabilities
Site Original
Cost
Estimate
Time Scale
New Build
or
Refurbishment
Inflation Form of
procurement
contract

10. i. Demand forecasting techniques
Several techniques can be used for demand forecasting, depending on the data available,
the resources that can be dedicated to the estimates, and the sector involved. The
selection of the most appropriate techniques for estimating the actual demand and
forecasting the future ones with and without the project will depend on the nature of the
good or service, the characteristics of the market and the reliability of the available data.
Transparency in the main assumptions and in the parameters and values, as well as the
trends and coefficients used in the forecasting exercise, are matters of considerable
importance for the accuracy of the estimates. Furthermore, any uncertainty in the
prediction of future demand must be clearly stated.
The method applied for the forecasting must be clearly explained and details on how the
forecasts were prepared may help in understanding the consistency and realism of
forecasts. To identify the cost, investment and revenue generation, forecasting techniques
is most necessary.
5. Project Performance Indicators
A. The Net Present Value
The Net Present Value of a project is the sum of the discounted net flows of a
project. The NPV is a very concise performance indicator of an investment
project: it represents the present amount of the net benefits (i.e. benefits less
costs) flow generated by the investment expressed in one single value with the
same unit of measurement used in the accounting tables.
The Net Present Value of a project is defined as:
(Where St is the balance of cash flow at time t and at is the financial discount
factor chosen for discounting at time t.)
It is important to notice that the balance of costs and benefits in the early years of
a project is usually negative and it only becomes positive after some years. As at
decreases with time, negative values in the early years are weighted more than
the positive ones occurring in the later years of a project’s life.
The value of the discount rate and the choice of the time horizon are crucial for
the determination of the NPV of project. NPV is a very simple and precise
performance indicator. A positive NPV, NPV>0, means that the project generates
a net benefit (because the sum of the weighted flows of costs and benefits is
positive) and it is generally desirable either in financial terms or in economic
terms. When different options are considered, the ranking of the NPVs of the
alternatives indicates the best one.
There are cases in which the NPV of one alternative is not greater than the other
or for every i value. This is due to a phenomenon referred to as ‘switching’
Switching occurs when the NPV curves of two projects intersect one another.

11. NPV Project 1 NPV Project 1
Project 2
Project 2 i i
Diagram 3: Project ranking by NPV values Diagram 4: A case of switching
B. The Internal Rate of Return
The Internal Rate of Return (IRR) is defined as the discount rate that zeroes out
the net present value of flows of costs and benefits of an investment, that is to say
the discount rate of the equation below:
NPV (S) = Σ [St / (1+ IRRt)] = 0
The Internal Rate of Return is an indicator of the relative efficiency of an
investment, and should be used with caution. The relationship between NPV and
IRR is shown in the graph below.
NPV
NPV
IRR IRR IRR
i i
IRR
Diagram 5: The IRR Diagram 6: Multiple IRR’s
If the sign of the net benefits, benefits minus costs, changes in the different years of the project’s lifespan
(for example - + - + -) there may be multiple IRRs for a single project. In these cases the IRR decision
rule is impossible to implement.
C. Benefit-cost ratio (B/C)
The benefit-cost ratio is the present value of project benefits divided by the
present value of project costs:
B/C = PV (I)/PV (O)

12. Where, I is the inflows and O the outflows. If B/C >1 the project is suitable
because the benefits, measured by the Present Value of the total inflows, are
greater than the costs, measured by the Present Value of the total outflows.
Like the IRR, this ratio is independent of the size of the investment, but in
contrast to IRR it does not generate ambiguous cases and for this reason it can
complement the NPV in ranking projects where budget constraints apply. In
these cases the B/C ratio can be used to assess a project’s efficiency.
D. RISK ASSESSMENT
In project analysis it is necessary to forecast the future value of variables, with an
unavoidable degree of uncertainty. Uncertainty arises either because of factors
internal to the project (as, for example, the value of time savings, the timing of
the completion of the investment etc.) or because of factors external to the project
(for example, the future prices of inputs and outputs of the project).
Risk assessment, in the broad sense, requires:
- Sensitivity analysis;
- Probability distribution of critical variables;
- Risk analysis;
- Assessment of acceptable levels of risk;
- Risk prevention.
E. Risk prevention
The degree of risk is not always the same over the time horizon of the project
realization. It has been demonstrated by past experience, and it is generally
accepted in literature, that the riskiest phase of a project is the Start-up. At that
time most of the investment costs have been incurred but there may not yet be
any feedback from an operational point of view. When the investment enters into
the operations phase, the risk involved diminishes because the feedback becomes
increasingly evident.
Moreover ‘there is a demonstrated, systematic tendency for project appraisers to
be overly optimistic. To reduce this tendency, appraisers should make explicit,
empirically-based adjustments to the estimates of a project’s costs, benefits and
duration. It is recommended that these adjustments be based on data from past
projects or similar projects elsewhere, and adjusted for the unique characteristics
of the project in hand. In the absence of a more specific evidence base,
departments are encouraged to collect data to inform future estimates of
optimism, and in the meantime use the best available data’
6. CASE STUDIES
United World Trade Centre (UWTC) is one of the largest shopping complex’s in the
Kathmandu valley. The complex is spread over 5,596.11 Sq.m. area and built in a lease-

13. land owned by Trivhuwan University with total investment of Rs 500 million. The
complex provide a number of services like Departmental stores, Silver Jewellary shops,
Cyber cafe, Party Palace, Health clubs, Heated swimming pool, Clothes and Acessories
shops, Social event hall, including more than 50 shops with following services and
facilities with advertisement boards as hoarding boards at the roof top floor.
The services and facilities inside the UWTC, are: wide range of clothings, textile, gadget
shops like Monalisa exclusive textiles, John Player, Landmark, Converse, Fabulous,
Temptation, Bajra and Blay, Life, Glamour, Revive, Shringar, Grasshopper, Garlic cafe
& bar, Hot breads, Cafe de valley, United bowling and others Jewellary and costumes
shop with parking facilities.
The case taken to study is of the United World Trade Centre. United Builders Pvt. Ltd.
made an agreement with Tribhuwan University to construct a business complex, the
United World Trade Center (UWTC), making it an important project under the BOT
model. The concession period for the UWTC is 30 years. And the lease agreement
between United Builders Pvt.Ltd and Tribhuwan University was deal in NRS 500 Million
as a land lease in FBOT model for 30 years. The lease agreement was signed on 2063
B.S. between United Builders Pvt. Ltd and Tribhuwan University. The total investment
invest to build the UWTC was known to be NRS 10 Crore excluding lawyer and additive
cost. (Source: News paper/Gorkhapatra)
Professional real estate developers (United Builders Pvt. Ltd) or business persons have
mostly used bank and financial institutions as source for real estate loan. In fact, all the
respondents have borrowed loans from commercial banks. However, fifty percent of the
respondents have used funds from both the sources (combining either commercial and
development banks or commercial banks and finance companies).
7. Analysis of the Investment cost with O & M with Revenue generation
The total investment invest to build the UWTC was known to be NRS 10 Crore.
Annual Operation and Maintenance Cost
Operation expenses could amount annually about 5 to 7% (or as per the contract lease
document and ranges from 5 to 15%).
The annual O & M cost of the UWTC is found to be NRS 50 Lakhs, from the 5% interest
rate on the successive year after completion of the newly building complex’s. Then after
successive years again, the price has been increased due to rise in market price in
material, labour cost, and in building component accessories. The O & M cost varies due
to change or increase in market price of the material, labour cost, additional cost and

14. overall maintenence and operation cost. The rise in market price is the biggest threat for a
developer/ investor to sustain his source of income , known as revenue generation to
controlled costs which will create adverse effect for such complexes to maintain it.
While estimating O & M costs, long term cost situations must be considered. Certain
expenses like major repair/maintenance of machinery, replacement of glass panes,
electric wiring, water supply pipes maintenence, sanitary fittings maintenence, colour,
painting furnish, railings maintenece, and including each and every thing which is
directly related to building works would not be encountered every year.
The operation and maintenence cost includes the following cost in successive years to
make a complex more fit and durable.
Operation Cost Maintenence Cost
Security guard operating cost
Plants and Machinery maintenece cost
Fuel/generator cost
Railing/ lift maintainence cost
Solid waste disposal cost
Tiles/joint mortar maintainence cost
Floor cleaning cost
Glass pane fitting maintainence cost
Manpower cost
Re-construction cost including aluminium
works, glass fittings cost
Additive cost including lawyer charge(legal
advisor),
Watersupply pipe maintainence cost
Layman cost of water supply, electricity
and sanitary
Roof maintainence cost
Watersupply pipe operating cost, electricity
wire fitting cost, sanitary fitting cost
Underground parking maintainence cost
CCTV operating cost with manpower
Hoarding board maintainence cost
CCTV material cost
Colour/painting refurbishment and
maintainence cost
Water tank cost to the complex
CCTV maintainence cost in maintaining
virus free, update of material
Hauling cost
Metal & utensil cost including shutter
Labour cost
Shutter partition by collapsing wall
maintainence cost

15. Transportation cost
wall maintainence cost
colouring/painting cost
extra maintainence cost including fire
hazards and other vulnerability
Plants/machinary operating cost
Source of Revenue generation
After operating the complex, the price for different shops are been categorized and vary
according to their sizes, usage and function: in the sense of allocating spaces used for
their purpose. The shops which are found in UWTC, they had a lease agreement again for
the rent purpose with the United Builders pvt.ltd for the source of revenue generation by
the concerned parties itself.
The economic returns from investing in trade development or shopping mall
infrastructures will be enjoyed by society after a relatively short time span following
project completion. Economic growth and welfare depends on productive capital,
infrastructure, human capital, knowledge, total factor productivity and the quality of
institutions.
Revenue opportunities include income tax surcharge, business tax, property and property
transfer tax, and capital gain tax; but also development fee or betterment tax to extract
private benefits for financing infrastructure. The source of revenue generation in United
World Trade Centre, Kathmandu; included from the different shops, social community
hall, party palace and other shopping place which is situated in the same building
complex with variation in range of money price for the shops within the UWTC.
In the United World Trade Centre, Kathmandu, there are more than 50 shops including
swimming pool, party palace, underground parking facilities, social event programme
hall and with other services and facilities. The number of services like departmental store
with more spaces allocated for it, Silver jewellary shops, cyber cafe, health club, heated
sauna, rent shops including wide range of clothing, textile, gadget shops like Monalisa
exclusive textiles, John Player, Landmark, Converse, Fabulous, Temptation, Bajra and
Blay, Life, Glamour, Revive, Shringar, Grasshopper, Eating and fast food shops like
Garlic cafe and bar, Hot breads, Cafe de valley, United bowling and other new rented
shops for clothings and accessories.
The source of revenue generation are from these shops, party palaces, parking lots and
from the other shops which are in the same complex as by lease rent agreement to the
concerned parties. There are variation among different shops to pay their rent to the
concerned parties. The source of revenue generation is also by the trade fair programme

16. which will be held in the same building complex per month. The source of maximum
income generation or revenue generation are done by fashion shows, organizing event
and function; and from that program, the amount of money is collected according to the
stall users and the whole event management group.
At the first successive years, the rent of the space used by the concerned shops at UWTC
is found to be from NRS 62,500 to maximum NRS 1,25,000 per month. The price varies
because due to location(front, middle and back) as well as the space used by the rented
shops. In the consecutive years after 2 years from that period, due to increase in market
price in material cost and infrastructure construction cost, the lease-rent agreement
between shops owner and the concerned authorities has a new agreement and the spaces
used by the shops are paying from NRS 70,000 to maximum 1,50,000 NRS. (Also
depends upon how much spaces used by the rented shops for their space to introduce
their shops in lease-rent agreement between concerned shops and parties.)
The another source of revenue generation is by of hoarding boards in the roof top. The
alternative source of revenue generation can be generated by creating a helipad in the
roof top for emergency landings.
Therefore, the source of revenue generation per year by the UWTC from the rented
shops, parking lots,party palaces, heated swimming pool, cyber cafe, Silver jewellary,
social event program, fashion shows, trade fair and from other shops from UWTC, is
found to be (in current state) per year:
From the UWTC shopping complex, the data are found by observing and measurement
that a space used for functioning that shops are:
15*10 Sq.ft=150 Sq.ft=13.93 Sq.m
15*12 Sq.ft=180 Sq.ft=16.72 Sq.m
For the departmental store, heated swimming pool, cyber cafe, party palaces, hall for
socio-economic and fair, banking ATM’s and other purpose; has the same rate of 1
Sq.m=5025.125 NRS. (By calculating the minimum price rate of Rs. 70,000.00 to
maximum 1,50,000.00)
From the underground parking lots, the total revenue per month found to be
1,50,000.00 Rs. and per year, it comes out to be: 18,00,000.00 Rs.
From the departmental store, the total revenue per year, comes out to be:
90,00,000 Rs.
The complex is spread over 5,596.11 Sq.m. area, deducing the lift area, floor
passage, space of departmental store and other unused portion for shopping store,
the total area for space used for its functioning comes out to be 4,700 Sq.m.
Hence from the criteria as shown above, that 1 Sq.m=5025.125 Rs.; the space

17. used wholly in NRS is found to be per month is Rs. 23,61,8087.5 and yearly the
total revenue comes out to be: Rs. 28,341,7050.00
Hence the total source of revenue generation by the United World Trade Centre
per year comes out to be:
o Parking lots= Rs. 18,00,000.00
o Departmental store= Rs. 90,00,000.00
o Space allocated by other shops in UWTC= Rs. 28,341,7050.00
Total source of revenue generation per year by United World Trade Centre,
Kathmandu is: Rs. 29,421,170,50.00 , hence calculating the data for 30 years
lease agreement, it comes out to be Rs. 8,8265,115,00.00, which shows a
clear evidence of benefit for the concerned parties by this kinds of land-lease
agreement under FBOT model.; which shows a clear view that PPP model is
a successful model in Nepal.
8. Conclusion
It is possible to define as PPP any project in which the investment (or part thereof) is
contributed by the private sector and where there is a regulatory contract between the
private and public sectors in terms of risk allocation for the provision of the infrastructure
and/or the services. The level of PPP complexity will differ according to the sector, the
type of project and country, as a function of the risk mitigation mechanisms and the use
of project finance to fund the project. The participation of the private sector in the
provision of public assets and services assumes that, whatever the contractual
arrangement between the two parties, adequate returns on investment – from a strictly
financial perspective - must be allowed to occur. The case studies of United World Trade
Centre gives us a possible outcomes that, these kinds of land-lease agreement which is a
FBOT model under PPP circumstances, helps to forecast for the future. This kinds of
project work will be successful model for infrastructure development within the country
to revive the economy and to sustain these kinds of land-lease mechanisms to develop
under LDO(Lease development and operate) or FBOT model.

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