Nepal | September 26, 2020

Fate of grid-tied solar project in limbo

Himalayan News Service
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solar light wind-solar energy project makawanpur

A wind-solar energy project being run in Phaparbari village of Makawanpur district. Photo: RSS

Kathmandu, August 19

The fate of the ‘25-megawatt Grid-Tied Solar Project’ is in limbo as the World Bank Group seems reluctant to go ahead with the project as the Public Accounts Committee (PAC) of the Legislature-Parliament had instructed Nepal Electricity Authority (NEA) to issue another tender for the project citing the power utility had breached the procurement rules while selecting the bidder to execute the project.

Following the PAC’s direction to the power utility on August 1, NEA had corresponded with the World Bank Group (WBG) regarding the decision of the parliamentary panel. However, the WBG is reluctant to carry on with the project through rebidding. The World Bank may withdraw from the $50 million project. The major reason for World Bank’s reluctance is because the retender process would further delay the project.

NEA had called a tender for installing solar panels with a capacity to generate 25 megawatts of energy during peak hours in April of 2015. The World Bank and NEA had formed separate bid evaluation panels to expedite the project. Technical and financial proposals of the bidders were evaluated by the NEA-formed Project Management Unit (PMU) and independent panel formed by the World Bank, that is,  Procurement Evaluation Panel (PEP).

After evaluating the financial and technical proposals of the five bidders, the project coordination committee led by the NEA managing director had recommended Pianggo and Harreon JV, China, to implement the project despite the negative working capital of the joint venture partner of the bidder — Harreon China. The then managing director of NEA, Mukesh Kafle, had piled pressure on the PMU to select Pianggo and Harreon JV, China, which was the second lowest bidder. The Kafle-led committee had opined that the negative working capital of the joint venture partner of the bidder could be taken as a ‘minor deviation’.

In the interim period, the government appointed Kulman Ghising as the managing director of NEA. Ghising had also written to the World Bank to expedite the project by awarding the bid to the bidder that was recommended by the project coordination committee. However, the World Bank refused to do the same stating that a company which has a negative working capital could not be an eligible bidder.

The bidder selection process was further prolonged as the World Bank was unconvinced with the recommendation of the project coordination committee. The World Bank has also asked NEA to submit the revised tender evaluation report incorporating the suggestions provided by it because the independent panel of experts (PEP) had identified Risen Energy Co China, which quoted the fourth lowest price for the execution of the project, as the best bidder.

NEA has also been asked to renegotiate on the price with the bidder citing the steep fall in solar prices in between 2015 and 2017 (between the date the tender was called and when it would be awarded). The Project Monitoring Unit of NEA had also negotiated with the aforesaid bidder and lowered the price of the system to $34.1 million from the price quoted in the financial proposal, which was worth $37.98 million. And the World Bank had also issued ‘No Objection’ to award the tender to Risen Energy. Thus, the NEA could generate per unit power at Rs 5.70 from this solar project, which is far lower than the prevailing per unit rate of solar power at Rs 8.35 to Rs 9.60.

“If the tender award process had gone smoothly, there would be additional 25 megawatts of energy that could have been connected to the national grid before the winter season,” as per NEA officials.

A version of this article appears in print on August 20, 2017 of The Himalayan Times.

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