Dahal-led government had signed agreement with CGGC

Kathmandu, July 2

Lawmakers have opposed the last minute deal made by the previous government with a Chinese company to hand over the contract of Budhigandaki Hydroelectric Project. Speaking in a meeting of the Agriculture and Water Resources Committee of Legislature-Parliament, lawmakers have urged the government to scrap the ‘controversial’ deal and ensure project development through the country’s own resources.

In the meeting of the parliamentary panel today, lawmakers said that there is no rationale behind awarding the contract of Budhigandaki to China Gezhouba Group Corporation (CGGC) as the project had already been initiated through the Budhigandaki Hydroelectric Project Development Committee. Lawmaker Amrit Kumar Bohara questioned the intention of the caretaker government and alleged that the previous government was motivated by ‘hidden interests’ in the Budhigandaki deal.

Another lawmaker Kashinath Adhikari said that the government had signed the deal with CGGC, overlooking its bad track record in construction contracts of various hydropower projects including Chameliya Hydropower Project. Cost of the Chameliya project escalated by more than two times and it took over a decade to complete construction of the 30-megawatt project. CGGC had also been blacklisted by the Sanjen Hydropower Project.

Moreover, Chilime Hydropower Project had terminated the construction contract and seized the collateral from CGGC. Another project, the 60-megawatt Trishuli 3A, being developed by the same contractor was initially supposed to have been completed by June 30, 2011, but the deadline was extended three times and it is now expected to be completed by 2019. As per Adhikari, the Dahal-led government had signed an Engineering, Procurement, Construction and Finance (EPCF) contract without any proper rules to govern such a contract in the country.

The Dahal-led government has defended awarding the Budhigandaki contract to CGGC as per section 35 of the Electricity Act, which allows the government of Nepal to sign a contract with any person or corporate body, for the generation, transmission or distribution of electricity. However, lawmakers have said that the government cannot go beyond the general rule of competitive bidding citing legal loopholes. “The Dahal-led government cannot justify the selection of CGGC as it has not followed any transparent procedure of competitive bidding,” according to lawmaker Adhikari.

Lawmaker Jamindra Man Ghale has urged the government to scrap the Budhigandaki deal at the earliest. The government recently dissolved the development committee of the Budhigandaki project and decided to develop the project through Electricity Generation Company. The Electricity Generation Company has been assigned the responsibility to implement the government’s deal with CGGC as the development committee has already been dissolved.

According to lawmakers, it will be beneficial for the country to develop the project through its own resources as the project is strategically located close to the major load centres — Kathmandu, Chitwan and Pokhara — and has very low transmission cost.

As per the detailed design carried out by French engineering company, Tractebel Engineering, the cost of the project will hover around Rs 260 billion. The government has already initiated land acquisition process in the project area and has been collecting five rupees on the sale of each litre of petrol and diesel from this fiscal to distribute the land compensation amount to the locals affected by the Budhigandaki project.