Nepal | September 21, 2020

NEA asked to retender grid-tied solar project

Himalayan News Service
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Kathmandu, August 1

The Public Accounts Committee (PAC) of the Legislature-Parliament today directed the Ministry of Energy and Nepal Electricity Authority (NEA) to retender the ‘25-megawatt Grid-Tied Solar Project’.

The House panel has instructed the power utility to call a tender again stating that the prevailing procurement rules were breached while selecting the bidder to execute the project, which is financed by the World Bank Group.

NEA had called a tender for installing solar panels with 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 Procurement Evaluation Panel (PEP).

After opening the financial and technical proposals of the five bidders, the project co-ordination committee led by the NEA managing director 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 handpick the Pianggo and Harreon JV, China, which was the second lowest bidder. 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 project coordination committee. However, the World Bank refused to do the same stating that the company that has 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 the World Bank because the independent panel of experts (PEP) had identified Risen Energy Co China, which quoted fourth lowest price for the execution of the project, as the best bidder.

The NEA has also been asked to renegotiate on price with the bidder citing the steep fall in solar prices in between 2015 to 2017 (the date tender was called to when the tender 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 financial proposal 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 had gone smoothly, there would be additional 25 megawatts of energy that could have been connected to the national grid before winter season,” as per NEA officials. However, the instruction of the House panel today has ended the chances of evacuating additional 25-megawatt power to the national grid in the near future.

A version of this article appears in print on August 02, 2017 of The Himalayan Times.

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