Nepal | July 12, 2020

No rational in retendering 25-megawatt grid-tied solar project: World Bank

Himalayan News Service
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Kathmandu, September 11

The World Bank Group (WBG) has said that the ‘25-megawatt Grid-Tied Solar Project’ has followed the procurement rules of the World Bank and there is no rational in retendering for the selection of bidder to execute the project.

In response to the Nepal Electricity Authority (NEA)’s query, the World Bank has refused to go for the retender as instructed by the Public Accounts Committee (PAC) of the Legislature-Parliament. NEA had written to the World Bank, financer of the project, following the instruction of the parliamentary panel.

The house panel had instructed NEA to issue another tender for the project stating that the power utility had breached the procurement rules while selecting the bidder to execute the project. However, as the bank had also formed a separate
selection committee to evaluate the bids and monitor the procurement process, the bank has claimed that the procurement rules of the WBG had been followed through.

As per the NEA officials, the World Bank may withdraw from the $50-million project. Nevertheless, NEA has said that it will forward the World Bank’s response to the House panel through the Ministry of Energy. The project that was supposed to be completed before dry season this year has been stalled due to PAC’s instruction for rebidding.

NEA had called a tender in April of 2015 for installation of solar panels with a capacity to generate 25 megawatts of energy during peak hours. 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 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 contract 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 had 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 had 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 PMU 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 of Rs 8.35 to Rs 9.60.

“If the tender award process had gone smoothly, additional 25 megawatts of energy could have been connected to the national grid before the winter season, which would have supported in minimising load-shedding,” as per NEA officials.

A version of this article appears in print on September 12, 2017 of The Himalayan Times.

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