KATHMANDU: Tanahu Hydropower Ltd (THL) is all set to appoint the joint venture (JV) between Lahmeyer International GmbH Germany and Manitoba Hydro International of Canada as consultant for the 140-megawatt Tanahu Hydropower Project.
The state-owned special purpose vehicle formed to implement the reservoir-type hydropower project had initiated the final process of appointing the project supervision consultant after receiving ‘concurrence letter’ from the Asian Development Bank (ADB), one of the project’s financiers.
“We received the letter day before yesterday,” THL Managing Director Sunil Kumar Dhungel told The Himalayan Times. “We will now table the proposal on consultant appointment to our board of directors. Once the board approves it, we will invite Lahmeyer-Manitoba JV to seal the deal.”
THL had sought the ADB’s ‘concurrence’ because the multilateral lending institution had led the consultant selection process on behalf of the government and shortlisted Lahmeyer-Manitoba JV as the consultant.
THL had then started negotiations with the JV to finalise the process of appointing the project supervision consultant.
Although the negotiations began in January, they took a long time to conclude after the JV proposed that non-resident experts it was hiring be exempt from income tax here.
THL then took the matter to the Ministry of Finance (MoF), which denied extending the facility citing the domestic law treats foreigners who have stayed in Nepal for over 183 days as residents. “So, income tax would be levied on remuneration of such people.”
Initially, the JV expressed reluctance to accept this condition, citing the issue on income tax was not mentioned in the tender document, sources said. But it eventually agreed to shed the demand and move ahead.
“With the settlement of tax issue, we do not have any other outstanding issue. So, we are ready to sign the agreement,” Dhungel said, without mentioning when the deal would be sealed.
THL is appointing the project supervision consultant to receive support in the areas of preparing tender documents to formally build the $505-million hydro project, project administration and design, engineering services, management control and other technical aspects.
The consultant has agreed to provide these services at a cost of $26.05 million for a total of 12 years, including one year of pre-construction phase, six years of construction stage and five years of operation stage.
Although the consultant should have been selected in May 2013, the process was delayed after the Commission for the Investigation of Abuse of Authority (CIAA) launched an investigation into the consultant selection process launched by the ADB.
Then on December 17, Energy Minister Radha Kumari Gyawali scrapped the consultant selection process.
The minister’s move was severely criticised by the MoF — which had mobilised $505 million to build the project — as ‘it created uncertainty about implementation of the project’, which was crucial for the country facing long hours of power outage every day.
The Cabinet on January 1, however, overturned the energy minister’s decision, paving the way for the ADB to give continuity to the project supervision consultant selection process.