Kathmandu, September 23

Nearly a year after the Sher Bahadur Deuba-led government scrapped the contract with China Gezhouba Group Company Ltd for the construction of the 1,200-megawatt Budhigandaki hydropower project, a national pride project, a Cabinet meeting on Friday decided to award the contract for the project to CGGCL again.

The Deuba-led government had rescinded the contract with CGGCL on November 13, stating that the bidding process was not competitive and the deal lacked transparency and flouted the Public Procurement Act requirements.

Earlier, the Pushpa Kamal Dahal-led government had awarded the contract to construct the Budhigandaki project to CGGCL on May 15, 2017, nine days before he was to resign from the PM’s post.

Speaking at a press briefing today, Minister of Energy, Water Resources and Irrigation, Barshaman Pun, said the Cabinet meeting had granted the contract to build the project worth Rs 300 billion to CGGCL. However, the Dahal-led government had awarded the contract to CGGCL to build the project at a cost of Rs 260 billion as per a study carried out by a French company, Tractebel Engineering.

In a recent development, CGGCL had submitted a proposal and a new memorandum of understanding to build the project to the Office of the Prime Minister and Council of Ministers on July 15.

“The Chinese firm has proposed to construct Budhigandaki under the engineering procurement construction and financing model, according to which the concerned construction company will generate the required funds for the project,” said Minister Pun.

According to Pun, the OPMCM has written a letter to MoEWRI directing it to reach a conclusion through negotiations and sign the agreement with CGGCL as soon as possible. “We’ll study the MoU before holding discussions with CGGCL on the appropriate construction model.”

He said the government would soon start negotiations with CGGCL for the final agreement. “We’ll hold discussions with the Chinese company regarding the MoU, details of the project, including the mode of financing and construction timeframe,” added Pun.

After revoking the contract with CGGCL , the Deuba-led government had handed over the responsibility to construct Budhigandaki project to Nepal Electricity Authority within eight years on engineering procurement and construction model on November 24, 2017. The government had formed a committee led by then vice-chairman of National Planning Commission, Swarnim Wagle, to submit the appropriate model to build the project.

At that time, the government had decided to construct the project utilising domestic funds and technology. “The study committee’s recommendation is just a study material for the project and will not be applied,” said Pun.

A quarter of the estimated cost to construct the Budhigandaki project will be spent on compensating those likely to be displaced in Dhading and Gorkha districts due to inundation caused by the project. The national pride project is likely to affect over 8,000 households in the two districts, as per the earlier study.