Nepal | May 30, 2020

Rejected contractor set to find favour


Rewati Sapkota
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Kathmandu, August 27

Prime Minister KP Sharma Oli and Nepal Communist Party (NCP) Co-chairperson Pushpa Kamal Dahal have directed Minister of Energy, Water Resources and Irrigation Barsha Man Pun to hire a Chinese firm previously rejected by the government as the contractor of the 1,200MW Budhi Gandaki Hydropower Project.

The PM and Dahal have told the energy minister to appoint Gezhouba Construction Group Corporation as the contractor of the $2.5-billion national-pride project before Dahal begins his weeklong China visit from September 17, sources told THT.

PM Oli, Dahal and senior leaders of the ruling NCP Bam Dev Gautam, Bishnu Poudel and Janardan Sharma, sources informed, are lobbying intensely to appoint the Chinese firm as the contractor of the mega hydropower project, which is expected to make Nepal an energy surplus nation ready to export electricity.

Energy Minister Pun could not be contacted for comments despite several attempts. But sources said, “The Cabinet will soon take a decision in this regard.”

Officials of the energy ministry, which should table the proposal in the Cabinet, however, said they were unaware of this issue. “We have not received any instruction officially,” Energy Secretary Anup Kumar Upadhyay said. “The last time this issue was discussed was before the PM’s China visit in June.”

The energy ministry, according to sources, is yet to decide whether to award the contract to the Chinese company, sign an agreement with a foreign government for development of the project or select a contractor through open bidding.

Energy ministry sources said discussions had been held in the past with private companies and governments of India, China, Bangladesh and Australia for development of the project. Oli and Dahal had also shown interest in outcomes of these discussions, they said. “But both are inclined towards appointing the Chinese company as the contractor,” sources said, adding, “The left government’s inability to hire the Chinese company will wound their ego.”

According to sources, lobbyists are trying to convince the Nepali Congress, as it can “challenge the decision in Parliament if it is not taken into confidence”.

The hydel project contract was initially handed over to Gezhouba Construction Group Corporation by the Dahal-led
government without conducting open bidding in May 2017. Subsequently, the government signed a memorandum of understanding with the Chinese company.

But in November 2017, the NC-led government scrapped the agreement with the Chinese firm citing “irregularities in handing over of the project” and instructions issued by parliamentary Finance Committee and Agriculture and Water Resources Committee. The two parliamentary committees had stated that it was improper to hand over such a huge project without open bidding.

Then in February, the NC-led government stated that it would build the project through domestic financial resources. Sources, however, said Energy Minister Pun wanted to select a contractor through open bidding.

Budhi Gandaki is a strategic reservoir project located in the central Nepal districts of Gorkha and Dhading. The government has already started providing compensation to locals of the area who need to be relocated once the construction of the project, located 80 km from Kathmandu, begins. The project will affect 8,000 households in Dhading and Gorkha, submerge 35,600 houses, and partially affect 4,557 houses.

The government has decided to provide compensation ranging from Rs 524,000 to Rs 835,000 for each ropani of land in the affected areas. If the hydro project is built it will be the largest in Nepal.


A version of this article appears in print on August 28, 2018 of The Himalayan Times.

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