Govt told to scrap Budhigandaki deal with Chinese contractor

September 27, 2017

The Himalayan times, 25 Sep 2017 

A joint meeting of the Agriculture and Water Resource Committee and Finance Committee of the Legislature-Parliament today instructed the government to scrap the Budhigandaki deal with the Chinese company — China Gezhouba Group Corporation — citing lack of transparency while awarding the contract of national pride project.

The last Cabinet meeting of the government led by Pushpa Kamal Dahal had decided to hand over the Budhigandaki project to the CGGC under EPCF (Engineering, Procurement, Construction and Financing) contract, and the then energy minister Janardan Sharma had signed a memorandum of understanding in that regard on June 4.

The 1,200-megawatt Budhigandaki deal landed in controversy as the caretaker government had signed MoU with the CGGC, breaching the general principle of competitive bidding in accordance with procurement rules.

“The earlier government breached the established norms of competitive bidding and hand-picked a company that has a very bad reputation in developing hydel projects in Nepal,” said Prakash Jwala, chairman of the Finance Committee. The joint meeting of the two House panels had summoned the minister and high-ranking officials at the Ministry of Energy and the Ministry of Finance and sought clarifications from them before taking the decision.

In the meeting today, the State Minister for Energy Shambhu Lal Shrestha admitted that legal requirements were not met before the Budhigandaki deal was inked.

Finance Minister Gyanendra Bahadur Karki, State Minister for Energy Shrestha and Finance Secretary Shanta Raj Subedi were present in the meeting.

The Dahal-led government handed over the EPCF contract to the CGGC, without framing EPCF guidelines. According to a study carried out by a French company — Tractebel Engineering (France) — the cost of developing the 1,200-megawatt project is expected to be around Rs 260 billion.

The Dahal-led government was criticised for handing over the national priority project to the Chinese company, which could be developed from domestic resources. Experts believe that Nepal can build the project with its own resources through proper planning.

The Nepal representative of the CGGC refused to comment on the House panels’ decision.

Meanwhile, the government has already initiated distributing land compensation to people in project-affected areas. The land compensation and resettlement cost is expected to hover at around Rs 50 billion.

Company with chequered past

  • CGGC was black-listed during construction of Sanjen Hydropower Project
  • Chilime Hydropower Project had terminated the construction contract and seized the collateral from CGGC
  • CGGC has also taken over a decade to complete the 30-megawatt Chameliya Project
  • The 60-megawatt Upper Trishuli 3A being developed by CGGC was initially supposed to be completed by June 30, 2011. The deadline has already been extended thrice — first to April 30, 2013, then by 26 months to June 30, 2016 and then again for another 34 months since the last deadline