Nepal awards $2.5-bn power project to controversial Chinese firm
China Gezhouba Group Corporation has had a bad track record in Nepal, having already left one hydro power project in limbo.world Updated: May 25, 2017 22:07 IST
On its last day in office, the Pushpa Kamal Dahal ‘Prachanda’ government of Nepal has awarded a contract to construct the 1,200MW Budhi Gandaki Hydroelectric Project to a controversial Chinese company, without any competitive bidding.
The last cabinet meeting held on Tuesday -- a day before Prachanda stepped down as prime minister-- approved the energy ministry’s proposal to let China Gezhouba Group Corporation (CGGC) build the project on the Budhi Gandaki River in Gorkha and Dhading districts.
Touted as a project to end the perennial power shortage in the country, it will be built under the engineering, procurement, construction and finance model, with an estimated cost of more than $ 2.5 billion.
Though there are accusations that Prachanda was pro-India, some of his decisions favoured Beijing, raising eyebrows in New Delhi. Nepal signed a framework agreement on China’s ambitious One Belt One Road and joint military exercise with China during his short tenure.
During the two visits of Nepal Prime Ministers- KP Oli and Prachanda- China had pushed for a Chinese company develop the hydel project. The matter prominently figured in the visit of Prachanda to China earlier this year. Subsequently, he initiated the process to engage CGGC for the development of the hydroelectric project, one of the most strategic in the country.
CGGC is a controversial company and has a bad track record in Nepal, critics pointed out. The company has already left one hydro power project in limbo and put pressure on political leadership to increase the generation capacity of another.
“The government should correct the decision to award the contract to a controversial company without any competitive bidding,” Nepal’s former finance minister Ram Sharan Mahat told reporters, adding the project should move forward in a transparent manner.
“This is not a reliable project,” said hydropower expert Ratna Sansar Shrestha.
The government was earlier planning to construct the project, once considered one of the most feasible and profitable, using its own resources and had distributed billions of rupees as compensation to project-affected people.
The cabinet approved the draft memorandum of understanding to be signed with CGGC. The company will get a year to make an assessment of the project and arrange funds for its development, according to the MoU.
The EPCF model of project development, under which the contracting firm makes all the arrangements including the funds to build the project, is considered one of the most effective for the development of huge infrastructure projects.