Tanahu Hydropower Project has failed to attract a single bidder for prequalification of contractors, forcing it to extend the deadline by 19 days.

The original deadline for applying for prequalification expired on Wednesday, and it has now been extended until April 17.

The 140MW storage-type project will be built on the Seti River in Tanahu district.

“About two dozen contractors from various countries participated in the pre-bidding discussion, but none of them applied for prequalification,” said Sunil Kumar Dhungel, managing director of Tanahu Hydropower Limited (THL), a subsidiary of Nepal Electricity Authority (NEA). THL had issued a notice on February 14 for prequalification.

Dhungel said most of contractors who participated in the pre-bidding process requested

for an extension of the deadline, citing the need for further study of the project.

The company had issued the notice for prequalification under two packages—detail design and construction head works and

detail design and construction

of waterway, powerhouse and related equipment.

According to the THL notice, applicants will be prequalified on the basis of their ability to meet financial qualifying criteria and technical experience criteria. “Only the firms registered in eligible countries of the Asian Development Bank (ADB) or member states of the European Union are invited to apply for the prequalification of the first package,” read the THL notice.

Under the second package, the prequalification would be conducted on the basis of procedures in accordance with applicable guidelines for procurement under the Japanese Official Development Assistance Loans.

The project will be one of Nepal’s biggest storage-type projects with an estimated average annual energy generation of 587.7 GWh for the first 10 years and 489.9 GWh from the 11th year. The project is designed for peaking up to six hours in dry season.

The project is being co-funded by Asian Development Bank (ADB), Japan International Cooperation Agency (Jica) and European Investment Bank (EIB).

A loan $150 million agreement was signed with ADB on February 21, 2013. A similar agreement for $183 million loan was signed with Jica on March 13, 2013, and the agreement with the European Investment Bank (EIB) was signed on May 7, 2013 for $70 million, which further increased to $85 million. Funds from the government and NEA will be used for the preparation of preconstruction infrastructures.

The project is estimated to cost $505 million and the Nepal government will invest $71 million.

According to NEA officials, design preparation and construction of a bridge has begun at the project site. The environmental impact assessment was done

in 2009.  

As per the project’s estimated cost, it will need to sign a power purchase agreement with NEA at Rs7 per unit. The government has said it will extend credit to NEA at an interest rate not higher than what the donors charge.

However, the government will charge NEA one percent of the loan amount as processing and guarantee fees. NEA will have to bear the risk of exchange rate fluctuation.