The government has revived the process of awarding the construction contract for the Budhigandaki Hydroelectric Project to China Gezhouba Group Corporation (CGGC) without competitive bidding.

The Energy Ministry has been holding talks with the Chinese company to give the job under the engineering, procurement, construction and financing (EPCF) model. 

The Energy Ministry, according to a highly placed ministry source, has readied a draft memorandum of understanding (MoU) that will be signed with the Chinese developer before it is given the contract.

CGGC has been trying for a long time to get the contract to develop the 1,200 MW hydroelectric project located in Gorkha and Dhading districts. Last July, the KP Sharma Oli-led government had tried to award the contract to CGGC, but it backtracked after widespread criticism over its decision to give the contract for the strategic project without going through the bidding process.

The Prime Minister’s Office (PMO) had issue written instructions to the Energy Ministry to initiate the process to award the EPCF contract to the Chinese developer. The directive followed a letter of interest submitted by CGGC.

Subsequently, the Energy Ministry asked the Finance Ministry for help to do a background check on the Chinese developer. The Finance Ministry then wrote to the Chinese Embassy requesting details about CGGC. The then finance minister Bishnu Paudel had pushed hard to seal the deal with the Chinese developer, but the government called it off following disapproval from different quarters. The parliamentary Agriculture and Water Resources Committee had also directed the government to follow due process when awarding the construction contract.

CGGC is again on track to receive the contract as Prime Minister Pushpa Kamal Dahal has resumed the process after he was asked about it during his recent visit to China.

Spokesperson for the Energy Ministry Dinesh Kumar Ghimire said, “Our ministry has not initiated such a process. The development of Budhigandaki is under the purview of Electricity Generation Company, and it will make any decision regarding the project.” Another source at the ministry said the ongoing talks with the Chinese developer were not aimed at awarding the contract. “Since this company is already working on various projects in the country, we couldn’t reject its proposal directly,” said the source. “Therefore, we started talks with it.”

CGGC is the the civil contractor for the 30 MW Chameliya and 60 MW Upper Trishuli 3A hydroelectric projects. There are examples of the government awarding contracts for large infrastructure projects to international companies without calling for bids as required by procurement laws.

In August 2012, it signed a memorandum of understanding with CWE Investment Corporation, a subsidiary of China Three Gorges Corporation, to construct the 750 MW West Seti Hydropower Project located in the country’s Far Western Region. The government decided to sign the pact without calling for bids after getting the go-ahead from the Cabinet. The Budhigandaki has been touted as a key project to resolve the perennial power crisis in the country. The government has allocated a budget of Rs5.33 billion for the project’s development for this fiscal year. An infrastructure tax of Rs5 per litre of petrol, diesel and aviation fuel is collected to generate funds for the project.

The project is presently engaged in acquiring land. The district administration offices of Dhading and Gorkha are currently distributing compensation to the owners of land taken over by the project.

More than 8,000 households will be affected by the project, according to the latest report. It states that the reservoir of the storage project will submerge 3,560 houses, so the residents will need to be resettled in an alternative location with proper compensation.

Likewise, 4,557 houses will be partially affected by the project, and proper compensation will have to be paid to the owners.