Money

Middle Bhotekoshi says it may cancel contract with Guangxi

- PRAHLAD RIJAL, Kathmandu

Apr 25, 2019-

The Middle Bhotekoshi Hydroelectric Project said it might end the contract with the Chinese contractor for the civil and hydro-mechanical works for its failure to follow instructions and resume work. Guangxi Hydroelectric Construction Bureau stopped work on the 102 MW plant situated in Sindhupalchok citing money problems.

Project authorities held a high level meeting with Guangxi representatives who arrived two weeks ago, but the Chinese firm has not produced a written commitment outlining its capital source and a timeline for completion.

Construction work on the hydel plant, which had gathered pace after months of obstructions caused by a series of natural disasters, has again sunk into uncertainty. “The construction of the headworks is at a complete stop, and Guangxi officials are only issuing assurances that they will resolve their money problems,” said Sunil Lama, project chief of Middle Bhotekoshi.

The civil and hydro-mechanical works were assigned to Guangxi under an engineering, procurement and construction contract which requires the firm to procure equipment and materials on

its own.

In February, project owner Madhya Bhotekoshi Jalavidyut Company, a subsidiary of Chilime Hydropower, sent a letter of correction to the contractor asking it to maintain adequate stocks of construction materials and procure equipment named by the project’s consultants.

Guangxi was given 14 days to maintain a 45-day stock of building materials and one month to dig the remaining 40 percent of the 7.1 km tunnel which will convey water from the Bhotekoshi River to the turbines at the hydel plant. But it has not done so.Highly placed sources at the Nepal Electricity Authority—one of the promoters of the project executing agency—said that a Guangxi official with power of attorney attended the meeting with Nepali authorities in March, but left after two days without finalising anything.

“Authorities are now mulling to send a 14-day warning letter to the contractor to resume and

expedite work. If the contractor does not comply with it, the project will have no option but to terminate the contract with Guangxi,” the source said. “The contractor has placed workers at the site for show rather than to execute work.”The project began construction in 2013 and had been expected to generate electricity by 2016. However, natural disasters and land compensation issues, among others, pushed back the deadline to 2018. The project has reported physical progress of 42 percent till date.

According to Lama, the project had adopted a lenient policy for releasing funds for timely completion, but without any physical progress at the site, project financers have no evidence to release funds to the Chinese contractor. “Regarding the electro-mechanical component contracted to Andritz Hydro, work is progressing smoothly and the required equipment is ready. Delays in civil works will make it difficult to complete the project by the stipulated deadline,” Lama said.

After revising the completion deadline twice, the project office had expected to start generating electricity in June 2019. The project office had revised the project’s price tag in October 2018 from the initial estimate of Rs12 billion to Rs14 billion without factoring in interest payments. Poor execution and delays by the contractor are expected to increase cost overruns.The project is funded under a debt and equity financing modality with 50 percent of the loans taken from the Employees Provident Fund.

Published: 25-04-2019 10:33

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