WB likely to pull the plug on $37m solar project

- BIBEK SUBEDI, Kathmandu

Aug 2, 2017-

The World Bank is mulling over abandoning the $37-million solar plant project after a parliamentary committee took a decision that would further delay implementation of the project, which is already one-and-a-half years behind its schedule.

The Parliamentary Committee on Public Accounts on Tuesday directed Nepal Electricity Authority (NEA), the project implementing agency, to scrap the deal with contractor hired to roll out the project and restart the procurement process to appoint a new contractor. The committee issued this instruction stating the previous procurement process had violated the provisions of the Public Procurement Act while appointing Chinese company Raijin Energy Co to install the solar plant. 

This instruction is likely to prompt the multilateral lender to lose its appetite to fund the 25MW solar plant, as it is not willing to go through another protracted procurement process which has already consumed over two years. 

“This would run contrary to the project’s original objective of supporting Nepal’s energy crisis action plan,” said a source close to the World Bank Office in Nepal, referring to the government initiative to end crippling energy shortage that is hitting industrial production and households as well.

The World Bank in February 2015 had agreed to provide $130 million to build solar stations to the government to supply electricity in the Kathmandu Valley and reduce electricity leakage. Out of that amount, $37 million was earmarked for installation of solar plants at Devighat and Trishuli of Nuwakot district. 

Although the solar plants’ installation was supposed to be completed within a year of signing the aid agreement, NEA took around two years to award the contract, as the entire contractor selection process was dragged into controversy.

Initially, previous NEA managing director Mukesh Raj Kafle had unilaterally decided to hire a Chinese company to build the project. After the Chinese contractor was deemed “technically unqualified”, new NEA Managing Director Kulman Ghising decided to hand over the project to Raijin Energy. 

But Ghising was barred from hiring Raijin, as a complaint was lodged at the Parliamentary Committee on Public Accounts stating the construction cost of Rs3.7 billion proposed by Raijin was Rs680 million more than the cost proposed by the contractor favoured by Kafle. 

NEA Chief Ghising said the project is likely to be abandoned as the World Bank is highly unsatisfied with the time overrun. “Now, the project will go ahead only if the government decides to build the project on its own,” said Ghising.

Public Accounts Committee Chairman Dor Prasad Upadhyay, however, said their intention was not to stop project’s implementation, but to control irregularities while rolling out the project. 

“We want NEA to start fresh bidding process and strictly follow the Public Procurement Act while appointing the contractor,” said Upadhyay.   

Published: 02-08-2017 07:53

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