WB defends NEA’s move to hire Chinese firm

  • $37m solar plant project
- Post Report, Kathmandu

Aug 5, 2017-

The World Bank has defended the decision taken by Nepal Electricity Authority (NEA) to hand over 25-megawatt solar plant project to a Chinese company amidst parliamentary committee’s instruction to scrap the process of appointing the firm and restart works related to contractor selection.

The Parliamentary Committee on Public Accounts on Tuesday directed NEA, the implementing agency of the World Bank-funded project, to halt the process of handing over the contract to Raijin Energy Co and restart the procurement process to appoint a new contractor. 

The committee had issued the instruction stating the procurement process, which led to the appointment of Raijin Energy, had breached provisions of the Public Procurement Act.

The World Bank, which is extending $37 million to implement the solar project, has, however, said the procurement process does not go against the Public Procurement Act.

“We can confirm that following extensive review, the award of contract managed by Nepal Electricity Authority under this project conforms with the procurement policies and practices adopted by 189 member governments of the World Bank Group, as well as the financing agreement between the government of Nepal and the Bank,” a statement issued by the World Bank on Friday quotes its Country Manager for Nepal Takuya Kamata as saying.

This statement indicates the Washington, DC-based multilateral lending institution is not very happy with the verdict issued by the parliamentary committee. 

After the parliamentary committee’s ruling, the World Bank even signaled that it might pull the plug on the project, as the process of appointing a new contractor would further delay project implementation, which is already one-and-a-half years behind its deadline.

However, Kamata, on Friday, said: “It would be premature to speculate upon the World Bank’s future role in that project….[as] we are yet to receive official communication from the concerned authorities on recent developments reported in the media.”

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 works related to solar plant installation should have begun 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.

The controversy began after former NEA managing director Mukesh Raj Kafle unilaterally decided to hire a Chinese company to build the project. 

This company was later deemed “technically unqualified” by a committee 

comprising international experts. Based on this decision, 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 solar installation cost of Rs3.7 billion proposed by Raijin was Rs680 million more than the cost proposed by the contractor favoured by Kafle.

The World Bank always says contractors should not be selected only on the basis of price they quote, as they should first meet the projects’ criteria. 

The government’s Public Procurement Act also calls on project developers to first evaluate technical bid documents before assessing their financial bid documents. 

This is to ensure quality is not compromised in the name of saving cost.

Published: 05-08-2017 07:29

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