World Bank backs NEA’s solar plant contract

- BIBEK SUBEDI, Kathmandu

Oct 3, 2017-

The World Bank has defended the Nepal Electricity Authority’s (NEA) decision to award the contract to install a 25 MW solar plant to a Chinese company, said a highly placed source at the state-owned power utility. 

Responding to a letter from the parliamentary Public Accounts Committee (PAC), which has accused the NEA of breaching the Public Procurement Act by hiring Raijin Energy Co, the World Bank said the NEA had followed the procurement policies and practices adopted by 189 member-governments of the World Bank Group and the funding agreement signed with Nepal. 

The NEA, the implementing agency of the World Bank-funded project, had forwarded the letter from the House panel to the multilateral lender. PAC has ordered the NEA to scrap the contract with the Chinese firm. 

“We received the World Bank’s reply in early September and forwarded it to PAC,” said the source. “Currently, the contract with the Chinese firm is in a state of suspension, and our next move will depend on the House committee’s response.” 

This is the second time that the World Bank has come forward to defend the NEA. The multilateral lender made similar comments in a press statement last August after the parliamentary committee directed the NEA to cancel the deal with Raijin Energy Co and restart the procurement process to appoint a new contractor. After the House committee’s ruling, a source close to the World Bank told the Post that it had even hinted at dropping the project altogether as selecting a new contractor would further delay the project launch which is already one and a half years behind schedule.

In February 2015, the World Bank agreed to provide $130 million to the government to build solar stations to supply electricity to the Kathmandu Valley and reduce electricity leakage. 

Of that amount, $37 million had been earmarked for the establishment of solar plants at Devighat and Trishuli in Nuwakot district. Although construction should have begun within a year of signing the aid accord, the NEA took two years to award the contract as the contractor selection process became engulfed in 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 declared ‘technically unqualified’ by a committee comprising international experts. As a result, new NEA Managing Director Kulman Ghising decided to award the project to Raijin Energy Co. However, the parliamentary panel directed the NEA to scrap the contract following a complaint that the price of Rs3.7 billion quoted by Raijin Energy Co was Rs680 million higher than the price tag proposed by the contractor favoured by Kafle.

Published: 03-10-2017 08:34

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