Nepal Electricity Authority’s plan to replace overhead electric cables with power lines underground at two locations in the Kathmandu Valley has hit a snag. The project’s financier, Asian Development Bank (ADB), is threatening to pull back from the project if the power utility fails to wrap up the bidding process immediately and appoint contractors for the job.

The ADB’s warning came at the time when the Nepal Electricity Authority (NEA) was planning to scrap the ongoing tender and initiate new procurement process to appoint contractors after bidders quoted prices that exceeded the estimates.

The NEA had invited two separate global tenders to appoint a contractor to lay cables underground in areas served by the Maharajgunj and Ratna Park distribution centres in July and August 2017. The NEA has decided to lay electricity cables underground and remove overhead lines in a bid to improve the distribution system. This is a component of the $180-million Power Transmission and Distribution Efficiency Enhancement Project (PTDEEP) funded by the Nepal government and the ADB.

Out of the nine firms interested in executing each of the contracts, two Indian firms—Larsen and Turbo and KEI Industries—were the lowest bidders for the Maharajgunj and Ratnapark area respectively.

However, as the price quoted by the Indian firms exceeded the cost estimations of the NEA by around 25 percent, the power utility wants to scrap the ongoing procurement process and call new tenders, according to a highly placed source at the NEA.

“The ADB, however, doesn’t want us to call new tenders and have warned us that it will not fund the project if new tenders are initiated. It wants us to negotiate with the two Indian firms and award them the contracts,” said the source. “The multilateral lender says that if fresh tender is called, it will take more time which will ultimately increase the cost of the project.”

The NEA management fears that if they appoint the contractors at the current bidding prices, the decision will face public criticism.

 “Although we have to follow the public procurement guideline of the ADB while executing the project under their financing, our decision might face lots of criticism and land us in controversy if we go along with the ADB’s decision,” said the NEA source. “But if we choose to call new tender, we will not get the multilateral lender’s financing.”

NEA Managing Director Kulman Ghising, who wouldn’t disclose much detail about the issue, said the power utility will make an appropriate decision soon.  The ADB, however, refused to comment on the particular package of PTDEEP saying the procurement process is in progress.