Nepal Electricity Authority, the state-owned power utility has fired the Chinese contractor appointed to execute the first section of Tamokoshi-Kathmandu Transmission Line Project and has initiated a new procurement process to appoint another company for the remaining job.

A few weeks ago, the power utility terminated the pact signed with Guangxi Transmission and Substation Construction Company to execute the 44-km long New Khimti-Barhabise section of the power line project after being fed up with its deliberate delays in executing the contract. Following the termination of the contract, the Nepal Electricity Authority (NEA) has confiscated the performance guarantee worth $1.45 million and Rs61.67 million deposited by the Chinese firm.

As per the deal signed between the NEA and the Chinese company in September 2016, the substation should have been up and running by May 2019. But by the time when it was supposed to complete majority of the job, the contractor was unable to complete even the preliminary task of the power line project, prompting the power utility to fire the firm and look for another alternative. 

Before firing the Chinese company, the NEA management repeatedly warned the firm to get its act together and expedite the power line project with strategic importance. “We constantly reminded the contractor to speed up the construction work of the transmission line. However, instead of expediting the construction work, the company was more interested in rescheduling the work, pushing back the completion date,” said Nava Raj Ohja, the NEA appointed project chief the power line. “With 74 percent of the contract period over, the Chinese firm has only completed around eight percent of the job.”

NEA Managing Director Kulman Ghising had visited the project site on multiple occasions and directed the contractor to expedite the job but it failed to spur any action.

Although the power utility had been planning to fire the Chinese firm in October, it waited till it received concurrence from the Asian Development Bank (ADB)—the Manila-based multilateral lender which is financing the project.

“As the ADB is financing the project, we had to make sure that funds will be available for hiring another contractor for the job,” said a source at the NEA. “We terminated the contract after the multilateral lender gave us the green light to initiate a fresh bidding process to appoint a new contractor.”   

According to the project office, the new contractor will be given 820 days to complete the remaining job of the power line project.

The 400kV power line is of strategic importance as it will be crucial to evacuate the electricity generated by the hydropower projects stationed at the Tamakoshi and Khimti rivers to the Kathmandu Valley where the demand for electricity is higher compared to other parts of the country.