Italian contractor may be fired for being no-show

- BIBEK SUBEDI, Kathmandu

Feb 12, 2019-

Tanahu Hydropower Limited, the developer of the Tanahu Hydropower Project, is mulling to fire Cooperativa Muratori e Cementisti di Ravenna for being a no-show. The Italian contractor was supposed to send workers to the construction site and start work by February 11, 2019, but it has not done so.

Tanahu Hydropower Limited, a wholly owned subsidiary of the Nepal Electricity Authority, is considering terminating the contract signed with Cmc di Ravenna which was appointed to implement an important component of the $550 million plant located in central Nepal.

Managing Director Pradeep Kumar Thike of Tanahu Hydropower said their next move would be to send a ‘notice to correct letter’ to Cmc di Ravenna and provide it a reasonable amount of time to start work.

“If it fails to mobilise the workforce within the time frame mentioned in the letter, we will terminate the contract,” said Thike. “We are holding talks within the company and with our parent company and the Asian Development Bank, the financier of the project, about issuing the letter to the contractor.”    

Tanahu Hydropower will provide Cmc di Ravenna extra time of a week or two through the ‘notice to correct letter’, according to Thike. The project developer has held talks with the Italian contractor. “During our discussions, the contractor said that it would not mobilise workers until we released the advance payment,” he said. “So we asked them to come up with a complete bank guarantee for the advance payment, but they did not do so.”

Cmc di Ravenna has submitted only a partial bank guarantee, according to Tanahu Hydropower. Another Tanahu Hydropower official, who declined to be named, told the Post that the Italian contractor had no intention of starting work. “Although we are convinced that Cmc di Ravenna will not start work, we have to go through the entire process to terminate the agreement due to contractual obligations,” said the source.

The Italian company’s refusal to start work is likely to push back the completion date of the project which has been divided into two components with a contractor for each package. As the tasks of the two contractors are interrelated, the construction of the entire project will be hit if both of them do not mobilise workers at the project site. Cmc di Ravenna got into serious liquidity problems after Tanahu Hydropower signed a contract with the Italian and Chinese firms for the two packages of the hydropower project respectively last October.

The Tanahu Hydropower Project will be one of the biggest reservoir-type projects in the country, with an estimated annual energy generation capacity of 587.7 gigawatt hours in the first 10 years of operation.

The project can generate energy for six hours daily during the dry season. Tanahu Hydropower is developing the project using a credit facility extended jointly by the Asian Development Bank, Japan International Cooperation Agency and European Investment Bank. The project is estimated to cost $550 million.

Published: 12-02-2019 11:31

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