Nepal revokes license of Chinese state-owned company to construct 1200 MW hydel project

A meeting of Nepal's Council of Ministers has decided to revoke license issued to Chinese state-owned China Gezhouba Group Corporation (CGGC) for the development of the Budhi Gandaki Hydropower Project.

A meeting of Nepal's Council of Ministers has decided to revoke the license issued to Chinese state-owned China Gezhouba Group Corporation (CGGC) for the development of the Budhi Gandaki Hydropower Project. Minister for Communication and Information Technology and Government Spokesperson Gyanendra Bahadur Karki announced that decision by the earlier government to award the 1200 MW project has been revoked.

"Regarding the Budhi Gandaki Hydropower Project, meeting of Government of Nepal's Council of Minister held on 2075-06-05 (September 22, 2018) decision would be now revoked," Minister Karki announced. Thursday's meeting also decided to build a 1200 MW reservoir-based nation-pride project through national investment for which the modality for the project's construction is being prepared by the Ministry of Energy, Water Resources and Irrigation.

The then Prime Minister KP Sharma Oli restored the contract for the project's construction with CGGC on September 22, 2018, after coming into power. However, the CGGC has done nothing to move the project ahead for three years, besides holding the project's license. After coming to power, the then Oli government restored the contract signed with CGGC to build the project under the Engineering, Procurement and Contraction and Finance (EPCF) model though the Oli government's predecessor had scrapped the contract. The EPCF model is not in practice in Nepal although there is no specific law on public procurement through the EPCF model in the country.

The project has not been able to move forward as the license to build it has been awarded to the Chinese company only to be scrapped by the next government. According to a report prepared by Tractable Engineering in 2015, the cost of the Budhi Gandaki hydropower project was estimated at Rs 270 billion. However, the cost of the project is speculated to have reached more than Rs 1 trillion now due to the sharp price rise over the past seven years. (ANI)

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