Responding to the recommendation made by parliamentary committee of the erstwhile Parliament, the government has scrapped the agreement signed with the controversial Chinese company; China Gezhouba Group Corporation (CGGC), hired by then UML led government to build the 1200 megawatt hydropower project.
A Cabinet meeting held in May had decided to award the contract to the company to build the project under the engineering, procurement, construction and finance (EPCF) model. Following the decision of the CPN UML led government, the energy minister Janardan Sharma and CGGC President Lv Zexiang had signed in a Memorandum of Understanding (MoU) to build the project.
With the government’s decision, the long-held plan to expedite construction of $2.5-billion Budhi Gandaki Hydropower Project (BGHP), located in Gorkha and Dhading districts, is unlikely to materialize anytime soon.
But the concerned stake holders have appraised the government decision for scrapping the contract of the controversial company. It was alleged that then UML and the CPN Maoist Center led government would have signed the agreement with the controversial company from undue influence.
Smelling rats in the MoU, a joint meeting of the Agriculture and Water Resources Committee and Finance Committee of the erstwhile Parliament directed the government to scrap the agreement.
In the directive handed over the government, the parliament committee had stated that the decision to hand over the project to the Chinese company was against the country’s legal provisions and breaches the Public Procurement Act.
As the government had handed over the contract of the biggest reservoir hydropower project to the Chinese company without initiating a competitive bidding process, the government was criticized from different sectors. The Naya Shakti Party’s coordinator and former Maoist leaders Dr. Baburam Bhattrai had protested the government decision even organizing a press conference.
The company had agreed to arrange soft or commercial loans from the Chinese financial institutions to build the project under terms and conditions acceptable to the Nepal government. But the decision was dragged into controversies stating that these types of decisions create policy uncertainty and an unpredictable situation for investors.
With the signing in the MoU, the government had begun to acquiring the land from locals in Dhading and Gorkha to build the project. The government has scrapped the agreement but not carved out any future course of the national pride project.