Kathmandu Scraps $2.5 Billion Hydropower Plant With Chinese Firm

Citing lapses in the tender award process, Nepal's energy ministry has scrapped a $2.5 billion deal with China-based Gezhouba Group Corporation to build the country’s largest hydropower plant, reports Reuters.

“The cabinet has cancelled the irregular ... agreement with Gezhouba Group to build the Budhi Gandaki hydroelectric project,” tweeted Energy Minister and Deputy Prime Minister Kamal Thapa after a cabinet meeting on Monday (13 November).

Nepal’s snow-fed rivers, which originate in the Himalayas, are laregely due to a lack of funds and technology which have made Nepal dependent on India to meet its annual demand of 1,400 megawatts (MW) of power.

In June, the Maoist-led coalition government of Pushpa Kamal Dahal awarded a contract to China Gezhouba Group Corporation to construct a 1,200 MW plant on the Budhi Gandaki river, roughly 50 km west of Kathmandu, in an attempt to address the acute power deficit.

Critics of the project have said that the $2.5 billion project was handed over to the Chinese firm without any competitive bidding, which is legally mandated, and a parliamentary panel asked the current government to scrap the agreement.

China has been competiting with India to influence major investments in the infrastructure sector in Nepal.

Nepal cleared a 750 MW power project on the West Seti River that is to be built by China’s state-owned Three Gorges International Corporation.

It has also allowed two Indian firms — the GMR Group and Satluj Jal Vidyut Nigam Limited —to build one 900 Mw hydroelectric plant each, mainly to be exported to India.