Communists propose, Congress disposes: What you need to know about the fate of Budhi Gandaki Hydro Project 

One after other politically motivated decisions are pushing the fate of 1200 MW Budhi Gandaki project in uncertainty.

File photo

NL Today

  • Read Time 3 min.

Kathmandu: The government on Thursday decided to scrap the decision made by the previous government led by KP Sharma Oli to award the contract of construction of Budhi Gandaki Hydropower Project to China Gezhouba Group Company Limited, a Chinese construction and engineering company based in Wuhan.

The government led by K P Oli had awarded the project to China Gezhouba Group in September 2018.

Four years later, the coalition government led by Nepali Congress overturned this decision.

It seems, Nepali Congress and Communist parties have been at loggerheads regarding how Budhi Gandaki project should be built and to whom to award the contract.

In May, 2017, the government led by Pushpa Kamal Dahal had decided to award the contract to construct over two billion US dollars Budhi Gandaki project to China Gezhouba Group. A month later in June, the memorandum of understanding (MoU) had been signed between the Ministry of Energy and the Chinese company to build the project under the EPCF model.

Then in November 2017, the Nepali Congress-led government scrapped the contract with China Gezhouba, citing irregularities and lack of transparency.

The government decision to undo the contract comes after Prime Minister Sher Bahadur Deuba’s visit to India last week. During the visit, Deuba and Modi had agreed to further strengthen mutually beneficial bilateral cooperation in the power sector including joint development of power generation projects in Nepal. According to the statement issued by India’s Ministry of External Affairs, Nepal, during the visit, had invited Indian companies to invest in the development, construction and operation of viable renewable power projects, including storage-type projects.

Budhi Gandaki project is a reservoir-type project.

It seems, Nepali Congress and Communist parties have been at loggerheads regarding how Budhi Gandaki project should be built and to whom to award the contract.

The project located about two kilometers upstream of the Trishuli-Budhi Gandaki confluence, at the cross junction of the Gorkha and Dhading districts, geographically extends across several villages of Gorkha  and Dhading districts. The 1,200 MW project is expected to generate 3,383 GWh of annual energy.

Points of controversy

The project courted controversy after the Pushpa Kamal Dahal led government awarded the contract to the Chinese company without competitive bidding.

There have also been serious allegations of corruption.

In October, 2020, former Prime Minister Dr Baburam Bhattarai had publicly accused the top leaders of the political parties of receiving billions in commission to award the project to the Chinese company.

Bhattarai had said that K P Oli, Sher Bahadur Deuba and Pushpa Kamal Dahal had received Rs 9 billion in commission while awarding the contract to the Gezhouba Group. Deliberate delay from contractors has also remained a major concern in hydropower projects in Nepal.  

Policy inconsistency

Experts say that while the contract awarding process must be fair and transparent by following all the due process, the tendency of one government led by one political party awarding the project to a certain company and succeeding government scrapping the deal sends a bad message far and wide.

“It sends the message that Nepal has no policy stability. It also sends the message that political parties cannot be trusted,” said Purushottam Ojha, who is a trade expert. “Such a tendency will also discourage the foreign companies from investing in Nepal.”

According to him, those who awarded the project to the Chinese company should explain why it was awarded to that particular company and those who overturned the decision should also forward a credible reason behind changing the decision taken by the previous government. “You cannot award the contract and then scrap it on a whim,” he said.