The subcommittee that includes lawmakers Gagan Thapa, Avishek Pratap Sah, Dharma Raj BK and Kul Prasad Nepal among others and also has Laxman Prasad Ghimire, Netra Prasad Panthi and Shiva Raj Gautam as invited members, has been given 10 days to report to the committee on its findings. [break]
The move came after a majority of lawmakers who attended Friday´s meeting raised suspicions about the intention behind the signing of the Memorandum of Understanding (MoU) with CTGC on Feb 29 without any competitive bidding, after revoking the MoE working procedure that requires such bidding.
“How are we to believe that the amendment revoking the MoE working procedure which requires competitive bidding was not meant to facilitate the MoU with CTGC?” asked lawmaker Ghimire. Lawmakers Ghimire, Panthi, Prithvi Subba Gurung, Thapa, Nepal, Ratna Gurung, Badri Neupane, Rana Dhwoj Limbu and Chandra Bahadur Gurung, who spoke at the meeting, cried foul over the ministry´s hasty decision to award the project to CTGC.
Comparing the MoU for West Seti with the one with India´s GMR for the development of the Upper Karnali Project, which was signed in January, 2008 and under which the Indian developers agreed to provide 27 percent free equity and 12 percent free energy to the government for the use of Nepal´s river, the lawmakers argued that Nepal has not gotten any benefit this time.
The lawmakers, while agreeing with Energy Minister Posta Bahadur Bogati and MoE officials about the significance of the reservoir project and the urgency with which it should be handled, contended that Nepal could have gotten a better deal through competitive bidding.
The lawmakers, lambasting MoE for snubbing the committee´s prior recommendations in not opting for competitive bidding, also asked if any other company had shown interest in the project as reported in some sections of the media and why they were all ignored in favor of CTGC.
They also took exception to the provision on the National Grid Company Limited building transmission lines to connect the project to the national grid under loan financing from Exim Bank. Lawmaker Nepal claimed that one of three Chinese companies that had reportedly expressed interest in the project had offered to build the transmission lines that, according to him, cost around Rs 20 billion.
Lawmakers find ministry´s defense unconvincing
Minister Bogati, MoE Secretary Hari Ram Koirala and Joint Secretary Arjun Karki, who had signed the MoU with Executive Vice-chairman of CTGC Wang Shofeng on February 29, argued that the government entered into bilateral agreement with CTGC as per Section 35 of the Electricity Act 2049 that allows the government to enter into bilateral contracts with any person or corporate body for the generation, transmission or distribution of electricity. Minister Bogati claimed that the MoE working procedures, which required competitive bidding, were revoked as these was against Section 35.
Minister Bogati and MOE officials argued that the government did not ask for free equity and free energy from West Seti now, like it did with GMR, because such additional benefits would eventually be reflected in the Power Purchase Agreement (PPA), ultimately making energy from the project meant for domestic consumption dearer for the Nepali public. They pointed to the grim energy scenario in the country to justify the haste in signing the MoU but lawmaker Nepal argued that one cannot drink poison saying one is thirsty. “We feel that the ministry is unfairly trying to cash in on a sense of fear in justifying the agreement citing the energy crisis,” Thapa stated.
Lawmaker Thapa also pointed out how Maoist cadres are against construction of the Upper Karnali project, describing the agreement with GMR, which gave Nepal 27 percent free equity and 12 percent free energy as being against the national interest. He asked if this agreement without any apparent benefit for Nepal can be said to be in the national interest. Quoting Maoist leader CP Gajurel--who once said that corruption if perpetrated by others is a sin, but is a divine act if perpetrated by Maoist Chairman Pushpa Kamal Dahal --Thapa asked whether the same standard held true with regard to Bogati´s decisions.
MoE ignores queries regarding other interested companies
Ministry officials and Minister Bogati did not answer if three other Chinese companies had expressed interest in the project, despite repeated queries by lawmakers, and their justification for revoking the working procedures that require competitive bidding did not appear convincing.
Director General of the Department of Electricity Development Dilli Bahadur Singh said the working procedures had to be revoked as promoter seemed to show no interest in projects with no study, conveniently forgetting that West Seti is a ready-to-build project, with the West Seti Hydropower Limited promoted by Australian company Snowy Mountain Engineering Corporation (SMEC) already having prepared a Detailed Project Report (DPR) and conducted other studies before its license, issued on June 27, 1997, was revoked on July 27, 2011.
Likewise, Joint Secretary Karki´s argument that big companies are not interested in reservoir projects does not hold any water, according to lawmaker Thapa. Karki had cited lack of response to a tender invitation for the 600 MW Budigandaki project to justify skipping the bidding process also. “The promoters may be reluctant over the unstudied Budigandaki project but we will always have the upper hand in opting for competitive bidding for West Seti as it is a ready-to-build project,” Thapa argued.
The sub-committee formed on Friday has been given a month to investigate the obstruction of work at the Upper Karnali project and government intervention in the selection of a management team for Upper Tamakoshi Hydropower Limited.
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