Nepal scraps hy­dropower deal with Chi­nese firm

The Straits Times - - ASIA -

KATHMANDU Nepal has can­celled an agree­ment with a Chi­nese com­pany to build the largest hy­dro­elec­tric plant in the im­pov­er­ished land­locked coun­try, which suf­fers from chronic en­ergy short­ages.

The project, agreed in June, would have nearly dou­bled Nepal’s cur­rent hy­dropower pro­duc­tion and cost an es­ti­mated US$2.5 bil­lion (S$3.4 bil­lion).

But the Fi­nance Min­istry rec­om­mended it to be scrapped, say­ing it had been awarded with­out an open and trans­par­ent bid­ding process, ac­cord­ing to let­ters seen by Agence France-Presse yes­ter­day.

“The Cab­i­net has ter­mi­nated the ir­reg­u­lar and im­pul­sive Budhi-Gandaki hy­dro­elec­tric project agree­ment with Gezhouba Group,” tweeted Deputy Prime Min­is­ter Ka­mal Thapa on Mon­day fol­low­ing a Cab­i­net meet­ing.

The gov­ern­ment signed an agree­ment with the Chi­nese state-owned China Gezhouba Group Cor­po­ra­tion (CGGC) in June to build the 1,200MW Budhi-Gandaki hy­dro­elec­tric plant. The deal fol­lowed Nepal’s de­ci­sion to sign up to China’s One Belt, One Road ini­tia­tive, a mas­sive in­fra­struc­ture drive at the cen­tre of the Asian giant’s push to ex­pand its global in­flu­ence.

China’s creep­ing in­flu­ence in Nepal has been closely watched by In­dia, which has tra­di­tion­ally played the role of big brother to its small Hi­malayan neigh­bour.

A Nepal rep­re­sen­ta­tive for CGGC said they were sur­prised by the gov­ern­ment’s de­ci­sion. “We had done quite a lot of work for the project... Such de­ci­sion is bound to alarm not just us but any in­vestor. There is fear among other for­eign com­pa­nies as well,” said CGGC pub­lic re­la­tions man­ager Om Bandhu Karki.

Wa­ter-rich Nepal has a moun­tain river sys­tem that could make it an en­ergy-pro­duc­ing pow­er­house but in­stead it im­ports much of its elec­tric­ity from In­dia. Ex­perts say it could be gen­er­at­ing 83,000MW but its to­tal in­stalled gen­er­a­tion ca­pac­ity cur­rently stands at less than 2 per cent of that.

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