PRATAP BISTA

HETAUDA, JAN 24 -

The Nepal Electricity Authority (NEA) has decided to confiscate the security deposit of Sino Hydro Corporation, the contractor for civil work of the Kulekhani III Hydropower Project, after the latter unilaterally withdrew from the contract agreement.

The corporation has deposited the security amount of Rs 50 million at Himalayan Bank Limited (HBL).

NEA's decision came after Sino Hydro moved the Patan Appellate Court, seeking its order against the confiscation of the security deposit. “We were compelled to come up with the move as the contractor breached the contract unilaterally and knocked the court's door,” said Uttam Amatya, project chief of the 14MW Kulekhani-III. “We have already written to HBL about our decision.”

In its letter, NEA has asked HBL to arrange the withdrawal of the advance payment of Rs 130 million made to the contractor at the start of the work, according to Amatya.

The authority has also initiated the process to blacklist Sino Hydro, which is likely to affect the construction of Upper Tamakoshi 3A project, as Sino Hydro has also bagged its construction contract. As per the rule, a blacklisted company cannot take part in bidding for a certain years in Nepal. “As a blacklisted company cannot work in the country, Upper Tamakoshi 3A project is likely to be affected,” said a senior official of NEA.

As per the contract, the contractor was supposed to complete civil work, including tunnel construction, underground reservoir and road construction, by December 7, 2011, but failed to meet the deadline. Instead, it demanded NEA for an additional three-year term for the completion of the project, and NEA extended the term by eight months. Sino Hydro was awarded the Rs 1.08-billion contract in 2008, of which is has already received Rs 300 million. The contractor has completed 45 percent of the work so far.

Sino Hydro wrote to NEA on January 9 informing about its withdrawal from the contract, citing NEA's failure to provide demanded compensation and increase the cost of the work assigned. Sino Hydro Project Manager Go Chhyauche said they were compelled to breach the contract as NEA failed to provide necessary amount in time and did not increase the cost of the contract work. “We are ready to work if NEA addresses the issues,” he said.

In fact, NEA is also to be blamed for the delay. For instance, in January 2011, construction of a tunnel for Kulekhani III was delayed as the government did not allow cutting down around 150 trees in surrounding areas of Audit No 2 in Bhainse VDC.

Posted on: 2012-01-24 09:23