NT project risks becoming a non-starter

KATHMANDU, AUG 31 -

Nepal Telecom’s ambitious project to install 10 million GSM lines is at risk of becoming a non-starter.

The telecom giant has terminated its contract with China’s ZTE Corporation to install 5.2 million GSM lines under the package ‘A’ of the project, and has asked Swedish telecom system vendor Ericsson to undertake the package.

Nepal Telecom (NT) on August 27 issued a letter of intent (LoI) to Ericsson which had quoted the third lowest after Huawei and ZTE.

NT has given a week’s time to Ericsson to come for negotiation

and sign an agreement. “If Ericsson refuses, NT will ask Huawei to accept the package at the amount it had quoted as per the bid condition,” said a senior NT official.

However, Huawei in advance told NT that it would not undertake the package A. It wrote to NT on August 27, expressing its unwillingness for the package A. It has also filed an appeal at the Supreme Court seeking a stay order against any possible forfeiting of its bid security amount of $4.6 million.

The 10 million lines project is being executed under two packages — A and B. Huawei had quoted the lowest for both the packages. According to

NT, the Chinese firm had quoted $122 million for the package A and $85 million for B.

However, NT decided to award the packages to two Chinese companies — Huawei and ZTE. Huawei has already started work on 4.8 million lines under the package B, signing an agreement in the last week of June.

NT terminated the initial agreement with ZTE after the two sides failed to reach a conclusion over costs even after three months of negotiations.

ZTE had asked NT to increase the contract amount, saying that could

not execute the project at the previously agreed cost.  NT also seized the bid security of Rs 420 million deposited by ZTE after cancelling the contract. ZTE had quoted $155 million and $101 million for packages A and B, respectively, according to sources.

Ericsson had proposed to undertake the package A at $242 million and B at $142 million. “Since the amount quoted by Ericsson was almost double the amount quoted by Huawei, the chances of the Swedish company agreeing are slim,” an NT official said. “It seems the package A will take some more time, affecting NT’s service expansion drive.”

As per the bid condition, Huawei, the lowest bidder, is obliged to accept the contract if the second and third lowest bidders reject. ZTE was the second lowest bidder for the package.

NT is surprised by Huawei’s advance refusal for the package A. The official said the NT board might blacklist Huawei besides seizing its bond security. “We are stunned to know about Huawei’s refusal to work on the same amount it quoted.”

Source: The Kathmandu Post