PAC sub-panel exposes massive irregularities at Chameliya
KATHMANDU, SEP 20 -
A subcommittee of the parliamentary Public Accounts Committee formed to probe the Chameliya Hydropower Project has found massive irregularities behind its cost overruns seeking the Commission for the Investigation of Abuse of Authority (CIAA) to conduct further investigations and take action against those responsible.
The project’s cost almost doubled to Rs 15.06 billion from its initial estimated outlay of Rs 8.49 billion due to a massive rise in the variation order, change in design, bad geographical condition, compensation for land acquired, squeezing of the
tunnel, steel lining and prolongation costs.
The parliamentary panel headed by Rajendra Kumar KC found irregularities such as overhead costs higher than those of similar other projects without any basis, cost calculation without ground reality, delayed preparation of construction drawing, differences in the formulae presented in the tender document and the ones used in escalating the cost and failure to obtain a promised discount from the contractor, among others.
KC said the project faced cost and time overruns due to irregularities and they recommended that the anti-graft body take action actions against those responsible. “The high variation cost and escalation of the cost for the transmission line from Balach, Darchula, to Attariya, Kailali, resulted in huge cost overrun,” he said. The cost for the transmission line rose to Rs 2.11 billion from an initial estimate of Rs 1.83 billion.
However, variation caused the biggest rise in the cost which has been approved by the Nepal Electricity Authority (NEA), the developer of the 30MW project, for six times until now for the civil works.
With Chinese contractor China Gezhouba Water and Power (Group) getting the civil contract for Rs 2.88 billion on December 21, 2006, variations approved by the NEA alone reached Rs 2.54 billion. The subcommittee’s report states that with the addition of variation and other costs, the revised cost of the civil work has reached Rs 7.5 billion.
The biggest variation approved by the NEA is for tunnel squeezing treatment works, which is worth Rs 1.09 billion. An 843-metre segment of the project’s tunnel, which is almost one-fourth of its total length, had to be reconstructed due to its being squeezed.
The report said that the tunnel became squeezed because the geological study of the project site was not done properly while preparing the detailed project report (DPR). Despite the NEA’s approval to pay such a large variation amount to the contractor, PAC stopped the payment until another decision was taken by its meeting held on July 1.
But the entire work of the project was stalled after PAC’s order to stop payment. “It is guided by publicizing reports that the project has been a failure at the local level,” stated the report.
The reported submitted to PAC at its meeting on Friday has recommended a new technical evaluation regarding the repair and maintenance status of the treatment of the squeezed tunnel and making payment based on the physical progress of the construction work. Earlier, PAC had suggested instructing the Energy Ministry to resume work at the project immediately after making payment for the 86th Interim Payment Certificate, a regulator task, fixing the exact deadline for completing the work with the contractor.
It has also recommended forming a monitoring team to find out whether work has been done as per the timeline and to ensure accountability for the work.
The subcommittee’s report has pointed out that contractors have demanded a variation amount 78 times higher than the amount determined by the Variation Review Committee (VRC). While fixing the variation, the contractor proposes variation which is checked by the consultant
engineer and the VRC fixes
the variation and sends it to the NEA board.
The variation amounts determined by these three agencies differ as they don’t use the same norms for the variation, the report further said, adding that there was a need to prepare and implement the norms. As a result of the higher variation, the cost of the project per megawatt has risen to Rs 500 million from the initially estimated Rs 283.18 million. Likewise, the appointment of a consultant as late as 10 months after the contract for the civil works was awarded as well as the change of the consultant after three years also created problems at the project, said the parliament panel.
The report also found NEA failed to claim the promised discount of 24.18 percent from the contractor while paying it the variation amount. “Overhead costs and profit for contractor have been hiked by 40 percent against NEA’s Financial Administration Bylaw that has provisioned keeping it at 15 percent by calculating the cost of materials, labour and equipment,” states the report.
Likewise, the NEA approved the cost escalation of the South Korean contractor appointed for the electro-mechanical and hydro-mechanical tasks. A Korean joint venture named KHNP Consortium, consisting of Korea Hydro & Nuclear Power Co, Hwachon Plant Construction Co, Sean Engineering and Construction Co and Nepal Hydro & Electric, are handling the electro-mechanical job.
According to the report, the cost of the electro-mechanical and hydro-mechanical work surged to Rs 2.48 billion from the initial estimate of Rs 1.97 billion.
Source: The Kathmandu Post
