Rs 550m embezzled in Chameliya project
KATHMANDU, DEC 04 -
The Parliamentary Public Accounts Committee (PAC) on Wednesday said that there had been massive embezzlement in the construction of Darchula-based 30MW Chameliya Hydropower Project.
The committee has also directed the government and the Commission for Investigation of Abuse of Authority (CIAA) to take necessary actions against those involved in the embezzlement within 10 days.
In what could be one of the biggest scams in the government-funded hydropower project, the PAC stated that Rs 550 million had been embezzled in the variation order number 6 alone. In July, a Nepal Electricity Authority (NEA) board meeting had approved the biggest variation order of Rs 1.09 billion to China Gezhouba Water and Power (Group) for tunnel squeezing treatment work in July.
The PAC study had found that the cost of construction material, manpower and equipment were highly inflated and that the NEA board had approved the variation order 6 of the contractor, bypassing the Variation Review Committee under Project Development Department (PDD). The NEA has already paid more than Rs 2.5 billion in variation orders to the project contractors. The committee had reviewed claims of five previous variation orders.
The developer, NEA, has made payments to six variation orders to the contractor so far.
According to PAC Chairman Janardan Sharma, the irregularities started when the NEA board replaced the Project Development Department (PDD) with SHAH/SILT/ICON JV as main consultant of the project. “Following that decision, the PDD and steering committee have been kept out of the consultation process,” says the PAC study. The variation order for Tunnel Squeezing Treatment was prepared by SHAH/SILT/ICON JV, but the review committee did not vouched the cost estimation.
With a massive rise in variation order, the project cost has now spiralled to Rs 15.06 billion from the initial Rs 8.49 billion.
An an estimated production cost of Rs 500 million per MW million, the project is set to become the costliest ever undertaken by the NEA.
PAC had formed a sub-committee under lawmaker Rajendra KC in July after reports of irregularities appeared in the media.
Pointing to massive irregularities at the time, the KC panel had suggested for a further study by technical experts. The technical report by the PAC secretariat has established what the KC panel had earlier found. “The technical study showed misappropriation of Rs 540-550 million,” said PAC Chairman Sharma. “We have directed the stakeholders to carry out further studies and penalise those found guilty.”
The study has also found discrepancies in the base prices submitted by the contractor and consultant for manpower, materials and equipment.
The price of construction materials was also found highly inflated, with the installation of steel rib on the tunnel squeezing treatment work being quoted Rs 458,029 per piece. “It should not have cost more than Rs 275,000,” states the study.
The contractor generally adds overhead and profit up to 25 percent (15 percent overhead and 10 percent profit) in the cost. But on this occasion, the study says, the contractor had added as much as 40 percent. “This has made the item rate exorbitantly expensive,” it adds.
According to PAC, till variation order 5, cost was fixed by deducting 24.18 percent but this process was neglected in the case of variation order 6.
The lawmakers have demanded stringent action against those involved in the misappropriation, but are against halting the project construction. “This is a criminal act and those involved should be punished accordingly,” said NC lawmaker Dhan Raj Gurung.
According to an NEA official, more than 90 percent of the project works have been completed. “Our aim is to complete the project within next one year,” said the official.
Source: The Kathmandu Post
