Sino Hydro agrees to resume work at Kulekhani III
KATHMANDU, FEB 22 -
Sino Hydro, the contractor for the civil work of the Kulekhani III Hydropower Project, agreed to resume work on Saturday. The Chinese company had breached the contract with the government on Jan 9 citing the Nepal Electricity Authority’s (NEA) failure to provide compensation as demanded and cost overruns.
During the second round of talks with government officials on Saturday, the company agreed to get back to work after being assured that its demands would be fulfilled. The company had also moved the Patan Appellate Court (PAC) asking it to help get back its security deposit. The corporation has deposited Rs 50 million at Himalayan Bank Limited as a security deposit.
During the meeting, the corporation agreed to withdraw the case filed at the court and resume work within 15 days, while the government agreed to pay compensation as asked.
“The company agreed to return to work after government officials promised to pay its due amount,” said Rajeshwor Man Sultiya, general manager of the production department of the NEA. He added that the company had basically pulled out of the contract after the government failed to make payment for the work completed so far which amounted to Rs 740 million.
“Despite the NEA being informed about the displeasure of Sino after the government failed to pay the amount for the construction works, we could do nothing as the Finance Ministry refused to release the necessary amount,” said a high level official at the NEA seeking anonymity.
The government has agreed to provide the corporation 30 months to complete the construction of the project. “The company had asked for 38 months to accomplish the project, but we have asked them to complete everything within 30 months,” added Sultiya.
He, however, said that the agreement made during the meeting would only come into effect after the NEA’s board meeting ratifies it them.
“We have been preparing a progress report about the dialogue with the company’s high officials,” said a NEA official, “Once the report is submitted, the NEA will call the board meeting within a couple of days.”
As per the contract, the contractor was supposed to complete the civil work, including tunnel construction, underground reservoir and road construction, by Dec 7, 2011, but failed to meet the deadline. Instead, it asked the NEA for an additional three-year term for the completion of the project, and the NEA extended the term by eight months.
Sino Hydro was awarded the Rs 1.08-billion contract in 2008, of which it has received Rs 300 million. The contractor has completed 45 percent of the work so far.
The NEA too has been responsible for delays in the Kulekhani III project. In January 2011, construction of a tunnel was delayed as the government did not allow cutting down around 150 trees in the surrounding areas of Audit No 2 in Bhainse VDC.
