Saturday, September 30, 2017

World Bank backs NEA solar plant contract

The World Bank (WB) has defended Nepal Electricity Authority’s (NEA) in solar plant case.
Defending the NEA decision to award the contract to install a 25 MW solar plant to a Chinese company, the World Bank has written a letter to the Public Accounts Committee (PAC). PAC has ordered the NEA to scrap the contract with the Raijin Energy Co.
The PAC has also accused the NEA of breaching the Public Procurement Act by hiring Raijin Energy Co but the World Bank – in the letter – said that the NEA had followed the procurement policies and practices adopted by 189 member-governments of the World Bank Group and the funding agreement signed with Nepal.
The NEA – the implementing agency of the World Bank-funded project – had forwarded the letter from the House panel to the multilateral development partner.
The NEA has received the World Bank’s reply in early September and forwarded it to PAC. Currently, the contract with the Chinese firm is in a state of suspension, and the NEA is waiting for the House panel's response.
This is the second time that the World Bank has come forward to defend the NEA. Earlier, the multilateral development partner defended NEA in August after the parliamentary committee directed the NEA to cancel the deal with Raijin Energy Co, and restart the procurement process to appoint a new contractor.
After the House committee’s ruling the World Bank had even hinted at dropping the project as selecting a new contractor would further delay the project, which is already one and a half years behind the schedule.
In February 2015, the World Bank agreed to provide $130 million to the government to build solar stations to supply electricity to the Kathmandu Valley and reduce electricity leakage. Of the money, $37 million had been earmarked for the establishment of solar plants at Devighat and Trishuli in Nuwakot district.
Although construction should have begun within a year of signing the aid agreement, the NEA took two years to award the contract as the contractor selection process became engulfed in controversy.
The controversy began after former NEA managing director Mukesh Raj Kafle unilaterally decided to hire a Chinese company to build the project. The company was later declared ‘technically unqualified’ by a committee comprising international experts.
As a result, new NEA Managing Director Kulman Ghising decided to award the project to Raijin Energy Co.
However, the parliamentary panel directed the NEA to scrap the contract following a complaint that the price of Rs 3.7 billion quoted by Raijin Energy Co was Rs 680 million higher than the rate proposed by the contractor selected by Kafle.

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