The odds of the thorny Budhi Gandaki hydro project, with an estimated cost of Rs 270 billion, being awarded to the China Gezhouba Group Corporation have gone up. The budget speech presented by Finance Minister Yubaraj Khatiwada this week does not mention the modality under which the project is to be undertaken. It only mentions that the project will be carried forward after giving compensation payments. Nor was the phrase ‘competitive process’ included in the federal government’s Policies and Programs unveiled on May 25 in the run-up to the budget presen­tation. This likely implies that the project will be given to the Chinese company.

 

This despite the fact that the white paper issued by the Ministry of Energy, Water Resources and Irrigation on May 8 had stated that a bidding process for the project would be initiated in the upcoming fiscal year.

 

Tug of war

 

Prime Minister KP Sharma Oli and his comrade-in-arms Pushpa Kamal Dahal have repeatedly declared that the Budhi Gandaki project would be handed to none other than the Gezhouba Group. The budget speech seems to be intended to make good on the prime minis­ter’s declaration, while going against the spirit of the Energy Ministry’s white paper.

 

Former Energy Minister Janardan Sharma had signed an agreement to hand the project to the Gezhouba Group without going through a competitive bidding process—the very next day that the government he was a part of was ousted and he was serving in a caretaker status. Shar­ma’s act was roundly criticized, for his term had already ended and his decision violated the Public Procurement Act. Following this, a joint meeting of the Agriculture and Water Resources Committee and the Public Accounts Committee of the then Legislature-Parliament directed the government to scrap the decision to award the contract to the Chinese company.

 

The previous Sher Bahadur Deuba-led government had then announced that the Budhi Gandaki project would be constructed with domestic investment. A taskforce under the coordination of Swarnim Wagle, the then vice-chairman of the National Planning Commission, had submitted a report to the government outlining a plan to carry out the project. Based on the report, the then Council of Ministers had decided ‘to undertake the Budhi Gandaki hydro project with domestic investment’.

 

The Energy Ministry’s white paper was in line with that government decision. But the recent budget speech, by omitting the word ‘com­petition’, has fueled speculation that Finance Minister Khatiwada has colluded with Prime Minister Oli to overturn the previous govern­ment’s decision and award the contract to the Chinese Company.

 

And what of West Seti?

 

What is more surprising is that the budget speech states that the West Seti hydro power project would be undertaken with domestic investment, although this is a project that has been deemed unviable even by the China Three Gorges Corporation, a global construction behemoth.

 

After Three Gorges wrote a letter to the Investment Board of Nepal implying that it intends to back off from the project, the IBN had formed a committee under Mahen­dra Man Gurung, a Secretary at the Office of the Prime Minister, to look into the matter. Although the committee has submitted its report, the IBN is yet to make a formal deci­sion. But Khatiwada, by preempting the IBN’s decision, announced in the budget speech that the West Seti project will be undertaken with domestic investment.