Logo of Phnom Penh Post newspaper Phnom Penh Post - Nepal reinstates a $2.5B hydro deal

Nepal reinstates a $2.5B hydro deal

Nepal reinstates a $2.5B hydro deal

NEPAL has reinstated a deal with a Chinese state-owned company to build a $2.5 billion hydroelectric plant scrapped by the previous government, officials confirmed on Monday, as the new pro-Beijing administration seeks massive infrastructure investment.

The agreement with the China Gezhouba Group Corporation (CGGC) to construct Nepal’s largest hydro plant was abruptly cancelled by the outgoing government just weeks before a general election late last year.

“The decision to scrap the agreement with the Chinese company by the previous government was taken without any grounds,” information minister Gokul Baskota said.

“We decided to correct that, because Nepal doesn’t have the capacity to build such a big project and funding is also challenging.”

‘Heavy national debt’

The long-mooted 1,200 megawatt Budhi-Gandaki plant would nearly double Nepal’s hydropower production. The impoverished landlocked country suffers chronic energy shortages and is forced to buy electricity from neighbouring India.

Beijing has been lobbying the new Communist government in Kathmandu to restore the contract since it took office in February, Baskota said.

Nepal wants the project to be part of the One Belt, One Road Initiative (OBOR), China’s massive infrastructure drive at the centre of the Asian giant’s push to expand its global influence. Nepal signed up to the plan in May 2017.
Critics say the contract should have been open for international bidding and warned of the risks of Chinese loans.

Awarding such a lucrative contract in an opaque manner risked inflating the cost of the project “leading to a heavy national debt burden”, tweeted former finance minister Ram Sharan Mahat.

Water-rich Nepal has a mountain river system that could make it an energy-producing powerhouse, but failure to develop its hydropower sector has weighed heavily on its ailing economy.

Nepal has awarded contracts for its mega hydropower projects to its two giant neighbours, rivals India and China, but construction has been slow.

Construction finally began on the $1.4 billion India-backed Arun Three hydropower plant earlier this year, 26 years after it was first proposed.

MOST VIEWED

  • Without shoes or a helmet, a young cyclist steals the show

    Pech Theara gripped the curved handlebars of his rusty old bike, planted his bare feet on its pedals and stormed as fast as he could towards the finish line. The odds were against him as the 13-year-old faced off against kids with nicer bikes at

  • Phnom Penh-Sihanoukville expressway on schedule

    The construction of the more than $1.9 billion Phnom Penh-Sihanoukville Expressway has not been delayed despite the Covid-19 pandemic, with more than 26 per cent of the project completed and expected to finish in about two years, according to Ministry of Public Works and Transport secretary of

  • Over 110 garment factories close

    A government official said on November 22 that at least 110 garment factories had closed in the first nine months of the year and left more than 55,000 workers without jobs – but union leaders worry those numbers could be much higher. Ministry of Labour and Vocational Training undersecretary

  • Singapore group seeks $14M in damages from PPSP over ‘breach of contract’

    Singapore-based Asiatic Group (Holdings) Ltd is seeking a minimum of $14.4 million relief from Cambodia Securities Exchange (CSX)-listed Phnom Penh Special Economic Zone Plc (PPSP) for allegedly breaching a power plant joint venture (JV) agreement. Asiatic Group’s wholly-owned Colben System Pte Ltd and 95 per

  • PM vows to protect Hun family

    Prime Minister Hun Sen has vowed to continue his fight against opposition politicians who he said intend to smash the Hun family. Without naming the politicians but apparently referring to former leaders of the Supreme Court-dissolved Cambodia National Rescue Party (CNRP), Hun Sen said there

  • Cambodia lauded for fight against Covid-19

    Cambodia has drawn global accolades for its handling of the Covid-19 pandemic, with a new report finding that the Kingdom has controlled the pandemic better than any other country in Asia. Dr Takeshi Kasai, director of the World Health Organisation’s (WHO) Western Pacific region,