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

  • Massive stingrays may live in Mekong’s deep pools

    US scientists have suggested that unexplored deep pools in the Mekong River in an area of Stung Treng could potentially be home to significant populations of giant freshwater stingrays, one of the world’s largest freshwater fish species. This comes as a fisherman hooked a 180

  • PM takes time to meet, greet Cambodians living in the US

    After landing in the US ahead of the ASEAN-US Special Summit, Prime Minister Hun Sen was received by over 1,000 Cambodian-Americans including political analysts who welcomed him with greetings, fist bumps and selfies. Hun Sen also met with analyst Mak Hoeun, who had allegedly spoken ill

  • PM reflects on shoe throwing: Free speech or act of violence?

    Prime Minister Hun Sen on May 17 questioned whether a man who threw a shoe at him while he was in the US was exercising freedom of expression or if it was an act of hostility. Hun Sen was referring to an incident last week when

  • Chinese tourists 2.0 – Coming anytime soon?

    Regional tourism is grappling with the absence of the prolific travellers and big spenders – the Chinese tourists. Cambodia, which has welcomed over two million Chinese tourists before Covid-19, is reeling from the economic loss despite being the first to fully open last November ‘To put

  • Prime Minister Hun Sen warmly welcomed by president Biden

    Prime Minister Hun Sen, as ASEAN chair, and other ASEAN leaders were warmly welcomed by US president Joe Biden as the ASEAN-US summit May 12-13 kicked off today in Washington. “This evening, I welcomed ASEAN leaders to the White House for the first time in

  • Third Makro outlet planned for capital’s Chroy Changvar

    Makro (Cambodia) Co Ltd is set to invest $12.7 million in its third Cambodian outlet, this time in northeast Phnom Penh’s Chroy Changvar district, an area dotted with high-end residential developments, as shopping behaviours continue to evolve in tandem with economic growth. The Cambodian Investment