Nepal’s $2.5 billion hydropower plant project has been given to a Chinese firm. In a reverse decision of its forerunner, the new government of Nepal has asked China Gezhouba Group Corporation to build the country’s biggest hydropower plant, an official said on Sunday, as it attempts to solicit Chinese investment in its ailing infrastructure. But it is being said that the project should have been permitted for foreign bidding instead of being consigned to the Chinese firm.
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The $2.5 billion deal with the Gezhouba Group to build the Budhi Gandaki hydroelectric project was rejected last year by the previous government, citing lapses in the award process. State-run Nepal Electricity Authority (NEA) was to have built it.
But Prime Minister K.P. Sharma Oli, seen as friendly to China, pledged to return the project to the Chinese company if he was elected to power in last year’s elections. Oli became prime minister in February after his Nepal Communist Party scored a landslide poll victory.
“Yes, the Budhi Gandaki has been given back to the Gezhouba Group,” said Roshan Khadka, an aide to Energy Minister Barsa Man Pun. “It is … restoring the project to the Chinese company,” Khadka told Reuters. He did not give further details of the decision taken by the cabinet on Friday night.
China and India are both pushing for influence in Nepal by giving support and investment in infrastructure projects.
As known from the officials, a formal construction deal will be signed on the hydropower project after the government had negotiated the project modalities with the Chinese company. No date for this was given.
Nepal’s rivers, cascading from the snow-capped Himalayas, have vast, untapped potential for hydropower generation, but lack of funds has made Nepal lean on neighbour India to meet annual power demand of 1,400 megawatts (MW).
The 1,200 MW plant on Budhi Gandaki river, about 50 km (32 miles) west of Kathmandu, is meant to spout severe power shortages that has destroyed economic growth in one of the poorest countries in the world.
According to the critics, the project should have been open for international bidding instead of being entrusted to the Chinese company. Officials of the Chinese company were not immediately available for comment.
Nepal wants the Budhi Gandaki project to be part of the Belt and Road initiative (BRI), which is President Xi Jinping’s landmark scheme to connect China to the rest of Asia and beyond, to which it signed up last year.
