Experts for conducting detailed analysis of all payments in Chameliya

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    KATHMANDU, Dec 10  : Experts have suggested that the government conduct a detailed analysis of cost overruns in Chameliya Hydropower Project to dig out anomalies in the project being implemented by Nepal Electricity Authority (NEA).

    NEA´s decision to pay payments for six separate variations in Chamaliya has draw criticisms from all quarters. Cost overruns have already doubled the project cost to Rs 15.6 billion from the initial estimated cost of Rs 8 billion. Similarly, per MW cost of the project has climbed to Rs 500 million compared to average generation cost of around Rs 200 million. Chameliya´s generation cost per MW was initially estimated at Rs 280 million including construction of transmission line.

    Chameliya Powerhouse

    Cost overruns of up to 27 percent occur in hydroelectric project, according to a study conducted by World Bank in around 66 such projects. But cost overruns in Nepali hydropower projects, particularly those developed by NEA, go as high as 100 percent.

    Former Energy Secretary Balananda Paudel has suggested to the authorities concerned to analyze payments made in each items to find out the root cause behind huge cost overruns in Chameliya project“ “Variation orders due to difficult topography are acceptable. But in Nepal, it has been misused in such a way that it has become a playground of different interest groups and middlemen,” Paudel said.

    Khadga Bahadur Bisht, president of Independent Power Producers Association (IPPAN), agreed with Paudel. “The cost-effectiveness of the project and the tendency of starting project without completing detailed design and cost calculation are the other factors that should be looked into,” added Bisht. “Cost overruns of this size wouldn´t have happened had NEA developed the project by forming a separate company as employees would have controlled unwanted expenditure.”

    Independent power developers say cost overruns in projects developed by them have not exceeded 25 percent so far.

    A sample of ´Variation Order 3´ of Chameliya Hydropower Project, which was studied by the parliamentary Public Accounts Committee (PAC), speaks in volumes of the irregularities in the project. Under the variation order, the monthly payments to a foreman and a skilled worker were Rs 116,337 and Rs 64,699 respectively. The payment is far above the normal market rate of Rs 35,000 and Rs 25,000, respectively.

    Talking to Republica, lawmaker Rajendra Kumar KC, who studied the anomalies in the project, had said that the change of the design to shift power house for increase the capacity of dams to make it a peak projects is also questionable.

    PAC has written to the Commission for the Investigation of Abuse of Authority (CIAA) to take action against all people, including NEA´s top board members, variation review committee members and consultants among others, involved in the anomalies.

    This, however, is not the first case of massive cost overruns in hydropower projects. Kulekhani III, which is being implemented by NEA, is also facing similar problem. Other projects like Middle Marshyangdi and Kaligandaki also had unnatural cost variations. Both the projects were also developed by NEA.

    Source : Republica