The Supreme Court today summoned government authorities for renewing a contract with Nepal Water and Energy Development Company Pvt Ltd, a joint venture of Korea-based Z Power Company, to produce electricity from 216 MW Upper Trishuli-1 Hydropower Project.
A single bench of Justice Prakash Osti issued the order to the Office of the Prime Minister and Council of Ministers, the Ministry of Energy, Electricity Development Department, Energy Secretary, Director General of Electricity Development Department and the Z Power Company to be present during the hearing on whether to stay the extension of the contract or not.
The five-million dollar project has kicked up a row, as the contracted company could not produce a survey report even after its survey licence expired and yet its contract was renewed twice.
The apex court has sought an explanation from the authorities within 15 days on why they renewed the contract second time on November 14.
A public interest litigation challenging the decision of the government has been filed, stating that the company’s survey licence was terminated after it could not meet the five-year deadline to produce a survey report till January 6, 2011, as per Section 5 of the Electricity Act, but the government renewed the contract going against Section 21 of the Act.
The government had issued the survey licence to the company on January 7, 2006, giving it five years to produce a survey report but when it could not do so, the government extended its contract for a year in November 2012. When it could not produce a survey report even during that period, the government again extended the contract on November 14.
Stating that the extension of the contract by the Cabinet and the department on November 14 was against Sections 18 and 19 of the contract signed between the government and the company on November 18, 2012, senior advocate Mithilesh Kumar Singh and advocate Amarjiwi Ghimire filed a petition demanding to annul the extension of the contract.
The petitioners have claimed that the renewal of the contract time and again even after the company’s failure to produce a survey report is illegal and the apex court intervention is a must. The petitioners have claimed that it was wrong to extend the contract after the company’s survey licence had expired.
The petitioners have also stated that on August 21 they had filed a writ petition against the extension of the contract last year and while the case was sub-judice in the apex court, the government and the company signed another contract, undermining the apex court.
The petitioners also stated that the company has been occupying a potential electricity producing river without producing any electricity.
Electricity Act violated
• Section 5 of the Electricity Act states that the term of licence to be issued for the survey of electricity cannot exceed five years
• Section 21 of the Act states that the licencee shall have to start the physical works within three months in case of survey and one year in case of production, transmission or distribution from the date of obtaining the licence and shall have to inform the Electricity Development Department about the same
Argument against the company, govt
• Nepal Water and Energy Development Company Pvt Ltd, a Korean joint venture, failed to produce a survey report even after its five-year survey licence expired
• In violation of Section 5 of the Electricity Act, the government extended its contract twice in November 2012 and November 2013
• The government entered into a contract with the same company while the case was sub-judice in the SC