Nepal Electricity Authority is constructing the multimillion-dollar 60 MW Upper Trishuli 3A Hydroelectric Project in Rasuwa and Nuwakot districts on soft loan from the Exim Bank of China. After the passage of more than two years of the 35-month contract period without any significant progress on construction, the project’s future is comparable to that of a bedridden person battling for life. Many observers fear the project might go the way of Arun III. The project management and higher authorities have a big challenge to save it.
Nepal is an energy-starved country with long hours of power cuts in both dry and wet seasons. However, our speed of hydropower development is following a tortoise pace. Many years have passed without any significant achievement in hydropower. We are yet to agree even on which hydroelectricity model suits us the best.
If Upper Trishuli 3A fails, it will be a damning verdict of the EPC (Engineering, Procurement and Construction) model of hydropower development, which is being practiced for the first time in Nepal. When the contract was signed between NEA and the Chinese contractor, CGGC on May 28, 2010 at the price of US $92.25 million, perhaps officials never imagined such a deplorable situation whereby the contractor comes up with a mountain of claims, with only about nine months of total contract period remaining.
In the EPC model, all three works related to engineering, procurement and construction are carried out by the same contractor who is given the freedom to do the work in his chosen manner, provided that the end result meets the employer’s criteria. Since more risks are transferred to the contractor in this model as compared to conventional models, it calls for careful deliberations from the employer so as to avoid unnecessary contractor claims in the future. In other words, the contractor should be highly reliable.
UT3A Contractor had wished from the very beginning to augment the project from 60 MW to 90 MW by showing NEA various advantages of doing so. The augmentation proposal bit dust following widespread protests, although there were a few good technical justifications for such augmentation.
The reason CGGC, the EPC contractor, could pursue power augmentation path so doggedly from the very beginning is because of the NEA policy of granting contract to the lowest bidder. This policy gives the winning bidder the room to introduce variations such as power augmentation or make other claims by cashing in on weak contract administration skills of the employer and flaws in contract documents.
Although the contractor’s power augmentation proposal ended in a fiasco, there are many avenues for the contractor to amass money through claims on flimsy pretexts such as NEA’s late decision to shift powerhouse location by about 50 meters upstream. As such, Upper Trishuli 3A Project is by no means certain to survive the three-way blows from the contractor, the local people and even state mechanism.
Nepali hydropower sector has always been characterized by raucous debate over the modality of its development. Provided that UT3A project goes wrong, the EPC model is unlikely to be adopted for power projects in the future, as long as contract documents or the information therein are not closely scrutinized. The existing Public Procurement Act is, of course, proving to be a big nuisance in this direction. We cannot expect the lowest-bidding contractor to produce high quality work.
There are problems even in construction of 220 KV transmission line for power generated from Upper Trishuli 3A. Although it commenced on February 26, 2012, its progress has been very slow since the signing of the contract with another Chinese contractor, CWE, at the contract price of US $25.53 million with completion target of 30 months. Both UT3A and the UT3A transmission line projects are being constructed by NEA through the Chinese contractors in EPC model with subsidiary loan agreement between NEA and the Government of Nepal. The transmission line, about 46 km in length and passing through dense forest for about 35 percent of its length, will also be utilized to transmit power from the hydropower projects in Trishuli and Marsyangdi corridors. So far, in over 17 months of total contract period of 30 months, detailed survey, geotechnical investigation, tree marking and 132 KV transmission line design have been completed. Remaining design works are at different stages and are expected to be completed soon.
The delay in getting the approval for tree felling from concerned forest authorities and in carrying out land acquisition will hamper the project’s timely completion. Since it is not possible to publish the notice of land acquisition for transmission line at the same time for all three districts, Nuwakot, Dhading and Kathmandu, it will be wise to do it in parts. The contractor is yet to submit the ‘land scope’ needed for the acquisition along the remaining route alignment of 220 KV transmission line. Likewise, the engineering work including the design of the last portion, the critical component of the project, has not been completed. However, regarding the transmission line, there is still hope for its timely completion despite the possibility of marginal time overrun, provided that both the employer and the contractor pay highest attention to their respective obligations to expedite transmission line work.
The impacts of the hydropower development in the everyday lives of the Nepali people with very low per capita energy consumption are manifold. Nevertheless, our plans, policies, priorities and practices indicate that we are not serious about its development. Without doubt, the power crisis in Nepal owes more to the failure of governance than to the shortage of capital for investment. To some extent, absence of energy-related economic diplomacy, especially with our neighboring countries, has pushed the country to a situation where electricity is treated almost as a luxury. Without the convergence of opinions on hydropower among political parties and the people, the state’s performance in hydropower development is bound to suffer in the years ahead.
The author is a senior Engineer
Source : Republica