Kulekhani III contractor wants Rs 1 billion in variation claims

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    Kulekhani-powerhouseKATHMANDU, Oct 15: Sinohydro Corporation, the civil contractor of Kulekhani III Hydropower Project, has demanded variation payment of Rs 1 billion, stating that has been remaining idle for long due to delay in electromechanical works.

    The electromechanical work progress of the project stands at only 40 percent. However, around 90 percent of civil works has already been completed. Jheijian Jialin Company is the contractor for electromechanical works of the project.

    The lack of synchronization between the two contractors is not only delaying the project but is also causing Nepal Electricity Authority (NEA), the implementing agency, huge loss.

    NEA has already paid Rs 430 million for variation order to the civil contractor. It has also extended construction deadline by 30 months.

    Sinohydro has now made claim for another Rs 1 billion and sought deadline extension by 18 months.

    Madhusudan Pratap Malla, chief of Kulekhani III Hydropower Project, told Republica that they had been charging Jheijian Jialin Company 0.05 percent of the total contract amount per day since September 21 — the deadline for completion of electromechanical works.

    The total cost of electromechanical works is Rs 800 million.

    “I have asked the civil contractor to reschedule the project with a view to completing it by the end of the current fiscal year (mid-July next year),” said Malla.

    Malla, however, is yet to receive rescheduled plan from the contractor.

    If NEA has to pay the variation claim, the project cost will climb to Rs 3.40 billion. The initial estimated cost of the project was only Rs 1.97 billion — Rs 1.09 billion for civil contract, Rs 800 million for electro mechanical works and Rs 80 million for the consultant. Similarly, the per megawatt construction cost has jumped by 72 percent to Rs 230 million from initial estimate of Rs 140 million.

    The project was initially expected to be completed by December 2012.

    Malla said Dispute Resolution Board (DRB) will decide on variation amount claimed by the civil contractor.

    Upon completion, the 14-megawatt project will generate 40 million units of energy annually. If the project is delayed by a month, NEA will face loss of around Rs 20 million.

    “The electromechanical contractor has recently brought penstock pipes. It has already started fitting pipes in project sites,” Malla said, adding: “The work will gain pace in the coming days.”

    In another case of cost variation, the generation cost, including the transmission line, of Chameliya Hydropower Project — another project implemented by NEA — has crossed Rs 500 million per MW. It was initially estimated to cost Rs 280 million per MW.

    After conducting field visit and studying the project, the parliamentary Public Accounts Committee (PAC) concluded that there is massive corruption in Chameliya project. It has submitted files related to variation payments made to the contractors to the Commission for the Investigation of Abuse of Authority (CIAA) — the constitutional anti-corruption watchdog.

    Talking to Republica, PAC Member Ram Hari Khatiwada said variation order has become a bad trend in hydropower projects, particularly those developed by NEA. Khatiwada also said PAC has asked NEA to submit documents of Kulekhani III Hydropower Project to look into the inflated project cost.

    Source : Republica