NEA to formally contact Korean contractor ‘within a week’



    KHNPThe Nepal Electricity Authority ( NEA ) is preparing to formally contact the Korea Hydro and Nuclear Power (KHNP) Consortium, which terminated the contract for electro and hydro mechanical works on the Chameliya Hydropower Project, for talks aiming at resolving the differences.

    After the KHNP showed willingness to continue the works, even after the termination of the contract on September 6, the NEA prepared to hold talks with the company. The Korean joint venture company had sought a “prolongation cost” from the NEA to continue the work on the project, as it was forced not to start work due to delays caused by a Chinese contractor responsible for the civil works of the project.

    The Nepal Electricity Authority ( NEA ) said it will give an official call to the KHNP for mediation within a week.

    Rajendra Manandhar, project chief of the Chameliya project said a negotiation committee formed to resolve differences with the contractor was preparing a report which would recommend several modalities with regard to the future course that needs to be taken.

    “The report, which is about to be finalised, will recommend what can be done so as to mend the relationship with the contractor and how the project can be taken forward for completing it on time without making the contractor wait long before taking over its task,” he said.

    Earlier, sending a letter to the NEA , the Korean contractor had said that it was prepared to continue the work if its conditions were met. The conditions it set included a prompt payment of costs, worth $16.2 million as prolongation costs, performance guarantees, advance payments and a joint work schedule.

    In the first week of August, the KHNP notified the NEA that it was breaking the contract, stating that the project developer had failed to fulfill the firm’s demands, including prolongation costs. Following the Korean firm’s warning, the NEA formed a six member negotiation committee under its board director, Vivek Tater. “As most of the members of the committee are outside of the country, it took us a long time to finalise the report,” he added.

    Sources at the KHNP said that the company was waiting for the NEA ’s letter and it was ready to hold a fruitful dialogue that would set the future course of the project’s development. It had shown flexibility to come to the dialogue following the Korean EXIM Bank’s intervention between the contractor and the NEA . In a letter to both the NEA and the KHNP, the Korean EXIM Bank had asked for the issue to be resolved “for the sake of the project and the two countries mutual relationship”.

    The Korean EXIM Bank is the sole lender for the projects hydro mechanical and electro mechanical works. Of the $45 million committed from the bank, the project has received only $6 million.

    The company was awarded Rs 3.8 billion ($48 million) for the contract in April 2009, for the electro mechanical and hydro mechanical works, as well as the construction of transmission lines.

    Source : The Kathmandu Post