Renegotiation of contract amount breaches law: Officials

The fresh agreement with civil contractor Mohan Energy Corporation Pvt Ltd to build 90-kilometer transmission was signed on April 5 and the negotiation was done as per a letter submitted by the contractor after the government issued letter of intent on March 13, according to officials.

Clause 19 of Public Procurement Act 2007 states that bidders can replace tender documents by revising the quoted price only before the tender is open.

This means price revision should not be made thereafter, according to officials of Public Procurement Monitoring Office (PPMO).

“Revision of the bid amount after opening tender leads to tender cancellation. It is illegal to change the quoted price,” said Ramesh Kumar Sharma, secretary of PPMO, said. Sharma, however, maintained that he has no idea about the specific project case of Solu Corridor.

The procurement decision fell into controversy right after the board of Nepal Electricity Authority (NEA) took the decision to approve bid of US$ 23 million submitted by Mohan Energy on August 21 last year. Two members of the board, including erstwhile energy secretary Rajendra Kishor Kshatri had written note of dissent on the decision.

JV of Jaguar Overseas and BS Ltd had not got the contract despite bidding Rs 270 million lower than the price quoted by Mohan Energy.

Commission for the Investigation of Abuse of Authority had even investigated the board’s decision and later recommended action against the board members including erstwhile energy minister Radha Gyawali,

A highly placed official of PPMO, seeking anonymity, the price renegotiation is doubtful. “The price negotiation cannot be justified in any way. The bidder will be backlisted if it has done son,” the official added.

However, project manager Janardan Gautam defended the decision. “We did not ask the contractor to reduce the bid amount. It did so voluntarily,” Gautam said, adding that the proposal has been accepted in good faith.

According to officials, Mohan Energy has cited ‘considerations of situational analyses’ as the reason behind price reduction.

Minister for Energy Top Bahadur Raymajhi told the Public Accounts Committee (PAC) about price renegotiation on Thursday itself.

“Initial talk was to reduce cost by Rs 60 million. Later, the bidder decided to lower price by Rs 100 million,” added Raymajhi.

Speaking at the meeting, Rayamajhi also complained that development works have suffered due to different directions from parliamentary committees and oversight agencies. “We are in a state of confusion as we have received various directions from the Supreme Court, CIAA and even parliament committees on the same issue,” added Raymajhi.

In the meeting, lawmakers, particularly those from Nepali Congress, criticized the ministry, its officials and NEA for picking second lowest bidder instead of selecting the lowest bidder.

However, government officials said that Jaguar Overseas and BS — the second lowest bidder — was disqualified as it had submitted bid security in Indian currency, instead of freely convertible currency as stipulated in the tender document, and lack of authorized signature of power of attorney in case of BS Ltd.

The delay in construction of Solu Corridor Transmission Line will inflict a loss of at least Rs 1.38 billion on NEA for failure to connect power generated five hydropower projects in Solu Corridor area to the national grid.