Tanahu Hydropower invites fresh bids after terminating contract


The project developers scrapped the contract with CMC in February after the Italian builder failed to resolve its liquidity crisis

Apr 26, 2019

After terminating the contract with the Italian builder, Cooperativa Muratori e Cementisti di Ravenna (CMC), Tanahu Hydropower Limited on Thursday has reopened an international tender for the construction of a major component, including dam and other structures of 140MW Tanahu Hydroelectricity Project situated in Damauli.

The project developers scrapped the contract with CMC in February after the Italian builder failed to resolve its liquidity crisis, deposit advance of bank guarantee and act as per instructions and begin works at the site within 28 days from the date of signing of the agreement.

Tanahu Hydropower Limited, the wholly owned subsidiary of the state-owned power utility, had selected CMC in October to execute an important component of the $550-million plant located in central Nepal.

But CMC refused to comply with the commencement date of Feb 11, 2019, given by project developers and asked the latter to release the advance payment first leading to termination of the contract.

After Tanahu Hydropower terminated the contract with CMC, the latter has moved an Italian court to halt the release of Rs2 billion in bank guarantee agreement from Italy’s Intesa Sanpaolo Bank to Nepal Investment Bank.

Nepal Investment Bank had backed CMC with the guarantee amount acting on assurance from Intesa. The bank has already released the funds to Tanahu Hydropower, but it is yet to receive it from Intesa.

In the preliminary hearing, Italy’s Tribunale di Bologna ordered to halt payment of guarantee amount and investigate whether Tanahu Hydropower acquired the amount not abiding laws. The next hearing of the case has been scheduled for June 26.

Under the reopened tender for the first package, the construction contractor will be assigned to construct a 140-meter high dam, cofferdams, two river diversion tunnels and other structures. The deadline for submitting bids has been set as June 9.

Funds from donor agencies, Asian Development Bank and European Investment Bank will be mobilised to carry out the first package of works, project developers said.

According to managing director Pradeep Kumar Thike of Tanahu Hydropower, interested contractors must follow ADB’s procurement directive and submit their technical and financial proposals through the two-envelope single stage process.

“We will evaluate bidders’ technical proposal in the first stage and review the financial proposals of only the shortlisted bidders thereafter,” Thike said. “The project expects to enter into an agreement with the selected bidder by October and mobilise the construction crew by December.”

The project aims to complete the construction of the storage type project and generate electricity by June 2024.

Meanwhile, the Chinese contractor for the second package, SinoHydro Corporation, has begun works pertaining to tunnel and powerhouse construction, procurement of hydro- mechanical and electro-mechanical equipment. According to the project, the Chinese contractor has been constructing project office and resident workers’ quarters and surveying and designing other structures including a link road to the plant site.

The plant will evacuate power through a 40-km long 220 kV double circuit transmission line to New Bharatpur sub-station. And, under the third package of the project, Indian contractor KEC International has begun check survey of the 200kV double circuit transmission line extending from district headquarters Damauli to Bharatpur in Chitwan.

The $550-million project is being built with credit facility extended by the Asian Development Bank ($150 million), Japan International Cooperation Agency ($184 million), European Investment Bank ($85 million) and investment amounting to $87 million from the electricity authority and government.

The Tanahu Hydropower Project, one of the biggest reservoir-type projects in the country, is projected to generate massive 587.7 gigawatt hours in the first 10 years of operation. The project can generate energy for six hours daily during the dry season.


Source: The Kathmandu Post