Tanahun hydro project’s fate hangs in balance

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    ADB’s ‘marking system favours one joint venture’ over the other

    KATHMANDU: Controversies surrounding the selection of Project Supervision Consultant continue to delay implementation of 140-megawatt Tanahun Hydropower Project being loan-financed by the Asian Development Bank.

    Multiple factors appear to have come in the way of $505-million project — tipped to be Nepal’s largest reservoir type so far — ever since a Tanahun resident knocked on the doors of the Commission for the Investigation of Abuse of Authority in April questioning the PSC selection process executed by the ADB.

    Tanahun-Seti

    Following this, the CIAA, in July, asked the Ministry of Energy to review the selection of a joint venture between Lahmeyer International of Germany and Manitoba Hydro International of Canada as the preferred bidder for PSC.

    The MoE then appointed a five-member committee headed by its Joint Secretary Keshab Dhoj Adhikari. His committee raised serious questions about ADB’s ‘marking system that clearly favoured’ Lahmeyer-Manitoba JV, which was given a score of 844.88 out of 1,000, shows the committee’s report, a copy of which has been obtained by The Himalayan Times.

    Even as Lahmeyer-Manitoba JV was on a par with the joint venture between Kansai Electric Power and NEWJEC Inc of Japan — which was given a score of 838.40 and ranked second — on a couple of criteria on bidders’ experience, the ADB should have ranked Kansai- NEWJEC JV better because it had more experience in at least two areas, states the committee’s report.

    In fact, the ADB had given 18 more points to Lahmeyer-Manitoba JV despite the bidder being completely silent on reservoir sediment flushing system, while Kansai-NEWJEC JV had appropriately addressed the issue, says the committee’s report.

    By the very nature of the proposed unique reservoir project — which requires effective sediment management — more points should have been allotted to Kansai-NEWJEC JV because it was experienced on sediment flushing and sluicing, and operation and management, adds the report.

    Adhikari’s committee, thus, concluded that it could not concur with the ratings extended by the ADB to the bidders, who had aspired to become PSC. The MoE was also not happy with the ADB, as the multi-lateral lending agency failed to ensure participation of the borrower – the Government of Nepal – in the PSC selection process.

    The ADB, meanwhile, refuses to buy the ministry’s arguments. First, it had agreed to execute the PSC selection process as per the request made by the managing director of Tanahun Hydropower Limited, a special purpose vehicle created to implement the hydropower project.

    Second, ‘sediment management is not the sole requirement for the PSC selection, which also calls for expertise in detailed design; selection, monitoring supervision and coordination of contractors; and operation and maintenance of hydropower projects at large. (So) it was not pass or fail criteria.’

    As controversies heightened, the Ministry of Finance appointed a joint review committee, comprising ADB officials and the government, represented by two bureaucrats, who retired from the Department of Roads: Birendra Bahadur Deoja on behalf of MoF and Dinker Sharma on behalf of MoE.

    The joint review committee meeting concluded, stating it ‘did not come across anything that gives a firm ground to question the credibility of the ADB Consultant Selection Committee’.

    “The JRC has also noted that the evaluation of the proposals was based on the outline Terms of Reference,” says a report prepared by the JRC on October 22, adding that ‘many issues can be discussed during the technical negotiation’.

    Based on this report, the CIAA has now asked the Ministry of Energy to speed up the consultant selection process without affecting deadlines related to project readiness and implementation. This tacitly means ‘appointing Lahmeyer-Manitoba JV as the PSC’, according to a CIAA official.

    The MoF has also asked the MoE to reconsider its earlier position in the light of the joint review committee report.

    “The ministry has already decided and is yet to reconsider its earlier decision,” said an MoE official. “Some decision will be and should be taken within a week or so.”

    Tanahun Hydropower, originally scheduled to have been completed by 2018 and later rescheduled for 2020, was supposed to complete PSC selection process by May 2013.

    Source : The Himalayan Times