KATHMANDU: The uncertainty over implementation of the 140-megawatt Tanahu Hydropower Project may be over as early as this week, as the Ministry of Energy is about to complete reviewing bids of firms that have expressed interest to work as project supervision consultant.
Once the revision is complete, the ministry will select a preferred bidder, which will be responsible for supporting Tanahu Hydropower Limited, a special purpose vehicle created to implement the hydropower project, in the areas of project administration and design, engineering services, contracting, management control, procurement and other technical aspects.
“If things go according to plan, we will be able to wrap up the process of evaluating bids within next three to four days. Based on these assessments, we will appoint a project supervision consultant,” MoE Joint Secretary Keshab Dhoj Adhikari told The Himalayan Times. The consultant will be hired for a period of 147 months.
The consultant selection process for the largest ever reservoir type hydro project in the country had begun in July 2013, with the Asian Development Bank (ADB), one of the major financiers of the project, seeking expressions of interest from interested domestic and international firms. Six international parties were shortlisted through this process.
Following this, the ADB issued request for proposals and five of the six parties submitted bids. Of these firms, a joint venture between Lahmeyer International of Germany and Manitoba Hydro of Canada was picked as the preferred bidder.
While the ADB was preparing to hand over the contract to the joint venture, the Commission for Investigation of Abuse of Authority (CIAA) received a complaint, which mentioned of ‘flaws in the consultant selection process’.
Based on this complaint, the CIAA told the ministry to review the bids submitted by the parties that were shortlisted.
“We issued the instruction as we were not satisfied with the bid evaluation process. The evaluation process was not transparent either,” CIAA Spokesperson Shreedhar Sapkota said.
The CIAA had intervened in the matter based on two issues raised by the complainant.
First, the ADB had no right to select the consultant as the project was being built through loan extended by the multilateral donor agency, not grant. This meant the recipient of the loan, or the government in this case, should be responsible for selection of consultants, not the ADB.
The ADB’s Guidelines on the Use of Consultants also states: “Normally, the borrower is responsible for the selection, engagement and supervision of loan-financed consultants, and ADB is responsible for the selection, engagement and supervision of TA (technical assistance) grant-financed consultants.”
Although this is the normal practice, there is a caveat, as the guideline further says that ‘specific rules and procedures to be followed for employing consultants depend on the circumstances of the particular case’.
This implies the ADB can select consultants for loan-financed projects if the nature of the project is complex; and the multilateral donor agency has engaged in such processes in other countries in the region.
Based on this provision, the ADB had entered into an agreement with Tanahu Hydropower Limited and assumed the responsibility of selecting the project supervision consultant.
We had agreed to help Tanahu Hydropower Limited in consultant selection process because the government had made a request in this regard,” an ADB source said, adding, “There is an aide-memoire on it, which has been confirmed by the Ministry of Finance.” However, the pact signed with the special purpose vehicle came under scrutiny, as the company had not signed a subsidiary loan agreement with the government. Because of this, many government officials are not willing to recognise Tanahu Hydropower Limited as a state entity.
Another issue raised by the complainant was that the consultant, which was selected as the preferred bidder by the ADB, ‘did not have adequate experience in sediment flushing’.
As per the terms of reference issued by the ADB, ‘specific experience’ in sediment management, such as sediment flushing and desanding, was one of the major criteria for selection of consultant.
“Yes, adequate experience in sediment management is one of the criteria. But it’s not the only criteria, because the project we’re talking about is by far the largest every reservoir-type hydro project in the country. So, other aspects like international exposure, safeguard experience, and expertise in maintenance and operation should also be taken into consideration while selecting the consultant,” the ADB source said.
The project is being built at a cost of $505 million (approximately Rs 49.25 billion), of which $470 million will go towards building the hydropower plant and $35 million towards transmission and rural electrification components. Other financiers of the project are the government, Japan International Cooperation Agency and European Investment Bank.
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