Guangxi Hydroelectric Construction Bureau replaced the project manager and resumed work on the Middle Bhotekoshi Hydroelectric Project following warnings by project authorities that it could lose the contract for missing the completion date.

The Chinese company is the contractor for the civil and hydro-mechanical works of the 102 MW plant located in Sindhupalchok district.

Project authorities have been telling the contractor repeatedly since February to resume construction and maintain adequate stocks of building materials at the site after it halted work citing money problems.

Construction work was supposed to have been completed by June 2019, but the delay means the completion date will be pushed back by a year, project officials said. This is the third time the project has revised its completion deadline after construction started in 2013.

Even though work has restarted, project authorities are not convinced the contractor will finish the task as promised. “The contractor has talked its way out of tough spots before, and this time it has just sent us a letter pledging to finish the project,” said project chief Sunil Lama.

“Although there is movement of construction crews at the tunnel entrance and powerhouse, we are not fully convinced, and want to meet a high-level delegation from the company within a month.” According to Lama, the contractor has not provided details about its capital source and timeline for completion which the project office had demanded.

The civil and hydro-mechanical works were assigned to Guangxi under an engineering, procurement and construction contract which requires the firm to procure equipment and materials on its own. In February, Guangxi was given 14 days to maintain a 45-day stock of building materials and one month to dig the remaining 40 percent of the 7.1 km tunnel which will convey water from the Bhotekoshi River to the turbines at the hydel plant. But it has not done so, and with the rainy season approaching, a majority of the civil works at the dam site cannot be carried out, officials say.

The project began construction in 2013 and had been expected to start generating electricity by 2016. However, natural disasters and land compensation issues, among others, had pushed back the deadline to 2018. The project being built by Madhya Bhotekoshi Jalavidyut Company, a subsidiary of Chilime Hydropower, has reported 42 percent physical progress till date.

According to officials, the project had adopted a lenient policy for releasing funds for timely completion, but without any physical progress at the site, project financers still have no evidence to trust and release funds to the Chinese contractor.

“After multiple setbacks owing to the contractor’s lingering, we do not rule out the possibility of the contract being terminated unless a high-level delegation from Guangxi comes up with the details that we have asked for,” said an official of the Nepal Electricity Authority, the project executing agency, who asked not to be named.

“The project is funded by domestic resources, and we don’t want it to sink into further uncertainty. We have decided to maintain a stronger vigil over the contractor’s work first, and contract termination is still on the cards,” the official said.

The project office had revised the project’s price tag in October 2018 from the initial estimate of Rs12 billion to Rs14 billion without factoring in interest payments. Poor execution and delays by the contractor are expected to result in cost overruns. The project is funded under a debt and equity financing modality with 50 percent of the loans taken from the Employees Provident Fund.