Nearly four months after the government signed a contract agreement for the Budhi Gandaki Hydropower Project with the China Gezhouba Group Corporation (CGGC), a joint meeting of the Agriculture and Water Resources Committee and Finance Committee of Parliament on Monday directed the government to scrap the decision.

The 1,200 megawatt project was recently listed as a component of the Belt and Road Initiative (BRI), the China-led plan that envisages greater trade and connectivity and supports varied infrastructure projects.

The government had awarded the contract under the engineering, procurement, construction and finance (EPCF) model of project development.

The house committee has said the government’s decision to hand over the project to the Chinese company is against the country’s legal premises and breaches the Public Procurement Act.

The government has also been criticised for not holding free competition before deciding on the company to undertake the hydroelectricity project.

“First, the government awarded the contract breaching the regular process as well as the law. Second, the CGGC has a bad reputation for failing to develop the 22MW Chilime Hydropower Project. How can we trust such a company?” Finance Committee Chairman Prakash Jwala questioned.

State Minister for Energy Shambhu Lal Shrestha told the House committee that the country can build the project with domestic resources.

“We need this project as it has a long-term and strategic significance. The government should take a lead in its construction by involving the general public, private 

sector and cooperatives, among others,” Jwala said, citing the example of the country’s bid to develop the Kathmandu-Tarai Fast Track on its own.

The Finance Committee chairman also criticised the Energy Ministry claiming that it had set aside a whole year for performance evaluation of the Chinese company. “This clearly shows the government isn’t serious about project construction and has already delayed the process by a year,” he said.

Though the parliamentary committees have directed the government to scrap the project, they want continuation of land compensation payment.

For easing the process, the committees have suggested providing the displaced people a share in the project instead of compensation.

The ministry signed the MoU with the Chinese company in June to build the storage-type hydropower project located in Gorkha and Dhading districts.

The agreement was signed by then energy minister Janardan Sharma and CGGC President Lv Zexiang in the presence of then PM Pushpa Kamal Dahal and Chinese Ambassador to Nepal Yu Hong.

Budhi Gandaki has been highlighted as a key project to resolve the country’s perennial power crisis.

The government has listed it as a national pride project. The government has allocated Rs5.33 billion for project development this fiscal year.