The Patan High Court on Tuesday issued a show-cause notice in response to a writ filed by SIU Infrastructure Limited and High Himalaya Hydro Construction (SIL–3HC) against the tender process for the 106 MW Jagadulla Hydropower Project.

The peaking run-of-the-river hydroelectricity project is located in Dolpa district.

The court has directed the defendants to provide written explanations within 15 days, detailing why the requested orders should not be issued.

The petitioners allege that the tender process violated the Public Procurement Act as it did not properly evaluate financial proposals, potentially undermining the integrity and transparency of the public procurement system. The court has called both parties for a hearing on May 13.

Two separate complaints were filed at the Commission for the Investigation of Abuse of Authority and the Public Procurement Monitoring Office that a Chinese company has allegedly submitted fake documents in order to bag the project. The court’s notice came just a day ahead of the unveiling of the project’s financial proposal.

The two complaints at the CIAA had been registered by three other bidders—Sinohydro Corporation Limited; SIL-3HC JV, a joint venture between High Himalaya Hydro Construction Private Limited and SEW Infrastructure Limited; and 2 MG Fewa, a joint venture between Fewa Construction Limited and 2 MG Insaat Madenclick Tic AS.

Sinohydro, another Chinese company, which had been ranked second after Jiangxi Construction Limited in the bidding, was among the complaining companies.

The project was dragged into a fresh round of controversy after three bidders, who were in the race to develop the project, accused the authorities of qualifying a Chinese company with zero experience in hydropower construction as “substantially responsive” during the technical bid evaluation for the EPC contract.

The project will follow the engineering, procurement and construction (EPC) model. The project is being developed by Jagadulla

Hydropower Company Limited (JHCL), a subsidiary of Vidyut Utpadan Company Limited (VUCL).

JHCL had picked Jiangxi Construction Engineering (JCE), a company with allegedly no experience in hydropower development, and which submitted fake documents to win the contract, according to a complainant.

Earlier, Energy Minister Dipak Khadka had faced allegations of corruption over the Jagadulla Hydropower Project, with accusations of facilitating collusion among contractors to manipulate the bidding process. The anti-corruption commission is reportedly investigating these claims.

Additionally, the initial tender for the project was cancelled after none of the bids passed technical evaluation. A new tender has been issued, with a revised bid submission deadline, as the project continues to seek qualified contractors.

Jagdulla Hydropower Company Limited has denied the allegations, stating that the tender evaluation was conducted transparently in accordance with the Public Procurement Act and company regulations.

The petitioners have requested the High Court to issue an interim order under Rule 42 of the High Court Rules, 2073, against the respondents, stating that proceeding further with the tender evaluation, approval, and contract award would cause irreparable harm to the petitioners.

They argue that there is a violation, prima facie, of Rule 61(3) of the Public Procurement Regulations, 2064, and that the process should be halted to maintain the status quo.

In the Jagadulla Hydropower Project tender, four companies had submitted bids.

The JCE-ANK, the Chinese entity’s joint venture with Nepal’s ANK, is accused of submitting false documents in the Jagadulla tender. The JCE-ANK had proposed Rs12.15 billion, while SinoHydro proposed Rs13.14 billion in the technical bid.

The CIAA has received complaints against JCE-ANK over the submission of fake documents, and the Central Investigation Bureau of police is conducting an investigation. There are allegations that JCE, after forming a joint venture with a Nepali company, proposed a lower amount to secure the contract, indicating a rigged deal.