The ruling Nepali Congress on Wednesday defended government’s decision to scrap the deal with China Gezhouba Group Corporation (CGGC) on the construction of the 1,200MW Budhi Gandaki Hydroelectricity Project.

Amid criticism from rival political parties, including the CPN-UML and CPN (Maoist Centre), NC leader Bal Krishna Khand defended the Cabinet’s move, saying that the previous government under Pushpa Kamal Dahal had made several procedural and systematic flaws while awarding the contract to the Chinese company.

The proposal was tabled in the Cabinet with the special directive from then prime minister Dahal overlooking the provisions of the Public Procurement Act, Khand said. The government on Monday scrapped the contract of the project awarded to the CGGC “based on the directives of the parliamentary panels”.

   A Cabinet meeting in May had decided to award the contract to build the project located in Gorkha and Dhading districts. In June, then energy minister Janardan Sharma and CGGC President Lv Zexiang signed a memorandum of understanding to build the project under the engineering, procurement, construction and finance model.

Around four months after signing the MoU, a joint meeting of the Agriculture and Water Resources Committee and Finance Committee of Parliament had directed the government to scrap the agreement stating that the decision to hand over the project went against the Public Procurement Act.

“But the project is not suspended,” clarified Khand, adding that the government is considering awarding the contract through a competitive bidding process, which was not followed by the previous government but while awarding the contract.

In the wake of the latest development, the Ministry of Energy is understood to be exploring several other options on ways to move the project forward at a time when its future hangs in the balance.

The reservoir type project located between Gorkha and Dadhing districts is one of the national pride projects and the government has started paying compensations to the families displaced by the project. The project will be carried out on the basis of competitive bidding that fulfils all the required criteria, which will also bring down the construction, Khand claimed.

Local people living around that area also want the early resumption of the project but also concerned about the possible “financial irregularities” so the government will opt transparent system while awarding the contract in near future, he claimed.