MCA Nepal Delays Re-Inviting Tender for Transmission Line under MCC

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MCA Nepal Delays Re-Inviting Tender for Transmission Line under MCC

December 5: Project officials are dilly-dallying in re-inviting tender bids of transmission lines under the US-funded Millennium Challenge Corporation (MCC). The countdown of the five-year deadline of the much-hyped project began with the Entry into Force (EIF) on August 30.

There are doubts that the project will be completed on time due to the delay in implementing the project plans by setting work priority

The Millennium Challenge Account (MCA) Nepal, which is responsible for implementing the project, had canceled the contract process of the transmission lines in October citing extremely high bids from the interested parties. The MCA Nepal had pledged to initiate the process of re-inviting the tender bids soon. But the tenders have not been called again till date.

A senior official of MCA Nepal said that it has not yet been decided when and how to re-issue the tender bids for the construction of the transmission line.

"The process of issuing the tenders is underway," said the official, adding, "It seems that it will take a few more weeks to reach a decision."

According to him, the process had to be canceled after the lowest bid in the tender was 66 percent higher than the cost estimate. At that time, MCA Nepal had invited bids for the construction of the 315 km long transmission line project dividing it into three parts – Lapsifedi-Ratmate-New Hetaunda section, Ratmate-New Damauli section, New Damauli-New Butwal section of the transmission line.

As the tender was canceled and the MCA Nepal has not re-issued not new tenders, there is a confusion regarding the construction of transmission line.

When the tender was called for the first time, MCA Nepal had estimated the cost of USD 226 million to build the transmission line. However, the offer made by the companies that offered the lowest price was much higher than that.

MCA Nepal has not been able to call for a new tender after making a new estimate of the cost. This has increased the risk of affecting the schedule of the MCC project which has to be completed within five years.

MCA Nepal did not even inform the board meeting led by the finance secretary about the cancellation of the contract. The operation of MCA-Nepal is done by the executive committee formed under the chairmanship of the secretary of the Ministry of Finance.

Other members of the Board of Directors are Joint Secretary of Ministry of Physical Infrastructure and Transport, Joint Secretary of Ministry of Energy, Water Resources and Irrigation and Managing Director of Nepal Electricity Authority.

Likewise, there are two representatives of the private sector and civil society in the board of directors. The executive director of MCA-Nepal is a member-secretary of the board of directors.

The initial agreement for the project was signed between the Finance Ministry and the US government representatives on September 14, 2017.

However, the MCC was delayed due to widespread protest by a section of the society on the pretext that the grant agreement was allegedly a part of the Indo-Pacific Strategy of the US government.

After much debate and deliberations, the House of Representatives finally ratified the MCC grant agreement on February 27, 2022 with a 12-point explanatory note clarifying that the project should not be associated with any military alliance and that the grant agreement must abide by the Constitution of Nepal.

The total cost of the project is USD 697 million (about Rs 92 billion. The US government will provide a grant of USD 500 million dollars while the Government of Nepal will contribute USD 197 million.




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