Chameliya Hydropower Project is usually identified as one of the most unsuccessful hydropower projects in Nepal.
The construction of 30-MW project, situated in Darchula district of Sudurpaschim province, began in 2010 and was expected to be completed in three years at an estimated cost of Rs 8 billion.
However, the project ultimately took ten years to complete and the cost scared to Rs 16 billion. The project was built by Nepal Electricity Authority (NEA).
The run-of-river hydrpower project generates 184.2 million units electricity annually. The electricity produced by Chameliya Hydropower Project has been connected to the national grid via a 131-km long 132 kV transmission line.
The project was jointly financed by the Government of Nepal and South Korea’s Economic Development and Cooperation Fund.
China Gezhouba Group Corporation (CGGC) was picked as the civil contractor to build a dam and tunnel, among other civil structures while Korea Hydro and Nuclear Power Company was the electro-mechanical and hydro-mechanical contractor for the hydropower project. These two contractors had also used Nepali companies during the project development phase.
The protracted delay in completion of the construction also significantly escalated the cost of the project. However, Chameliya Hydropower Project is not the only project of the NEA that has faced cost overruns due to delays. Kulekhani-3, Upper Trishuli-1, Upper Tamakoshi are other projects that have seen a significant rise in costs compared to the initial estimates.
As most of the projects developed by the NEA are experiencing time and cost overruns, many argue that the government entity or public enterprise should not be engaged in hydropower project development.
Most of the projects developed by the public sector have suffered political intervention. Chameliya Hydropower Project was no exception. It became a 'cash cow' for the Office of the Prime Minister and Council of Ministers. Project managers and other staff were frequently transferred. The project had to suffer due to lack of timely decisions from the NEA and the government. In 2014, China Gezhouba Group Corporation halted construction work demanding additional funds of Rs 1.1 billion from the NEA (cost variation) citing construction cost had gone up due to squeezing of the tunnel. As the dispute lingered on, the construction work at the project halted for nearly 18 months.
Similarly, the project was also delayed after Korea Hydro and Nuclear Power Company, a contractor hired to build the transmission line, disappeared from the project site for months. Had this project been developed by the private sector, investors and banks financing this project would not have allowed such a long delay in bringing the project into operation, say experts. They argue that investors who use their own investment or borrow money from banking institutions are more serious and sincere in developing projects which is not the case with officials of government agencies including NEA.
Due to the investment of taxpayers' money, other oversight agencies scrutinise and monitor public enterprises and their functions. Chameliya Hydropower Project often came under the scanner from the parliamentary Public Accounts Committee, Agriculture and Energy Committee and Commission for Investigation of Abuse Of Authority (CIAA).
After conducting several hearings and investigations, they issued various directives to the government and the executing agency NEA. The directives issued by these oversight agencies without understanding the technical, economic and managerial aspects of the hydropower sector not only caused complications during the development of the project but also contributed to the delay in the completion of the project. If the project was built by the private sector, it would not have faced such oversights. They have more independence in making decisions without any interference from oversight or other agencies.
However, there are some positive aspects of Chameliya Hydropower Project. Since this is a project built in the farwestern region of Nepal, it has contributed towards balanced geographical development. Similarly, the transmission line built for Chameliya Hydropower Project has also paved the way for other developers to construct hydropower projects in the area and evacuate the electricity. This project has also created employment opportunities for locals, electrified rural areas of the region and brought motorable roads to the project area.
There is no doubt that the Chameliya Hydropower Project is one of the most expensive projects in Nepal. While the private sector has been developing hydropower projects at a cost of Rs 180 million per megawatt, the government has spent Rs 540 million per MW to build Chameliya Hydropower Project. Energy experts say that the inflated cost also could offer a lesson in that it's better for the public sector and the government to refrain from pursuing projects that the private sector can develop.
However, the involvement or investment of public enterprises or government agencies is required in mega hydropower projects which the private sector cannot dare to develop. Experts also underscore the need for the government to lower the cost of building hydropower projects in Nepal. Hydropower projects developed by the public sector should get rid of political intervention and unnecessary oversight.
The government should facilitate hydropower projects by issuing necessary regulatory approvals without any delay and hassle, and building infrastructure including access roads and transmission lines to complete the project in time. Chameliya Hydropower Project may always be cited as an ‘unsuccessful and costly’ project in Nepal. However, the lessons that this project has offered could help other projects avoid a similar fate.