Friday, May 10, 2013

Two articles on Chinese dam builders in South Asia

[Two articles below - about the Chameliya project in Nepal and West Seti
in Pakistan - discuss delays related to the Chinese actors involved in
these projects.]

Completion date of Chameliya Hydro Project pushed back four years
27 April 2013
The Katmandu Post

KATHMANDU, April 27 -- The completion date of the Chameliya Hydropower
Project has been pushed back four years due to the contractor's poor
performance, the project's geographic situation and the country's
political situation.

The 30 MW project, located in Darchula district in central Nepal, was
originally scheduled to be completed in 2011. The deadline was postponed
to August 2013 and then extended again to March 2015 due to poor progress.

A senior official of the Nepal Electricity Authority (NEA), the
developer of the project, said that that new deadline was set after
discussions between the NEA, the project consultants and the contractor.
"We have sent the rescheduled date to Exim Bank of Korea, the financer
to the project, for its approval," said the NEA official. In addition to
Exim Bank of Korea, the government and the NEA have also invested in the

About a month ago, a field study done by the Economic Development and
Cooperation Fund (EDCF), the South Korean aid agency that manages Exim
Bank, predicted that the project would miss its completion date.

The NEA and project officials said that construction would be further
delayed due to two reasons: The ongoing construction work on the tunnel
requires treatment due to a squeezing at 840 m, and the penstock will be
made of steel instead of roller-compacted concrete as originally planned.
"The month-long banda called in May 2012 before the Constituent Assembly
was dissolved also hampered work at the project," said Project Chief
Rajendra Manandhar.

However, the EDCF blamed the poor performance of the Chinese contractor
assigned to do the civil works including digging the tunnel for the
delay. In its assessment report after the field visit, the EDCF said
that the delay in civil works had affected the electro-mechanical works too.

The Korean assessment found out that the civil works preceding the
electro-mechanical works had been delayed due to the contractor's "low
priority, less profitability" attitude. Chinese contractor China
Gezhouba Water and Power (Group) Company is doing the civil works that
include building the intake, penstock tunnel and powerhouse.

A Korea joint venture named KHNP Consortium - consisting of Korea Hydro
& Nuclear Power Co, Hwachon Plant Construction Co, Sean Engineering and
Construction Co - and Nepal Hydro & Electric are handling the
electro-mechanical job. Officials said that construction of transmission
lines has also got nowhere particularly due to a row over compensation
for acquired land.

Manandhar said the compensation issue is yet to be settled at many
places. According to him, installation of transformers has almost been
completed, and construction of 30 percent of the 131-km transmission
line has also been completed.

The team concluded that 84.3 percent of the civil works have so far been
completed while progress on electro-mechanical works has reached 80
percent. The EDCF has also demanded a feasible action plan for the
project's completion after assessing its progress.

As the Chameliya Hydropower Project is certain to be delayed, the
government is preparing to ask Exim Bank of Korea to reschedule its
loans for one more year based on the expected completion date. The
Korean bank reimburses the expenditure made on the project with domestic

"As financing is made based on the progress of the project, Exim Bank of
Korea should also reschedule its deadline for financing," said a senior
Finance Ministry official.

Due to delays in the project, the cost is also going to rise. For this
reason, the ministry had asked the Korean bank about a year ago to
provide additional funding of US$ 15 million for the project to cover
cost overruns. Out of the total project cost of Rs 12.5 billion, Rs 8.6
billion has already been spent, according to the project.

"We are yet to get a clear commitment from the Korean side whether they
will provide additional resources," said the ministry official. "They
are of the view that they don't have a custom of providing extra
financing for projects that get delayed."

He added that the Korean bank had also sought specifics regarding the
purpose of the additional aid and when these works will be
completed.Published by HT Syndication with permission from

West Seti hydro project likely to fall in limbo
May 5, 2013

KATHMANDU, May 5: China Three Gorges Corporation, a Chinese power
developer involved in development of much-delayed 750-megawatt West Seti
hydropower project, has maintained conspicuous silence on development of
the project in the last six months.

"No communication has been held with the developer since last October,"
a source privy to the Investment Board Nepal (IBN) told Republica.

The corporation had dispatched a team of experts to conduct preliminary
study of the project site last October. At that time, the team had
promised to discuss future plans within next couple of months.

"It has not shown much interest in the project since then," the source
disclosed. "IBN officials claim they had video conference with
corporation officials but since nothing has materialized in more than
six months we have no grounds to believe the conference--if it was ever
held--was fruitful."

The IBN that received authority to facilitate project implementation
from the government also confirmed that it has not heard from the
corporation. "We are waiting for their response," Radhesh Pant, chief
executive officer of the IBN, told Republica over the phone on Saturday.
"We are hopeful they will soon communicate and come up with a financial

The 18-year-old project has always made locals dream of a prosperous far
western region--where the project is located. But the latest development
has disappointed them as the project seems to be falling in a limbo even
after the government established a separate high-level entity, IBN, to
fast track the implementation of the mega project.

"No one has shared any information about the project since last year,"
Ratan Saud, president of West Seti Concern Group, a pressure group
formed by locals, told Republica. "We are now worried about the future
of the project."

Officials at the Office of the Prime Minister and Council of Ministers
(OPMCM) also expressed pessimism about development of the project in the
near future.

"China is in the wait-and-see mood to make investment in Nepal as the
country is going through a transitional phase," a high-ranking OPMCM
official said requesting anonymity. "It had expressed enthusiasm to
invest before May 2012--before the demise of the Constitution Assembly
on May 27. The Chinese developer's mood has changed since then and is
not that interested in project implementation."

Earlier, China's Exim Bank had expressed interested to finance the
project and had proposed Nepal to take commercial loans.

West Seti is one of the priority projects of the government. Through
this project, the government aims to supply up to 150 MW of electricity
in the western industrial corridor, while the remaining power would be
used to fulfill domestic power demand.

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