Samsung backs out from Chameliya

KATHMANDU, Feb 8: Samsung C&T Corporation, a South Korea-based firm that had earlier expressed willingness to construct the electro-mechanical and transmission lines in the 30 MW Chameliya Hydroelectric Project (CHP) in Darchula at a lower cost has backed down from the project.



The Korean firm has said its earlier proposal sent to the government of Nepal was based on wrong understanding, analysis and estimation. [break]



"In simple consideration with all factors including the falling tendency of raw material price due to the current economic crisis, we estimated that the price level to be proposed by any potential bidder might be lower than NEA´s (Nepal Electricity Authority) estimated budget without our knowing the detailed information on project cost," said a letter written by Yang Bai Kim, vice president, Plant Division of the corporation to Minister for Water Resources Bishnu Poudel.



"However, it is deeply lamentable to inform you that our cost estimation for successful implementation of this project would be not less than US$ 60 million."



The project cost estimated by the NEA is US$ 35 million. Yang Bai Kim reportedly had earlier sent a letter to the minister requesting to consider re-tendering the project saying that Nepali side can have better choices.



"In order to make us free from any misunderstanding, we would like to express our strong intention not to involve in this project any more. Even though the tender may be reopened, we hereby declare not to participate in it," the firm has said in the letter, which has also been forwarded to Secretary of Ministry of Finance, Rameshwor Prasad Khanal, and other concerned authorities.



NEA earlier decided to award the construction contract to Korea Hydro and Nuclear Power (KHNP) from South Korea, the only bidder, at a cost of US$ 45 million (around Rs 4 billion). The electro-mechanical and transmission line lot includes installation of 132-KV transmission lines to link with the national grid. The line will be 131 kilometers long. The contract also includes construction of a power house among other things.



The total estimated cost of the entire project is US$ 99.9 million. The South Korean government under the Economic Development Cooperation Fund, a joint mechanism, provided US$ 45 million as “soft loan” to Nepal to commission the project. The two governments had also agreed to appoint a Korean firm as the main contractor for the project.



China Gezhouba Group Corporation (CGGC) started main civil works of the project from January 2007. The project completion deadline is 2011-12.

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