The 30-MW Chameliya Hydro Project has been stalled for nearly two years. This happened after the parliament’s Public Accounts Committee (PAC) back in July, 2014 directed the government not to pay any variation costs—on works not stipulated in the initial contract—to the project contractor, China Gejuwa Group of Power Company. The PAC, after an investigation, had found many irregularities in past payments of variation to Gejuwa. The committee had concluded that the Minister for Energy, the Energy Secretary and the Managing Director of Nepal Electricity Authority, among other government officials at the time, were involved in ‘illegally awarding variation payments’ to Gejuwa. The committee had asked the CIAA, the anti-corruption watchdog, to look into the case. No action was taken against the accused. What instead happened was that Gejuwa refused to resume the project without the settlement of the variation costs it was claiming. So the project, which was initially slated for completion by November, 2011, at the cost of Rs 8.5 billion, is now expected to cost an additional Rs 6.5 billion—and take five more years.
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Thankfully for the 30 million Nepalis who have been forced to live in the dark, work on Chameliya is expected to resume soon. This after the PAC on Sunday gave its green-light to the NEA to pay the variation cost and complete the whole project within next one year. Members of the parliamentary committee were clearly feeling the heat as public pressure was mounting on the government to resume the stalled project and cut down on the long hours of power cuts. But surely, public pressure cannot be used to justify corruption. If the committee had found government officials complicit in illegal deals, why was no action taken against them? The previous Koirala government could have removed the corrupt officials—if they were indeed corrupt—and installed new officials in their place with the mandate to immediately restart the stalled project. But instead it chose to sit on the case, as if hoping that the problem would take care of itself. The result of this willful inaction is that at Rs 500 million per MW, Chemeliya, when completed, will be easily the most expensive hydro project in Nepal in terms of unit cost.
We are again happy that the project, if things go as planned, will be completed within the next eight months (the vastly undersupplied national grid could do with whatever extra power it can muster). But the project’s resumption cannot be a cover to paper over irregularities—to the tune of Rs 550 million, according to the PAC. As variations costs are paid to Gejuwa, it will also be the right time to investigate the whole Chameliya saga from the start. With Nepal inking many big hydro agreements with foreign companies in recent times, Chameliya must set the right precedent. Mechanisms must be developed to promptly probe reported case of corruption in such big projects and to punish the guilty officials. But these investigations also should not be allowed to come in the way of timely completion of these vital projects. This will be a difficult balancing act, but one for which the country must be ready post-Chemeliya.
