KATHMANDU, Oct 13: All the contracts for the transmission line project by the Millennium Challenge Corporation (MCC) have been canceled. The Millennium Challenge Account (MCA) Nepal issued a notice on Friday, stating that all these contracts were canceled.
MCA-Nepal has cited the high cost offered by the bidders compared to the cost estimate made before the bidding for these contracts as the reason for the contract's cancellation. Consequently, a new tender for the transmission line contract will need to be called.
MCA-Nepal had previously divided the transmission line project into three lots and had awarded the contracts accordingly.
However, Finance Minister Dr. Prakash Saran Mahat expressed concerns to MCA-Nepal Executive Director Khadga Bahadur Bista, stating that the project cannot proceed at such a high cost and that the tender notice should be reissued.
Why MCC transmission line seems crucial
A contract notice was issued on November 28, 2022 for the construction of a 315 km long 400 KV transmission line. Tenders were invited for constructing the transmission line in three sections.
A total of 315 km of transmission line was to be constructed including Lapsiphedi-Ratmate-New Hetauda (117 km) first section, Ratmate-New Damauli (90 km) second section and New Damauli-New Butwal, New Butwal to Indian border (108 km) third section. All three contracts were canceled due to the contractor companies' bids being 60 percent higher than the estimated cost.
The project was announced to have entered the construction phase on August 30, and it must be completed within five years from this date. Otherwise, the U.S. will withdraw its aid amounting to $500 million. The construction companies will receive three and a half years for the design and an additional period for addressing any issues that may arise during the project.
The cancellation of the contracts is considered the first step in the project, and it may take an additional 5-7 months to issue new contract notices and complete the evaluation process, making it challenging to meet the project's completion deadline.
It was announced that MCA-Nepal has entered the project implementation phase without completing the preparatory work including land acquisition.
It has been reported that MCA-Nepal has entered the project implementation phase without completing the preparatory work, including land acquisition. Under the MCC project, 856 towers will need to be constructed for the transmission lines, requiring the cutting down approximately 212,000 trees. The project is estimated to need 800 ropani of government and private land. MCA-Nepal has stated that the process of tree felling approval and land acquisition is underway.
MCA-Nepal has estimated that the construction of the transmission line will cost approximately $228 million (Rs 29.64 billion).
