Nepal asks Chinese company to build its biggest hydroelectric plant
Nepal has reinstated a deal with a Chinese state-owned company to build a USD 2.5 billion hydroelectric plants scrapped by the previous government, officials confirmed Monday, as the new pro-Beijing administration seeks massive infrastructure investment.
The agreement with the China Gezhouba Group Corporation (CGGC) to construct Nepal's largest hydro plant was abruptly canceled by the outgoing government just weeks before a general election late last year.
"The decision to scrap the agreement with the Chinese company by the previous government was taken without any grounds," information minister Gokul Baskota told AFP.
"We decided to correct that, because Nepal doesn't have the capacity to build such a big project and funding is also challenging." The long-mooted 1,200-megawatt Budhi-Gandaki plant would nearly double Nepal's hydropower production. The impoverished landlocked country suffers chronic energy shortages and is forced to buy electricity from neighboring India.
Beijing has been lobbying the new Communist government in Kathmandu to restore the contract since it took office in February, Baskota said.
Nepal wants the project to be part of the One Belt, One Road Initiative (OBOR), China's massive infrastructure drive at the center of the Asian giant's push to expand its global influence. Nepal signed up to the plan in May 2017.
Critics say the contract should have been open for international bidding and warned of the risks of Chinese loans.
Awarding such a lucrative contract in an opaque manner risked inflating the cost of the project "leading to a heavy national debt burden", tweeted former finance minister Ram Sharan Mahat.
Nepal has awarded contracts for its mega hydropower projects to its two giant neighbors, rivals India and China, but construction has been slow.