ALSO READNepal to strengthen cooperation with China under B&R Initiative Nepal seeking access to China's land, sea ports Nepal vice president Pun on seven-day visit to China China, Nepal should enhance cooperation in traditional medicine: Wang Nepal, China hail 'smooth, healthy development' of bilateral ties
By Gopal Sharma
KATHMANDU (Reuters) - Nepal has scrapped a $2.5 billion deal with China Gezhouba Group Corporation to build the country's biggest hydropower plant, citing lapses in the award process, the energy minister said.
"The cabinet has cancelled the irregular ... agreement with Gezhouba Group to build the Budhi Gandaki hydroelectric project," Energy Minister Kamal Thapa, who is also the country's deputy prime minister, said on Monday in a twitter post in Nepali after a cabinet meeting. He did not give further details.
Nepal's rivers, cascading from the snow-capped Himalayas, have vast, untapped potential for hydropower generation, but lack of funds and technology have made Nepal lean on neighbour India to meet annual demand of 1,400 megawatts (MW).
In June a Maoist-dominated coalition government awarded a contract to China Gezhouba Group Corporation to build a 1,200 MW plant on the Budhi Gandaki river, about 50 km (32 miles) west of Kathmandu, to address acute power shortages.
Critics say the $2.5 billion project was handed to the Chinese company without any competitive bidding, which is required by law, and a parliamentary panel asked the government that succeeded the Maoist-led coalition to scrap the deal.
Officials of the Chinese company were not immediately available for comment.
Kathmandu has cleared a 750 MW project to be built on the West Seti River in the western part of the country by China's state-owned Three Gorges International Corp.
It has also permitted two Indian companies - GMR Group and Satluj Jal Vidyut Nigam Limited - to build one hydropower plant each, both capable of generating 900 MW of power each, mainly to be exported to India.
(Reporting by Gopal Sharma; Editing by Malini Menon and David Goodman)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)