Risen Energy — the contractor of the 25-megawatt Grid-Tied Solar Project — has sought $27 million as compensation amount from Nepal Electricity Authority (NEA), after the state entity sent a letter stating suspension of tender awarded to the Chinese firm.

The contractor has claimed that due to the suspension of the tender, it will have to face a loss equivalent to the aforementioned amount, which should be compensated by NEA.

The World Bank is financing the $37 million project, which had landed in controversy due to breach of procurement rules during the contractor selection process.

“We have received a letter from the contractor claiming the compensation amount,” sources at NEA said. The contractor has also said that after receiving the suspension of contract letter from NEA, it has stopped all the preparatory works and halted import of construction materials too. “The contractor has said that they should be compensated for the financial loss that they would incur due to the decision to scrap the contract,” officials said.

NEA had sent a letter of suspension of tender to the contractor after Public Accounts Committee (PAC) of Legislature-Parliament directed the authority to begin the retender process of the project on August 1.

However, development partner of the project — World Bank — has shown strong reservations against retendering the contract to execute the project as that would further delay its implementation. Initially NEA had planned to instal the solar project within this winter, however the fate of the project is now in limbo following PAC’s instruction.

PAC Chairperson Dor Prasad Updhyaya refused to comment on the issue when contacted today.

NEA had called a tender for installing solar panels with a capacity to generate 25 megawatts of energy during peak hours in April of 2015. The World Bank and NEA had formed separate bid evaluation panels to expedite the project. Technical and financial proposals of the bidders were evaluated by the NEA-formed Project Management Unit and independent panel formed by the World Bank, that is, Procurement Evaluation Panel.