Nepal Electricity Authority (NEA) has cancelled the contract for the New Khimti-Bahrabise 400 kVA transmission line, which is the first section of the Tamakoshi-Kathmandu transmission line project. NEA has said that the Chinese contractors that were responsible for construction of the project have violated the terms and conditions that govern the agreement.

In a press statement issued by NEA today, the power utility has mentioned that it took this step of cancelling the contract as the Chinese firms had failed to not only meet certain conditions but also failed to carry on with construction works as per schedule.

The contract to construct the New Khimti-Barhabise section of the transmission line project had been jointly awarded to China-based Guangxi Transmission and Substation Construction Company and the Shenzhen Clou Electronics Co Ltd.

According to the statement, NEA had terminated the contract a few days ago and also seized the 10 per cent of the works executions securities.

“We have seized $1.45 million, which is 10 per cent of the total construction cost, and also the performance guarantee amount of Rs 61.67 million that the contractors had submitted,” said Navaraj Ojha, project chief of Tamakoshi-Kathmandu transmission line project.

“Likewise, we have also seized $1.45 million that the contractors had deposited as advance payment and Rs 61.67 million that had been deposited as bank guarantee,” Ojha stated.

NEA had signed the contract with the two companies on September 27, 2016 and the transmission line project was expected to be completed by May 2019. The contract was awarded at a cost of $14.54 million and Rs 616 million.

According to NEA, despite the completion of 74 per cent of contract time, the companies had completed only eight per cent of works and failed to begin the works related to tower design, foundation and insulator, among others.

Kul Man Ghising, managing director of NEA, has stated that the Tamakoshi-Kathmandu transmission line project is a strategic one for the country but the Chinese contractors had failed to perform.

Meanwhile, the aforementioned Chinese companies had also won the bid to construct the 220/132 kV substation in Bahrabise. As per Ojha, the works of the substation are also not satisfactory and NEA may terminate the contract if the contractors fail to do works as per schedule.