The government has decided to revoke the license issued to the Chinese state-owned China Gezhouba Group Corporation (CGGC) for the development of the Budhi Gandaki Hydropower Project. A meeting of the Council of Ministers on Thursday also decided to build the 1200 MW reservoir-based nation-pride project through national investment, according to one of the government ministers present in the meeting.

“The responsibility of finalizing the modality for the project's construction has been given to the Ministry of Energy, Water Resources and Irrigation, ” the minister said.

The then Prime Minister KP Sharma Oli had restored the contract for the project’s construction with CGGC on September 22, 2018, after coming into power. However, the CGGC has done nothing to move the project ahead for three years, besides holding the project’s license. The decision to scrap the contract with the Chinese company was made by the Cabinet under the recommendation of the Ministry of Energy. Earlier, at a press meet held at the ministry on Wednesday, Minister for Energy, Pampha Bhusal said that the government will build the Budhi Gandaki Project on its own.?

Although the decision to scrap the contract awarded to the CGGC was reached a month ago, it was not made public “so as not to affect Chinese Foreign Minister Wang Yi’s recent Nepal visit.”?

After coming to power, the then Oli government restored the contract signed with CGGC to build the project under the Engineering, Procurement and Contraction and Finance (EPCF) model though the Oli government’s predecessor had scrapped the contract. The EPCF model is not in practice in Nepal although there is no specific law on public procurement through the EPCF model in the country.?

The project has not been able to move forward as the license to build it has been awarded to the Chinese company only to be scrapped by the next government.

According to a report prepared by Tractable Engineering in 2015, the cost of the Budhi Gandaki hydropower project was estimated at Rs 270 billion. However, the cost of the project is speculated to have reached more than Rs 1 trillion now due to the sharp price rise over the past seven years.

Minister Bhusal had recently instructed the Nepal Electricity Authority (NEA) Engineering Company, a subsidiary of the NEA, to review the cost of the Budhi Gandaki project and submit a report. NEA Engineering has reported that it will cost more than one trillion rupees to complete the project. The report of the project has not been made public so far. The ministry has spent more than Rs 35 billion to provide compensation to the locals of the areas affected by the project.