KATHMANDU, Nov 14: At a time when the government is trying to woo more investments from China, a cabinet meeting on Monday decided to revoke the government's previous decision to award the Budhigandaki Hydroelectricity project to China's state-owned company Gezhouba Group Co Ltd (CGGC).
The move by the Sher Bahadur Deuba-led cabinet to roll back the decision taken by the Pushpa Kamal Dahal government barely five months ago has raised serious questions about Nepal's policy stability and sent out a negative message among prospective investors in mega infrastructure projects in Nepal.
Deputy Prime Minister and Energy Minister Kamal Thapa announced in twitter that the move was aimed at correcting a decision taken in an irregular and whimsical manner by the then government just a few days before Dahal stepped down as prime minister.
As the decision immediately caused huge controversy in social media, Minister Thapa took to twitter again some five hours later and clarified that it was not aimed against any institution or individual and there was no politics involved.
"The decision was taken in line with the directives of various parliamentary committees and keeping in mind the wider interests of the country. The Ministry of Energy and the Investment Board of Nepal shall now expedite the project in a transparent manner after formulating the necessary policy and work procedures," Thapa said.
The reservoir project with a 1,200 MW generation capacity has been recognized as a national pride project. The project to be built on the Budigandaki River bordering Dhading and Gorkha is the only ready-to-build storage project and its detailed project report and contract documents are all ready.
The Dahal government's decision on June 5 came at a time when discussions were underway within government ministries to develop the project indigenously in line with the Upper Tamakoshi model.
The decision drew serious criticism from a section of political parties, media and the parliamentary committees for procedural lapses and the bad reputation of the awardee company.
As such, a joint meeting of parliament's Agriculture and Water Resources Committee and Finance Committee on September 26 directed the government to scrap the decision .
Hydropower developers have taken strong exception to the latest decision. "This shows how weak the policy of our government is. While a caretaker government [led by Dahal] decided to award the contract, another caretaker government [under Deuba] has decided to withdraw it. It shows the weakness in our overall policy," said Vice President of Independent Power Producers' Association, Nepal (IPPAN) Kumar Pandey.
Pandey said that this kind of immature decision on the part of the government has raised a question about policy stability. "This is likely to send a negative message among prospective foreign investors in Nepal."
Officials said Nepal had asked China to carry out the hydropower project under its One Belt One Road (OBOR) --something China had responded positively to. "If there were procedural lapses, these should have been duly addressed. But the way the decision has been revoked has only eroded the credibility of Nepal in the international arena," said Nepal's former ambassador to China, Dr Mahesh Maskey.
Maskey argued that this particular incident may make prospective investors think twice before taking any decision to invest in Nepal. "We have become a part of OBOR. The decision to scrap the contract at a time when we are reiterating our commitment to OBOR is obviously not positive," he further said.