KATHMANDU, March 28: Nepal Telecom (NT) on Tuesday said that it would not release funds for the Upper Tamakoshi Hydropower Limited (UTKHPL) unless the latter provides details of the progress on selection of the management team through international competition.
NT has also issued a deadline for completion of the selection process as per the provision on loan agreement.
Responding to the letter sent by UTKHPL seeking around Rs 90 million, NT pointed out that UTKHPL has not been able to select the management team as per the clause 14.2 of the loan agreement that requires UTKHPL to select a management team, including the chief executive officer (CEO), through international competition.
“Selection of the management team through international competition is mandatory and we cannot release the money until we are informed about completion of the selection process,” said Deputy Managing Director of NT Rameshwar Karmacharya.
NT has signed a loan agreement of Rs 6 billion, Employees´ Provident Fund (EPF) of Rs 10 billion, and Citizen Investment Trust (CIT) and Rastriya Beema Sansthan (RBS) of Rs 2 billion each for the 456 MW project. Nepal Electricity Authority (NEA) will own 41% share of the project, NT 6%, CIT 2%, RBS 2%, general public 15 % and residents of Dolakha 10%, among others. The government has agreed to loan the remaining Rs 11.08 billion for the Rs 35.29 billion project that is expected to come into full operation by March, 2016.
EPF has released a loan amount of Rs one billion but NT, CIT and RBS have yet to release any loan while the government will provide the remaining amount only after others released their share of the loan commitment. Project Director and Officiating Chief Executive Officer of UTKHPL Mrigendra Bahadur Shrestha revealed that the project would require another Rs 1.5 billion in the next two months.
With NT also sending the copies of Tuesday´s letter to EPF, CIT and RBS along with NEA, UTKHPL is worried that other lenders may also refuse to release funds. “We do not know about the progress of the selection process but the project cannot go ahead without honoring the loan agreement reached with the lenders,” EPF Board Director Radha Krishna Pote said refusing to divulge if EPF would follow suit.
The board meeting of UTKHPL on January 29 had decided that only Snowy Mountain and Engineering Corporation (SMEC) of Australia met the requirements and a negotiating team led by NEA Director Sunil Kumar Dhungel met the SMEC team last week. “We have asked them questions regarding their responsibility and obligations toward the employers to ensure accountability,” Dhungel stated, adding that accountability of SMEC becomes even more important due to the failure of SMEC to develop West Seti Project over a decade.
The SMEC team, which has proposed American Kevin Irving Candee as the CEO and former NEA Managing Director Uttar Kumar Shrestha as chief finance officer, has sought around Rs 540 million for four years while UTKHPL has put the estimated cost of management team at around Rs 500 million.
“We will also negotiate the amount but first we have to be clear about SMEC´s ability to conduct such an important task,” Dhungel said assuring that the selection process would complete within a month.
Probe committee likely to recommend IB to take up West Seti
The sub-committee formed by the parliament´s Committee on Natural Resources and Means to probe into the signing of the Memorandum of Understanding (MoU) with China Three Gorges Corporation (CTGC) for West Seti Hydroelectric Project is likely to recommend the Investment Board to take up the project.
The probe committee, however, will mention all irregularities it found in the deal including why the Ministry of Energy (MoE) chose the 75 and 25 percent model when CTGC had also proposed to develop the project on a 51 and 49 percent model, among others in its report that will be submitted to the Committee on Natural Resources and Means on Wednesday, the last day of the probe committee´s deadline.
The board had written to the probe committee that it was ready to take up the project with high priority if it is brought under the board´s jurisdiction after requisite amendment and revision in the MoU while the government has also asked the board to take up the project.