KATHMANDU, Oct 29: A ten-year-long payment dispute between the Nepal Electricity Authority (NEA) and Italian contractor Impregilo SPA, the contractor of 144 MW Kaligandaki A Hydropower Project, has ended after NEA decided to withdraw a case filed against Italian bank, Banca Intesa. NEA had filed the case after the bank denied NEA US$ 2 million deposited by the contractor as performance guarantee.
NEA had filed the case at Milan Court in Italy claiming the performance guarantee amount and the court in 2010 had directed the bank to pay the money to NEA. However, the bank refused to transfer the money and instead moved the appellate court.
"We decided to withdraw the case after a negotiated settlement with the company. NEA will withdraw the case at the next hearing that would be held after 2-3 weeks at Milan court," said Bishwa Prakash Gautam, NEA board member who visited Italy a week ago.
After negotiations, NEA has finally agreed to pay Impreglio US$ 8.5 million as the company citing cost overruns was demanding compensations.
The project construction started in 1997 and completed in 2002.
In 2003, Impreglio citing cost overruns had demanded $2.5 million from NEA but the latter ignored the demand. Following this, Impreglio filed a case at the International Chamber of Commerce (ICC) demanding the sum. ICC a few years ago ruled that NEA should pay Impreglio US $20 million but NEA ignored the decision. Instead NEA decided to seize the US$ 2 million performance guarantee.
Also, NEA had filed a case at Patan Appelleate court challenging the ICC decision. The case that was pending for long was withdrawn last year by NEA after the company proposed out of court settlement.