Project Background

Rahughat Hydroelectric Project with a capacity of 32 MW is located in Galeshwor, near Beni, Myagdi District in Dhaulagiri Zone of Western Nepal. The fund required for the construction of the project was estimated to be US$ 67 million. Out of US$ 67 million, US$ 31 million was made available from EX M Bank of India under US$ 100 million Dollar Line of Credit Agreement dated 14th September, 2007 for the civil works and Consultancy services for civil works. The remaining fund of US$ 36 million required for electro-mechanical, hydro-mechanical, transmission line and main civil works was made available from EXIM Bank of India under US$ 250 million Dollar Line of Credit Agreement dated 21st October, 2011. The approval of US$ 36 million Credit Line for the project was conveyed by the Embassy of India, Kathmandu on 3rd June, 2013. Contract Agreement for the construction of the Main Civil Works (dam, intake structure, de-sander, headrace tunnel, surge tank, penstock, power house, tail race, access road etc) was signed on 4th November 2010 with IVRCL Limited, India. The duration of the contract period, after the issuance of “Notice to Proceed”, was 42 months. As per Contract Agreement, the construction of the access road, bridge and the Contractor’s temporary facilities were to have started immediately after signing of the Contract and the rest of the works were to commence after the issuance of the Work Order from the Consultant.

Contract Agreement for the Consultancy Services for Construction of Main Civil Works was signed with WAPCOS Ltd. (A Govt. of India Undertaking) in association with TATA CONSULTING ENGINEERS LIMITED AND LARSON & TOUBRO LIMITED on 16th February, 2012 and the concurrence was received from the EXIM Bank of India on 2nd August, 2012.

The EXIM Bank of India gave approval for the appointment of WAPCOS Limited, consultant for the construction of main civil works of the project, as consultant also for Electro-mechanical, Hydro-mechanical and Transmission Line (EM, HM and TL) works. A Supplementary Contract was signed with WAPCOS Limited for the Consultancy Services of EM, HM and TL works on 24th March, 2014. The Contractor could not take up the construction work even after repeated instructions and understandings made because of the very poor financial condition of the company. The Consultant issued a “Notice to Correct” to the Contractor with the hope that the Contractor would expedite the work. Instead, the Contractor filed cases against the Employer, at the Lalitpur Appellate Court seeking stay orders to prevent the Employer from terminating the Contract and seizing the bank guarantees. The Court rejected to issue the stay orders. The Employer issued “Notice for Termination” to the Contractor on 18th June, 2015. As the Court rejected the plea of the Contractor to issue stay orders, the Employer seized the Bank Guarantees on 28 June, 2015. The contractor IVRCL has now initiated the arbitration process under UNCITRAL rules of Arbitration as per the Condition of Contract. The Construction of the Camp Facilities being under taken by Gorkha Swachchanda JV has also entered into the disputes and the contractor has already initiated arbitration proceedings at NEPCA. The case is still under consideration at NEPCA.

The Construction of Infrastructures for Camp Facilities being undertaken by Lama Construction has not been completed yet.

Project Status

Most of the land necessary for the construction of the Project has already been acquired. Similarly the permission for cutting trees has also been acquired. After the Termination of the Contract with the Contractor, the Project has decided to optimize the capacity and remodel the framework for Project management and contract planning. The hydrological study was revised and the new design discharge of 16.67cumecs was fixed. The detail design of the structures, estimation of quantities, rate analysis, preparation of Tender Drawings and preparation of Tender Documents are being undertaken at this moment. An understanding was reached to complete this phase of the work within three months, and Minutes of Meeting for the same was signed with the Consultant WAPCOS Limited on 15th July, 2015. The design work has already been started from 26th July, 2015 and the capacity has been optimized to 40 MW. The re-design of the structures, for the new discharge and installed capacity, has already started. The experts from WAPCOS Limited have started arriving and more experts are scheduled to arrive according to the approved manning schedule. The notice for fresh Tender will be issued by November 2015 and the new contractor is expected to be appointed by June 2016. The Project is scheduled to be completed by June 2020.

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