KATHMANDU, JAN 02 - Wednesday’s meeting of the Nepal Electricity Authority (NEA) board of directors has decided to "indirectly" make an additional payment of 65 million euros (Rs. six billion) to the DDC-JV, the contracting company involved in the construction of the German-supported Mid-Marsyangdi hydel project.If the contractor gets the amount that it is claiming, officials said, the project cost could the double. Reason: That amount is 80 percent of the initial construction cost of the project, which was put at 77.7 million euros in the contract agreement.
"Directly or indirectly, the board has decided to pay the amount," a highly placed source privy to the development told The Kathmandu Post today. The blunder, according to him, was made when the board decided to endorse the "heads of agreement" signed by the parties concerned in Frankfurt, Germany, on December 19.
In the meeting, the German donor, KfW, suggested that the additional cost should be borne by NEA. The problem started a few months ago when DDC-JV unilaterally terminated the contract and demanded that NEA dole out the additional payment as "variation order" if the construction had to restart.
Asked about Wednesday’s board decision, NEA Executive Director Dr. Janak Lall Karmacharya said that the board meeting indeed endorsed the "heads of the (Frankfurt) agreement", but hastened to add that the endorsement did not necessarily mean that NEA would need to pay the amount claimed by the contractor."Even if the consultant recommends the payment, we won’t do that," he said. "We’ll rather go to the international court for arbitration."Posted on: 2004-01-03 04:52

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