22-28 January 2016 #792

Big delays in big projects

Across the country, hydropower and infrastructure projects are on hold as the blockade bites
Sahina Shrestha

STANDING STILL: The Chinese-aided Ring Road upgrade project has been at a standstill for seven months because of the earthquake and blockade.

The $1.5 billion Tama Kosi III in Dolakha would have been the biggest foreign investment project in Nepal. The Norwegian company Statkraft had been working since 2007 on the dam that would have generated 650MW of electricity for export to India.

Last week, Statkraft decided enough was enough and backed out of the project. It cited bureaucratic hurdles, geo-political instability and fragile political situation – code words in investor parlance for corruption, India’s reluctance to allow any other country to be involved in large hydropower projects in Nepal, and the blockade.

This came as a huge blow not only to Nepal’s goal of finally exporting power to India, but also damaged whatever confidence foreign investors still had in the country. The Australian SMEC also pulled out of the export-oriented West Seti hydropower project in western Nepal four years ago after battling bureaucracies in India and Nepal for two decades.

Other foreign investment and aid projects in Nepal may not be leaving just yet, but they are facing costly delays due to disruptions caused by the earthquake followed by the blockade that has now lasted nearly six months.

Click on blue markers for more information on each project. Map by Ayesha Shakya

The construction of the 456MW Upper Tama Kosi, which was to be completed this year to alleviate a ruinous power shortage, has been pushed back by at least a year. Other under-construction hydropower projects face similar delays.

“We need at least a year to catch up,” Upper Tama Kosi project chief, Bigyan Shrestha told Nepali Times. Situated near the epicenter of the 12 May aftershock, the dam structure sank 7 cm, and the access road was heavily damaged by landslides. The project has been at a near standstill for seven months due to the earthquake and blockade.

Work has resumed to repair the road to the powerhouse, but progress is slow. “We have only received 12,000 litres of diesel since November,” says Shrestha, adding that the construction normally needs 50,000 litres every month. “We are managing somehow, but if this continues for two more months it will have a severe impact on the project.”

Another big project, the 216MW Upper Trisuli I is delayed not because of the earthquake and blockade but because the Ministry of Energy is too busy firefighting the fuel crisis to sign the Project Development Agreement. While the Korean investors are eager to start, the government seems to be in no particular hurry.

“We are cooperating with the International Finance Cooperation but unlike the other countries, the Nepal government cannot multi-task,” said Kim Joon Hyung of promoter, Korea South East Power (KOSEP).

Chameliya Hydropower Project in the Far-West is also facing delays. "Because of border blockade since September, we are having difficulties in supplying goods to the construction site," said Cho Sang Beom of Korea Hydro & Nuclear Power.

Meanwhile, the Melamchi Project to supply water to Kathmandu Valley which had been plagued by delays even before the earthquake has pushed back its completion date of October this year because of the fuel crisis. The Italian contractor Cooperative Muratori Cementisti (CMC) Di Ravenna stopped construction after the earthquake and although some work resumed in September, it came to a halt again because of the diesel shortage. Only half of the 26.5 km tunnel is complete.

“By contract they are required to have buffer stock and should not stop working without proper reasons. And although work has resumed now, the contractor is saying they may not be able to finish on time,” explained Ghanashyam Bhattarai of the Melamchi Water Supply Development Board. But even if CMC digs 1km of tunnel per month, the project which is supported by JICA, ADB and the OPEC Fund, will not be able to meet the project deadline and can be completed by April 2017 at the earliest.

The Kathmandu Airport runway extension work as well as other hydropower and infrsatructure projects around the country have been at a standstill since September.

The construction of the Gautam Buddha International Airport to serve Lumbini had just started with much fanfare in early 2015 when unrest in the Tarai brought everything to a grinding halt.

“We will need at least six months to catch up with lost time even if the fuel situation is back to normal,” Project Chief Om Narayan Sharma said. The project gets 12,000 litres of fuel every week, whereas the same amount is required every day at normal times.

The other aviation project facing delays is the upgrade of Kathmandu Airport, where the runway, apron and taxiway expansion was supposed to be completed by March this year. Construction had resumed after the earthquake when the Spanish contractor Constructora San Jose stopped work citing difficulty in accessing raw material and lack of fuel. Only 15 per cent of the work in the ADB-supported project has so far been completed.

“The government and the Civil Aviation Authority of Nepal are 100 per cent behind the project. It has been delayed because of the contractor,” said Devananda Upadhyay, General Manager of Tribhuvan International Airport.

The other project in Kathmandu that has come to a standstill is the Chinese-aided Ring Road expansion from Kalanki to Koteswor. “We would have completed half the work by now, but the Shanghai Construction Group says it can speed things up and the project will be completed on time if fuel and construction material is available,” said Ashok Tiwari, the former head of the project. Work has resumed on Manahara Bridge, which contractors say can be finished in four months if there are no further disruptions.

The fuel shortage has affected even telecom companies like Ncell, which used to have a dedicated electricity supply for its servers, but now has to use its diminishing stockpile of diesel. More than 13 million mobile users will be affected if its servers go down.

Likewise, construction of five star hotels including Shanker Group's DoubleTree by Hilton has been temporarily put on hold.

Read Also:

Blockade delays hydropower, Lokmani Rai

Back to the dark ages, Om Astha Rai

Piped water still a piped dream, Kenji Kwok

Lumbini set to take off, Matt Miller

About Time, Dewan Rai