Melamchi Water Blues
Contractor Selection under Question
The lowest bidder for the construction of the Melamchi Water Treatment Plant at Sundarijal has been surprisingly disqualified, and the authorities have no convincing explanation to justify the use of their discretion.
TC Correspondent
The selection of a Chinese joint venture (JV) over an Indo-French JV has created some ripples in the concerned Kathmandu diplomatic circles. However, neither the Chinese nor the Indian diplomats based here are willing to furnish a comment ‘so early.’ India’s Hindustan Construction Company (HCC) and its French partner VINCI Construction were disqualified from the bidding process by the Melamchi Water Supply Development Board (MWSDB), the government agency responsible for implementing the project. According to sources, the Indo-French proposal was trashed by the MWSDB despite being the lowest bidder. Sources also claimed that the MWSDB is all set to award the WTP construction contract to a Chinese JV which has one of its partners blacklisted by The World Bank for five years with effect from January 2009.
With a bid of Rs 3.9 billion, the Indo-French JV had emerged as the lowest bidder. But the MWSDB authorities have decided to award the contract to the Chinese consortium, the second lowest bidder with a bid of Rs 4.5 billion. “MWSDB authorities have not furnished any explanation or given us any opportunity to be heard despite repeated requests. Such discrimination could have serious bearing on the future relationship between the two countries,” opined a HCC source.
As one of the companies in the Chinese JV was penalized by the WB for engaging into malpractices, it should not have been pre-qualified in the first place, argues the HCC source. The Nepali authorities not only overlooked this fact at the prequalification stage but also are now ignoring the lowest bid in favour of the same company, he complains. He further said that the MWSDB authorities are trying to ignore the advice of even the Japanese International Cooperation Agency (JICA), the donor of the WTP project, to “re-evaluate all the bids.”
The WTP will treat raw water coming through 26.5 Km tunnel from Melamchi River for the Melamchi water supply project. The ultimate capacity of the water treatment plant will be 510 mld. The plant will be developed in three phases, each of 170 Ml/d. The second stage will be accomplished by duplicating the major facilities of the initial phase, and the third phase will comprise mainly performance enhancements and increased design loading on the facilities constructed under phases 1 and 2. JICA has signed a grant agreement of Rs 5 billion for the project.
According to Poorna Das Shrestha, deputy executive director at MWSDB and member secretary of the proposal evaluation committee, five proposals submitted by HCC-VINCI, Hitachi Power Plants; China Water Energy Corporation; China Geo Engineering Corporation (CGEC) and China 15 Bureau Group; and WABAG were prequalified for the project. Among these companies, CGEC was blacklisted by the WB in January 2009. “WABAG did not participate in the bidding process. The proposal by the Indo-French JV was disqualified. Then we evaluated the remaining three proposals and forwarded them to JICA for concurrence,” says Shrestha.
MWSDB Executive Director Hari Prasad Sharma dismisses the Indian claims. “Besides the government’s Public Procurement Regulations Guidelines, we also have to follow the JICA Guidelines while evaluating the proposals. JICA Guidelines don’t say that we cannot select a company blacklisted by the WB,” Sharma defends the Board’s decision. He also claimed that the same Chinese company blacklisted by the WB has been awarded contracts for JICA-funded projects in the Philippines and Sri Lanka. On the issue of the disqualification of the lowest bidder he says the decision was taken based on the suggestions of international consultants. “The Indo-French JV had some 8-9 conditions attached to its proposal. The costs of these conditions were not included in the bidding amount. Hence, the consultants suggested that the proposal was substantially non-responsive and we disqualified the proposal,” he clarifies.
But it seems things are not as straightforward as claimed by Sharma. According to Shrestha, over two months have elapsed since the MWSDB forwarded the three proposals to JICA for concurrence. But the Japanese aid agency has not given its “go ahead” to the MWSDB decision to award the contract to the Chinese JV, delaying the start of the project. “The contractor should have been mobilized in March. But it is being delayed,” informed Shrestha.
Sharma blames the recent earthquakes in Japan for JICA’s indecision. “The devastating quakes disrupted communication between JICA’s Nepal office and its headquarters in Japan for nearly 20 days. This is probably causing the delay,” he reasons. But sources said that JICA has already written to the Nepal government to re-evaluate all the bids, an advice the MWSDB refuses to consider.
Sharma accepts this, though in a roundabout manner. “We have received two contradictory letters from JICA. The first said it had no objection to a WB-blacklisted company being awarded the contract while the second one was a bit ambiguous and said the matter was for the Nepal government to decide,” said Sharma.
VOITH Chairman Passes Away
TC Correspondent
Senior industrialist and chairman of Vaidya’s Organisation of Industries and Trading Houses (VOITH) passed away on Sunday April 17, 2011. He was 84. Vaidya, who was suffering from brain tumour for the last three years, died at his residence, Jasutara Niwas in Budhanilkantha. Dr Vaidya is the father of Suraj Vaidya, the newly elected president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
Late Vaidya started his career as an employee of the US Agency for International Development (USAID). He began a difficult and exciting journey at the age of 29 to build his own business empire with US$ 700. His first major success came in the year 1967 when he founded the United Traders Syndicate (UTS) and bagged the sole authorized distributorship of Toyota vehicles and its genuine parts for Nepal. Today, VOITH employs more than 7,000 people.
He was also the Honorary Consul General of the Philippines to Nepal. He was well regarded in the business community for his contribution to make Nepal known in the international arena. Apart from being a renowned industrialist and a social worker, Vaidya was also a lyricist who has penned a number of patriotic songs. He is survived by two sons - Suraj and Suresh and a daughter, Susan.
According to the press release issued by VOITH family, his last rites will be performed on April 18, 2011.
