Nepal scraps $2.5 billion hydropower project deal with Chinese state-owned company

By Lobsang Tenchoe

DHARAMSALA, Nov 14: In a huge blow to China, Nepal has cancelled a deal with a Chinese state-owned company to build its biggest hydropower project worth USD 2.5 billion.

Nepal has scrapped the agreement of 1,200-MW Budhi Gandaki hydropower project with Gezhouba Group on the directive of several parliamentary committees following a cabinet meeting on Monday, reports Hindustan Times.

“In the meeting of the Board of Ministers held today, the agreement with the Gezhouba Group in respect of Budhi Gandaki Hydro Electric Project was found in an irregular and thoughtless manner and rejected under the direction of Parliamentary Committee,” Nepal’s Energy Minister and Deputy Prime Minister Kamal Thapa said in a tweet on Monday.

Image- Hindustan Times
Image- Hindustan Times

Former Prime Minister of Nepal, Pushpa Kamal Dahal’s Maoist-dominated coalition government awarded the contract to built the 1,200MW hydropower plant about 80km from Kathmandu to a Chinese state-owned company, Gezhouba Group in June, 2017 during his last days in office without any competitive bidding.

The report concluded by citing a widespread speculation in Kathmandu that the current Prime Minister Deuba took the bold decision to signal to China that Nepal will not be pressured into developing projects under China’s Belt and Road Initiative.

Pushpa Kamal Dahal’s Maoist-dominated coalition government signed the Belt and Road Initiative, a development initiative introduced by China in May, 2017.

As China and India have been competing for influence in Nepal, the cancellation of the agreement could serve as a huge blow to China.