Nepal cancels a deal with China to build a US$ 2.5 billion dam
A memorandum of understanding for the construction of a 1,200MW hydroelectric plant at about 80km from Kathmandu was signed in June, less than a month after Nepal formally agreed to take part in the Belt and Road Initiative, Beijing’s new Silk Road.
Kathmandu (AsiaNews) – Nepal is expected to cancel a deal with a Chinese state-owned company to build one of the country’s biggest hydropower plants, this according to its deputy prime minister.
In a tweet on Monday afternoon, Deputy Prime Minister Kamal Thapa said the plan to award the US$ 2.5 billion hydroelectric project to China Gezhouba Group had been scrapped.
“In the meeting of the Council 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 the Parliamentary Committee,” he said.
The two parties had signed a memorandum of understanding in June to build the 1,200MW hydropower plant about 80km from Kathmandu, inking the deal less than a month after Nepal formally agreed to take part in the Belt and Road Initiative, Beijing’s new Silk Road.
The agreement’s cancellation is expected to be a major setback for Beijing as it seeks to expand its influence in the Himalayan country through the massive infrastructure drive.
Dinesh Kumar Ghimire, a spokesman for Nepal’s Ministry of Energy, said he believed the decision was final “Since [the deputy prime minister] put the decision on Twitter”.
A Nepal-based public relations officer for Gezhouba said the company had not been notified about the change, adding the original memorandum was expected to be turned into a formal contract next year.
Gezhouba already has at least two hydropower contracts in Nepal, whilst other Chinese companies are also building hospitals, roads and airports in the country.
The Nepali government led by former prime minister Pushpa Kamal Dahal signed up for the Chinese initiative in May. However, some had questioned whether Nepal would continue to support such links with China after Sher Bahadur Deuba took over as prime minister in June.
In August, Deuba told visiting Chinese Vice-Premier Wang Yang that his government remained committed to implementing past agreements.