The contract agreement for fifth phase of rural electrification project with the investment of European Investment Bank (EIB) has not yet been signed. It is clear that the bidding process for electrification in Baitadi, Bajhang, Rukum East and Rolpa, initiated by Nepal Electricity Authority (NEA) on April 20, 2023, has stalled due to vested interests of the NEA leadership. The work, which was progressing according to law, has been halted midway as it did not serve the interest of NEA Managing Director Kulman Ghising. NEA has asked EIB for permission to re-tender, and EIB has requested necessary documents on the matter. It is true that NEA leadership has unnecessarily created controversy after realizing their interests wouldn’t be fulfilled, despite the bidding process following legal procedures. According to an agreement between EIB and Ministry of Finance in February 2020, EIB was investing over Rs 12 billion for electrification in some districts of Lumbini, Karnali and Sudurpashchim provinces. The tender for the fifth phase under this agreement was called last year. Five companies had submitted proposals.

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An evaluation committee was formed on April 2, 2023, before the tender call. The tender notice was issued on April 20, 2023, with a tender submission deadline of June 25, 2023. Technical evaluations of proposals submitted through the Public Procurement Monitoring Office’s e-bidding portal were conducted the same day. The technical proposals were opened at 2 pm and uploaded to the portal.
Technical proposals of all five companies were found suitable in the evaluation, meaning all five bidders are technically competent. The committee submitted the technical evaluation report to NEA Managing Director Kulman Ghising for approval, as per law. Ghising approved the committee’s technical report on August 15, 2023, and it was sent to EIB for approval the same day. EIB sent a “no objection” to the technical report on 22August, 2023. NEA opened the financial proposals on 30 August, 2023. Rudranee Infrastructure Ltd. of India quoted Rs. 61,233,200,000 which is the highest among five companies. As per the Public Procurement Act, this company cannot win the contract. The joint venture of Chinese firms Zhejiang Orient Engineering Co Ltd (ZOIC) + HOGN Electrical Group Co. ltd JV made the lowest bid.

The process till the opening of the financial proposal is as per Nepal’s procurement law. The evaluation committee, as per the law, submitted the proposal of the ZOIC+HOGN JV to NEA Managing Director Ghising for approval on November 5, 2023. However, upon seeing that the financial proposal of the Indian company Rudranee, which he favored, was the highest, Ghising formed an ‘investigation committee’ on November 27, 2023, to examine the evaluation committee’s report. This was done to award the contract to Rudranee which is represented in Nepal by Kulman’s own brother Ganesh Ghising. It is illegal to form an investigation committee after financial proposals have been opened. This illegal committee amended Rudranee’s financial proposal and reduced the bid amount to Rs 2.14 billion. The Public Procurement Review Committee (PPRC) has already pointed out that NEA committed an illegal act by amending a bidder’s proposal after its financial proposals had been opened. EIB has received the PPRC’s order to NEA through a complaint and has requested additional details from NEA. EIB’s move to verify documents from both parties is commendable. After reviewing the documents, EIB will learn that its own procurement guidelines were not followed and attempts were made to restart the process contrary to Nepal’s procurement laws. EIB must not accept actions that violate its own procurement guidelines and have been proven wrong by Nepal’s procurement laws.

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There is a precedent where NEA was defeated in court in a similar controversy over a Rs 1.5 billion wire supply contract in the past. NEA, which faced defeats in the Patan High Court twice for disregarding PPRC’s orders, is certain to face defeat in this electrification contract as well. It is certain that the company legally entitled will win the electrification contract funded by EIB. Therefore, EIB must take initiative to avoid prolonging unnecessary controversy. It is also the EIB’s responsibility to intervene with clear directives to ensure that the project they are investing in progresses in accordance with their guidelines and the procurement laws of the respective country. EIB must provide clear instructions to follow its procurement guidelines and Nepal’s procurement laws to move the project forward. Past incidents have shown that halting an ongoing legal tender process midway and re-tendering will lead to court battles. Therefore, it is necessary for EIB to issue clear instructions now to resolve the dispute and finalize the tender agreement in accordance with the law.

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