How CIAA intervened in hydro projects beyond its jurisdiction

Not only the public sector, but the private sector too was victimised by the Commission for the Investigation of Abuse of Authority (CIAA) under now-suspended Lok Man Singh Karki, it has been revealed. A case in point: Surya Bahadur KC, chairman of Jhyamolongma Hydropower Development Company, saw the construction license for 36MW Karuawa Khola Hydropower Project scrapped even after spending a huge amount on project preparations. The company had acquired 80 percent of the land required for the Kaski-based project and was in the process of signing an agreement with Nepal Electricity Authority (NEA) to evacuate electricity generated by the project. The delay in signing the Power Purchase Agreement (PPA) was later used as a pretext by the CIAA to deem the company unsuitable to build the project and ordered the Energy Ministry to scrap the licence. Before ordering the annulment of the licence, the CIAA had summoned the company officials and sought clarification for the delay. During the meeting, the company officials had pledged to start construction immediately after the signing of the PPA, for which they had waited three long years, according to KC. “I also told them the summoning was beyond CIAA’s jurisdiction,” said KC. The company officials were then lured to pay bribes to save the licence. “A CIAA official told me that the issue could be settled, hinting that I should provide kickbacks,” a director of the company told the Post. “But I didn’t listen to them.” And, the construction license for the Karuawa Khola project was finally scrapped. It is not the only hydropower project whose survey or electricity generation licenses were scrapped. An additional 12 such projects, except for World Bank-funded Kabeli-A, met the same fate. Despite the Parliamentary Finance Committee telling the government not to implement CIAA’s instruction, and Agriculture and Water Resource Committee asking the Energy Ministry to take decision on its own while questioning CIAA’s jurisdiction, the ministry acted as per the CIAA directive. However, KC, whose company had already invested Rs150 million in project development, did not remain quiet and moved the Supreme Court. The court recently issued a verdict in the company’s favour, paving the way for reissuance of the licence. Four other companies that had also moved the apex court received verdicts in their favour. “Our licences were scrapped just because NEA delayed PPA signing process,” complained KC, adding the project’s estimated cost would go up by around Rs180 million per megawatt from previous estimation of Rs160 million. It means the total project cost would go up by an estimated Rs720 million due to the two-year delay caused by the scrapping of the license. Welcome Energy Development Company, the developer of 4.53MW Balefi-B Hydropower project, also saw its electricity generation license scrapped while it was holding negotiations with banks for financial closure. “The set deadline for the financial closure had just expired and we had sought a six-month extension to the deadline, but the anti-graft body decided to scrap our license,” said Yagya Prasad Subedi, a promoter of the project. “It was unfair as we had already spent around Rs140 million in land acquisition and engineering works and knocked the door of the court, which has given us justice.” Subedi said they had planned to begin construction right after the financial closure, as PPA had already been signed with NEA. “Now, project cost will rise. And on top of that we also have to sign a new PPA with NEA,” he said. “We had to suffer because of CIAA’s intervention that was beyond its jurisdiction.” Similar is the story of Kalika Energy, whose survey license for 60MW Bhotekoshi-5 was scrapped as per CIAA’s instruction. The court also issued a verdict in its favour. Kalika Energy Director Padam Gurung said the anti-graft body had ordered the annulment of the five-year licence just 22 months after its issuance. “We were confident that we would get justice from the court,” said Gurung. In fact, Kalika Construction—promoted by some of the promoters of Kalika Energy, including Bikram Pandey, who is now a minister—had acquired survey license for the same project in 2002 which was scrapped in 2007. Kalika Energy later acquired the licence for the project in 2012. “CIAA considered Kalika Construction and Kalika Energy as the same company because Minister Pandey is promoter of both the companies,” said Gurung. “In fact, they are two different companies and have different shareholders.” Independent power developers were alarmed after the anti-graft body started intervening in the licensing process. After the CIAA directed the government to scrap survey or electricity generation licences of many companies, Independent Power Producers’ Association Nepal (IPPAN) had sought revision of the orders, arguing proper study should have been conducted prior to harassing project developers. IPPAN President Khadga Bahadur Bisht said government officials did not dare to stand against the CIAA instruction although the government did not want the licences to be scrapped. “I also heard complaints from developers about the demand for kickbacks to save the licenses,” he said. Source: ekantipur