For two days in a row, employees’ unions at the government-owned Nepal Electricity Authority cut off power supply to the Ministers’ quarters, protesting a controversial government decision to extend and upgrade the contract with a Chinese company, which is building a hydro plant on the Trishuli river. Besides the ‘blackouts’, the unions have also carried on with ‘pendowns’, halting office work and threatening further agitation if the government does not reverse the decision.

Revision in contract with China Gezhouba, which the critics allege is responsible for one of the biggest corruption scandals resulting in a loss of billions of rupees to Nepal, has resulted in the outcry.

“Instead of being penalised for not finishing the project in time, the company has been rewarded by breaching the law, as well as the national interest,” said Dambar Nepali, a hydro expert. Similar charges have been made by three former energy ministers (except the Maoist Energy Minister) as well as former finance secretary involved in the original negotiations with the company.

According to the agreement signed in May three years ago, the state-owned Chinese company was supposed to have finished the 60 MW Trishuli-3A hydropower project by early 2013, bringing a measure of relief to the power-hungry country that sees more than 14 hours of cuts during winter. A clause in the agreement stipulated that the company was to pay a fine, amounting to more than $10 million, should it for fail to complete the project on time. The company is understood to have claimed that the project was delayed due to obstruction from locals, but attempts to reach the company personnel through its field office in Kathmandu were unsuccessful.

Exemption

The board of the Nepal Electricity Authority agreed to “upgrade” the project on June 1, thereby exempting the company from paying the fine, delaying electricity generation by at least two years and adding $43 million to the project cost. If things to according to the government’s plan, the Finance Ministry will get additional cost covered through a “soft loan” from the Exim bank of China, a state-run bank which has a strategic agreement with China Gezhouba Group.

Former Prime Minister Baburam Bhattarai, whose government agreed “in principle” to the change in contract, took to Twitter to defend the move, claiming it was necessary to save the project. “It’s in national interest,” he tweeted, “if any irregularity has taken place that must be looked into by relevant authority.”

Experts say that increasing the capacity of the project would do little to reduce Nepal’s power woes since the additional electricity will be generated only during the rainy season, when the swelling rivers produce enough electricity to meet the country’s needs, and add no power during the dry winter months, when demand far surpasses supply.