Consultant to clarify stand on Tanahu hydropower

The consultant of Tanahu Hydropower Project is preparing to clarify Nepal Electricity Authority (NEA) on its position on 140-MW hydel project.
Nepal Electricity Authority (NEA) has last week asked the consultant to clarify its position on signing the contract for Tanahu Hydropower Project within 15 days as the latter has demanded for income tax waiver. However, the state power uitility has turned down the request of income tax break saying that it is beyond their jurisdiction. The Finance Ministry also rejected the demand as it is against the law of the land.
The consultant – a joint-venture of Germany’s Lahmeyer International and Canada’s Manitoba Hydro – is ready for negotiation with the authority within April 20, according top the Asian Development Bank (ADB) that is funding the project.
“Both the parties should review the initial request for proposal (RFP),” according to ADB country director Kenichi Yokoyama. “Negotiations should be held on the tax provision based on the request for proposal,” he said, adding that the consultant is ready for negotiation. “It is the responsibility of consultant to ask the government on how it plans to handle the financing and what kinds of taxes need to be levied.”
He, however, clarified that the issue is related with the government and consultant.
The NEA is also serious on its part. “We are serious about the ultimatum given to the consultant,” NEA managing director Mukesh Kafle said, warning that the authority would go for a legal remedy, if the negotiation fails to come up with positive results.
Apart from the tax issue, there is no other complication for the state power utility to sign the contract with the consultant, he added. “The financial closure of the project has already been completed and the project will also be completed in five years.”
Earlier too, the row over consultant hiring had also delayed the construction of the project
But the cabinet – in January – had ended the deadlock over the selection of project consultant. The ministry had scrapped the consultant appointment process after the ADB selected German-Canadian joint venture company as consultant, resulting in a tussle between the project’s main donor and the Energy Ministry.