LOCAL NEWS THE RISING NEPAL (DAILY)

Retendering for privatisation of BPC recommended

BY A STAFF REPORTER

Kathmandu, Sept. 10: The privatisation committee today recommended the government that there should be retendering for the privatisation of Butwal Power Company (BPC).

The committee made the recommendation after it found the financial bid of Interkraft Nepal (IN) – a consortium of seven Nepalese investors and a Norwegian Company -- too low. "The bid was too low," said Dr. Dilli Raj Khanal, one of the members in the committee. "That was why we have recommended for retendering."

IN had offered Rupees 730 million for the 75 per cent shares of the BPC – presently valued at Rupees one billion. That way, the price of one share – tagged at Rupees 100 by the government – has been offered at Rupees 122 by IN.

According to an official in the committee there were also some mistakes in the financial bid of Interkraft Nepal. "Under such circumstances, we simply could not accept the bid," he said. "And now we have decided to send the committee's decision to the cabinet for approval."

The government last month (on August 16) had opened the bid of IN after the Finance Ministry disqualified the technical bid of Chaudhary Group – another bidder for BPC shares. CG was out of the race after the Finance Ministry found errors in its technical bid. That was why its (CG's) financial bid was returned to it unopened while IN's was declared opened.

Ever since, till today, the Finance Ministry took time to analyse the IN's financial bid.

IN's representatives, however, cried foul over the privatisation committee's decision. "We were not given even a single chance to clarify our position," said Gyanendra Pradhan, one of the investors in the IN consortium. "If they think our offer was so low, they should have stated the minimum bar (to quote the offer)."

He further reasoned that since BPC, under its Power Purchase Agreement (PPA) with Nepal Electricity Authority, has its electricity's selling price fixed at Rupees 2.36, the company cannot fetch any better deal than what the IN has offered. "If only they increase the power tariff, we also can increase our offer."

But, some in the privatisation committee said that IN's offer was indeed too low and that it was not good to have only one bidder.

If the government decides to go for retendering of the BPC shares, it would be doing so for the second time in the last three years. When the sealed tenders were invited for the first time some three years back, IN and Chaudhary Group together with Independent Power Corporation (IPC) had offered their bids.

Then IN had quoted Rupees 135 per share (conditional) and Rupees 90 per share (unconditional) while Chaudhary-IPC consortium had offered Rupees 109 per share. Later, when the government asked both the parties to revise their bids, IN had quoted Rupees 115 per share while IPC chose not to change its earlier offer.

While the decision had to be made, IPC cried foul that the government was favouring IN and it pulled out last year. Following that incident, the government decided to cancel the entire bidding process and go for a retendering.

And this time, it was Chaudhary Group versus IN. But again, with CG having been disqualified on technical grounds and IN not successful to impress the privitasation committee, retendering for the BPC shares has once again been the recommendation.

BPC has the installed capacity of 17.1 MW with two of its power plants – Jhimruk (12 MW) and Aandikhola (5.1 MW). It also owns 15 per cent shares of the 60 MW Khimti Hydropower Project.

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