Three Chinese, one Italian firms bid for Melamchi project


Three Chinese and one Italian companies have been competing for the contract to build the Melamchi tunnel after the previous contractor abandoned the project in midstream. The 26.5-km tunnel lies at the centre of a long-standing project to bring drinking water to thirsty Kathmandu from the Melamchi River.

Though 19 companies had purchased bid documents, only four of them submitted their proposals to the Melamchi Drinking Water Project (MDWP) by Jan 21, the closing date for submitting tenders.

According to the Melamchi Water Supply Development Board (MWSDB), the four companies are China International Water and Electric Corporation, Sino Hydro Corporation, China Overseas Engineering Group and CMC Cooperativa Muratori e Cementisti di Ravenna of Italy.

“We began doing a technical evaluation of these four companies on Wednesday,” said MWSDB executive director Krishna Prasad Acharya.

Previously, nine Chinese and 10 other companies had purchased bid documents expressing interest to take over the remaining work of the Melamchi project. A total of 13 companies had bought bid documents on Dec 14 when the board called a pre-bidding meeting. The previous contractor, also from China, left the job halfway over differences with the government.

Apart from the Chinese firms, other companies like Marti and Gammon, IVRL and KEC International from India and Gyund Yunenc, Sambu Construction and Kyeryond Construction Industrial Company from Korea have also purchased tender documents.

Similarly, Yaksel Insaat of Turkey, OTA Tunnel Squad Corporation of Malaysia and Italian Thai Development Company of Thailand have also bought tender documents. Six other companies had made enquiries with a view to buy bid documents.
Acharya said that due to the strict provisions maintained during the selection procedures, the other 15 companies did not submit detailed proposals. He added that some companies could not fully participate in the tender process as they could not find local partners in time. However, officials said that publicity regarding delays and failures of the Melamchi project had discouraged many potential bidders from participating.

The government had floated a fresh tender for Headworks and Diversion Tunnel Construction on Dec 1.

Acharya said that it would take some four weeks for the board to complete the technical evaluation of the four companies, and then a week later it would begin making a financial evaluation of the bidders. “The financial evaluation will be done only of the short-listed companies,” he added.

The government began the process of selecting a new contractor after construction of the tunnel came to a halt following termination of the agreement with the previous contractor China Railway 15 Bureau Group in September. The Chinese firm had initially pulled out of the project which led the government to formally cancel the contract as disagreements over delays and fulfilment of demands came to a head.

Out of the 26.5 km length of the planned tunnel, the Chinese company has dug only 6.5 km. After ending its contract with the Chinese contractor, the government had rescheduled the completion date of the project to March 2016.

A provision for a reward for early completion and penalty for delays has been inserted in the full bid document, according to which the contractor will be provided 0.5 percent of the total bid amount as a bonus for early completion while the same amount will be charged as penalty in case of a delay.

Board officials said that the final memorandum of understanding (MoU) would be signed with the new contractor in mid-April. The contract period will be 36 months.

The project had earlier been targeted for completion by 2015. The new contract will further delay the project with cost overruns amounting to as much as US$ 100 million.

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