The KHNP is currently facing a corruption scandal erupting from its dealings with a California-based valve manufacturing company for the buying of valves for its power plants between 2003/07. The kickback-for-contracts case may eventually lead to the collapse of KHNP, thereby leaving CHEP in limbo.
“The Ministry of Water Resources, NEA and other concerned government bodies awarded the contract only because the project is financed under the Korean government´s soft loan scheme,” a Nepali private investor said.
Moreover, the process of choosing the contractor aroused controversy after KHNP ended up as the only bidder. The bidding price in February was about INR1 billion in surplus, according to the source.
“The amount could have been reduced, but NEA turned a blind eye to a letter and reports sent by another Korean Company – Samsung C & T, citing a downturn in the cost of materials,” the source added.
Samsung pulled out of CHEP because of excessive increase in the cost of the project, leaving KHNP the sole bidder.
Interestingly, KNHP was not qualified as a bidder as the tender document clearly mentions that the bidder must be a contractor and must have executed two similar contracts within the last 10 years. KNHP is not a contractor but a subsidiary of the Korea Electric Power Corporation, a utility company similar to NEA.
