Korea Hydro and Nuclear Company (KHNP), a subsidiary of Korea Electric Power Corporation, has warned Nepal Electricity Authority (NEA) of terminating the contract for 30MW Chameliya hydropower project.
The South Korean company was contracted for electro-mechanical, hydro-mechanical works and transmission lines construction works for the hydro projects.
However, the company has claimed that it would walk out of the project stating that the delay in civil works is holding back the company in progressing with its work. Chinese firm China Gezhouba Water and Power has been employed for the civil works.
A NEA official has told eKantipur.com that the company has also sought $8m in compensation from the government citing delays.
"The Korean company has warned to breach the contract signed with the NEA unless it is paid the prolongation cost," official added.
The project was originally scheduled for completion in May 2011. However, the Chinese contractor’s performance forced the authorities to postpone the completion date to August 2013, after which it was again deferred to March 2015.
"The NEA is holding talks with the Korean firm and other stakeholders on Thursday to resolve the problem," the official revealed.