Tanahu Hydropower Project has officially announced the termination of the contract with Co-operativa Muratori e Cementisti (CMC) di Ravenna after the Italian firm abandoned the 140-megawatt Tanahu Hydropower Project.

The project also asked Nepal Investment Bank to confiscate the money deposited by the CMC. After completing 28-day deadline to the Italian company to return to work and, Tanahu Hydropower Project issued a letter terminating the contract with CMC.

Before taking the decision, the project consulted with the Asian Development Bank (ADB) and European Investment Bank (EIB), which are financing the hydropower project, before the contract termination letter is sent to the Italian company.

After issuing termination letter, the project is now working to publish the new tender within the month of March.

Once the contract is terminated with the Italian company, the project will restart the procurement process. The project had hired CMC to divert the flow of the river, build dam and complete head works. CMC was selected as the preferred bidder as it had made the lowest bid of Rs 20.64 billion.

The project has hired Chinese firm, Sinohydro, to build the tunnel and power house of the storage-type project. The Chinese company will also import hydro-mechanical and electromechanical equipment and assemble them. The Chinese firm has agreed to complete all the work at Rs 3.83 billion.

The total cost of the project is estimated at $506 million, of which the Manila-based Asian Development Bank will provide $150 million, Japan International Cooperation Agency will contribute $184 million, European Investment Bank will give $85 million and NEA will chip in $87 million.