MCC-Nepal Cancels All MCC Transmission Line Contracts Due To High Bids

MCC-Nepal Cancels All MCC Transmission Line Contracts Due To High Bids

Oct. 14, 2023, 12:35 p.m.

The Millennium Challenge Corporation Nepal (MCA-Nepal) has cancelled all of its contracts bid for the MCC transmission line project in Nepal

The announcement was made by the (MCA) Nepal on Friday (October 13) due to conditions submitting bids that were significantly higher than the initial cost estimates.

The decision to cancel the contracts was made because the lowest offer received during the tender process was a staggering 66 percent higher than the initial cost estimate. The proposal to cancel the contracts was approved by the MCC headquarters resulting in the termination of the existing contracts. As a result, MCA Nepal will now have to issue a new tender for the transmission line project.

Previously, MCA Nepal had invited bids for the construction of a 315 km long transmission line project, which was divided into three parts. The tender, opened on June 8th, and received proposals from six companies, with only five being successful. The companies that qualified for all three packages were India's Kalpataru Power Transmission Limited, Transrail Lighting Limited, Tata Projects Limited, KEC International Limited, and Larsen & Toubro Limited.

mCC cancel all tenders.png

The first segment of the transmission line, which spanned from Lapsifedi to Ratmate and New Hetaunda, was initially estimated by MCA-Nepal to cost $764.64 million. Among the competing companies for this segment, Transrail Lighting Limited submitted the lowest contract bid at $130.15 million. However, this amount was significantly higher, amounting to $55.67 million or 72 percent above the cost estimate. Similarly, the second section from Ratmate to New Damauli, which was initially estimated at $64.853 million, received the lowest bid from Tata Projects Limited at $105.425 million. This bid exceeded the cost estimate by $45.71 million, which was a 62.5 percent increase.

In the third segment, covering New Damauli to New Butwal, leading to the India border, MCA Nepal had initially estimated a cost of $79.282 million. However, Tata Projects Limited submitted the lowest bid of $129.021 million, exceeding the cost estimate by 62.73 percent or $49.7 million.

In summary, MCA-Nepal had initially estimated the total cost of the MCC-supported transmission line at $226 million. However, the lowest bid received was $366.59 million, representing a 66 percent increase compared to the initial estimate. This significant cost difference led to the cancellation of all the MCC transmission line contracts.

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