October 15: The   Millennium Challenge Account (MCA) Nepal canceled the contract bids of the projects under the US-funded Millennium Challenge Corporation (MCC) due to high cost.

The MCA Nepal, which is responsible for implementing the MCC projects, cancelled the contract process as the bid amounts were much higher than the overall estimated cost.

According to Information Officer of MCA Nepal, Rajeev Dahal, preparations are being made to invite new tender bids for the transmission line project.

The process was canceled after the lowest bid in the tender was 66 percent higher than the cost estimate, said Dahal. MCA Nepal had invited bids for the construction of the 315 km long transmission line project dividing it into three sections.

Responding to the tender issued on May 22, six companies had submitted proposals to build the transmission line. Out of them, only five companies met the requirement as mentioned in the tender notice.

India's Kalpataru Power Transmission Limited, Transrail Lighting Limited, Tata Projects Limited, KEC International Limited, Larsen & Turbo Limited were technically successful and those companies applied for all three packages.

The first phase of the transmission line includes Lapsiphedi-Ratmate-New Hetaunda section. MCA Nepal had estimated the cost of building this section of transmission line at a cost of USD 76.4 million.

Among the companies that submitted proposal for the first package, Transrail Lighting Limited, the company that made the lowest bid, proposed to build the transmission line for USD 130.15 million.

The lowest bid exceeded the estimated cost by USD 55.67 million which is 72 percent more than the estimate.

Under the second phase, MCA Nepal had estimated the cost to build the Ratmate-New Damauli section at USD 64.8 million. The lowest bid was made by Tata Projects Limited. The company proposed to build the section for USD 105.4 million. The lowest offer was USD 45. 71 million more than the estimate of MCA. This is 62.5 percent more than the estimate.

Likewise, under the third package, the New Damauli-New Butwal transmission line up to the border of India was estimated to be constructed for USD 79.2 million. However, Tata Projects Limited, which made the lowest bid, proposed USD 129. 21 million. That amount is 62.73 percent more than the cost estimate. The lowest offer was USD 49.7 million more than the estimate of MCA.

The MCA Nepal had estimated the total cost of all three sections of the transmission line to be around USD 220 million. However, the proposal made by the companies that presented the lowest bid was amounted to USD 364 million. This cost is 66 percent more than the estimate.

While there are doubts that the project will be completed within five years, MCA Nepal itself is not clear about how much time it will take for the next tender process.

The US government will provide grants of USD 500 million for the project while the Government of Nepal will contribute USD 197 million to build transmission line and upgrade roads.