Two Indian companies have been selected to build high-powered three substations under the Millennium Challenge Corporation (MCC) project.
Techno Electric and Engineering has been contracted to build two substations while Linxon India will build one, according to the agreement.
Although the project commenced on August 22, 2023, with a five-year completion deadline, the contract for building the three sub-stations has recently been signed. MCA-Nepal signed the contract with Indian company Techno Electric and Engineering Co. Ltd. to build a US$ 38.8 million 400kV substation in Damauli, Tanahun last Friday.
With this, the contract process for all three 400 kV substations as part of implementing the US government's MCC Nepal Compact has now been finalized.
The contract was jointly signed by MCA-Nepal Executive Director Khadga Bahadur Bisht and Rajiv Agarwal, Director-Commercial at Techno Electric and Engineering Company Ltd.
Before this, in June 2024, MCA-Nepal had awarded the contract to India's Techno Electric to construct a 400kV sub-station at Ratmate in Belkotgadhi Municipality-7, Nuwakot. Once it is completed, it will be Nepal's one of the biggest substations with a capacity of 1000 Mega Volt Amperes.
To be constructed at the cost of US$ 51.6 million, Ratmate sub-station will connect the transmission lines stretching between Lapsiphedi and the new Hetauda substations.
This sub-station will be constructed in the next 39 months, according to the agreement.
Similarly, MCA-Nepal had on May 9, 2024, awarded the contract to Linxon India for the construction of a 400kV new Butwal Sub-station located at Butwal in Nawalparasi West. The sub-station will be completed within 39 months of the signing of the contract.
The 400kV substation falls within the priority of the Nepal Electricity Authority as it helps boost the cross border power trade. Currently, there is a 220kV substation in this place.
Minister for Energy, Water Resources and Irrigation Deepak Khadka said the substation to be built under the MCC Nepal Compact will play an instrumental role in the electricity distribution system.
Status of the selected companies
Padam Prasad Gupta is the chairman of Techno Electric And Engineering Company, one of the two companies awarded with the contract to build three substations.
Director-Commercial at the Techno Electric Company, Rajiv Agarwal has signed the contract negotiated with MCA-Nepal. Established in 1963, the company has its headquarters in Calcutta.
The company had made an income of IRs 10 billion 400 million in the Fiscal Year 2023. This increased to IRs 18 billion and 120 million in the FY 2024, according to an audit report.
Similarly, the net profit of the company climbed to IRs 2 billion 690 million in the FY 2024 from IRs 2 billion 180 million in FY 2023. The FY in India begins from April and ends in March.
The company has built its own transmission line in India and been distributing electricity by charging tariffs. Even though, Managing Director of the company, Padam Prakash Gupta, was present in the Damauli Substation Agreement, both the agreements have been signed by Rajiv Agarwal.
The company Linxon contracted to build the substation at Butwal in Nawalparasi West is a multi-national company. It has been involved in building sub-stations for the past 60 years. It had constructed 400kV Dhalkebar substation, the first substation in Nepal, paving the way for the operation of transmission lines connecting Muzaffarpur (India) with Dhalkebar (Nepal). The NEA was happy with its performance and honored the company with an appreciation letter. The electricity up to 1,000 megawatts can be exchanged through this transmission line. AtkinsRéalis, a Canadian company, is the parent organization to Linxon, its Indian branch. This company has, however, courted controversies in the international level.
This company was established in 2018 as Linxon India Pvt with its corporate office in Kolkata. It has built a 400 kV transmission line in Indian State of Bihar and is currently building substations in Saharsa, Chandauti and Motihari.
Some Indian professionals and companies were unhappy when multinational company Linxon was contracted by MCA Nepal to build Nawalparasi substation. However, it has been involved in building substations for the past 60 years.
Transmission line contract in limbo
The MCA-Nepal can spend US$ 697 million including US$ 500 million from American government and US$ 197 million from Nepal government, according to MCC Nepal Compact.
Aside from three substations, the MCC Nepal Compact is providing financial assistance for the construction of a 315-km transmission line stretching from Lapsiphedi in Kathmandu to the Indian border point in Nawalparasi.
Similarly, of the 315-km transmission line that begins from Ratmate in Nuwakot to the Indian border, the contract for the construction of 18-km transmission line on the Indian side has been finalized while the contract for the construction of the remaining 297-km is yet to be awarded.
MCA-Nepal scrapped an earlier tender for transmission line construction after bids exceeded estimated costs by a whopping 60 percent.
“The costs surged after we established stricter standards,” an official at MCA-Nepal told Nepalkhabar, “We are undertaking a study to build the transmission line adhering to NEA standards. The contract will probably be signed by the end of 2024.”
MCA-Nepal is, currently, re-evaluating technology options to cut costs, determining which to adopt, drop, or modify from the initial plan.
Despite a claim to accomplish the project within the set deadline, it not likely to complete it is in the next four years.
“Once the contract is signed, we will urge to work in two to three shifts,” the official at MCA-Nepal said, “If project completion is delayed beyond the next four years, we must advocate for a deadline extension through the Ministry of Finance and Foreign Affairs to the MCC. We will try our level best to accomplish it within the set deadline.”
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