The 456-megawatt Upper Tamakoshi hydropower project, Nepal’s largest hydropower plant, has finally come into operation with one of its six 76-megawatt units producing electricity. Once the plant starts producing power at full capacity, we will officially become a country with surplus electricity during the rainy season, capable of exporting electricity. The project will also save billions by reducing the import of electricity from India during the dry season. But for a coveted project, the past 10 years have seen massive cost and time overruns. From the initial cost of the project of Rs35 billion (without interest), the cost of the project has now reached Rs53 billion (without interest). The project’s completion deadline in mid-July 2016 was also affected by the 2015 earthquakes, which destroyed the access road to the site, followed by technical setbacks for the contractors. The revised deadline of mid-June last year was disrupted by the pandemic. And last month, there were concerns after landslides near the Nepal-China border blocked Rongsi Creek, a tributary of the Tamakoshi River.
For decades, a parallel story of protracted political instability in Nepal has been one of delays in development projects that have cost the country billions. Development projects are mired in controversy, corruption and conflict, and have subsequently affected project timelines and financial planning. For example, Nepal’s largest water supply project, the elusive Melamchi Water Tunnel Project, has taken nearly two decades since its inception to finally deliver water to the Kathmandu Valley earlier. this year in March. The project was plagued by political interference, mismanagement of the project, corruption and extortion scandals. So much so that Melamchi ko paani has become a public metaphor for something unattainable. Several deadlines were set, pushing the cost of the project to 31 billion rupees. After last month’s catastrophic flooding in Melamchi, the future of the project is again uncertain.
Across the country, sites of infrastructure development, from roads to bridges and hospitals that look deserted, have a similar history. Like broken election promises and inflated targets, construction delays and project extensions have become all too common. At the same time, bidders and contractors enjoy impunity to the detriment of national progress. According to a 2019 report by the Commission of Inquiry into Abuse of Authority, 1,848 development projects worth Rs 118 billion are in limbo, of which 1,032 projects have not been completed or extended. No need for an economist to understand that these delays in the construction sector have undesirable effects on the country’s economic production and keep potential investors away for lack of transparency and the business environment. And given the pandemic, it’s all too likely that there will be more delays in development projects due to shortages of labor and more expensive building materials, among other critical political and financial shortcomings.
For the administration, which repeatedly sells big promises on jobs and prosperity, it has little responsibility for managing and ensuring that projects are on schedule and on budget. It has also failed to take the necessary steps to address the issues causing delays, thus contributing to stagnation. While there is no dearth of policy interventions to assess entrepreneurs, current projects and their progress, it is evident that the government‘s reservation stems from its inability to plan and forecast results. At the same time, it is beating the drum of a populist agenda and rushing to lay the foundations for projects without proper planning and budgetary resources. Our progress as a nation depends on the sustainable development of infrastructure. The government needs to better plan and implement to meet the targets instead of proposing ambitious growth rates and plans while systematically failing to spend wisely. If we do not take stock of the situation, project delays will only put additional pressure on the economy and we will have to face losses.