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RAA recommends policy guidelines to curb cost escalation for PHPA-I

December 9, 2016
in Uncategorized
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Royal Audit Authority (RAA) recommends clear policy guidelines on Fund Management and realistic Detailed Project Report to curb cost escalation for Punatsangchhu-I Hydroelectric Project. The project cost has increased by more than Nu 58 B.

The Royal Audit Authority’s Joint Performance Audit attributes the huge increase in the estimated cost of the project to improper fund management, inadequate geo-physical investigations in the preparation of Detailed Project Report and uneconomical operations among others.

As per the Audit report, cost overrun and delay in completion of the project will adversely impact energy tariff and revenue. The report states that kilowatt per hour tariff has risen to Nu 2.70 from its estimated cost of Nu 1.03.

The Authority also recommends that decisions for major changes should be based on comprehensive study and analysis of experts and environmental and ecological initiatives should be accorded more attention among others.

Punatsangchhu-I Hydroelectric Project was supposed to be complete by November last year at a cost of Nu 35 B. Today, apart from cost overrun, the deadline has also been pushed to 2019.

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