Scam in High-Density Polyethylene Pipe: ADB’s Silence on Corruption

Kathmandu: The Nepal Electricity Authority (NEA) has been accused of concealing the test report of High-Density Polyethylene (HDPE) Pipes used in the underground electricity distribution line project. After the pipes were found to be of substandard quality during testing, the process of replacing them has been deliberately delayed.

Tests conducted at the Central Institute of Petrochemicals Engineering & Technology (CIPET: IPT) in Lucknow, India, revealed defects in the pipes. However, the implementation of the report's findings has been neglected.

According to test report, the manufacturer’s own laboratory tests indicated that the pipes met the required standards. However, the government laboratory (CIPET: IPT) in Lucknow found them to be substandard. This discrepancy suggests that Tijaria, the manufacturer, attempted to cover up deficiencies and influence the NEA.

The Project Management Directorate (PMD), under the Asian Development Bank (ADB)-assisted Distribution System Strengthening Project (DSSP), is overseeing the underground distribution line expansion in Pokhara–Bharatpur and Lalitpur–Bhaktapur. Since the pipes already installed and those awaiting installation were suspected to be substandard, samples were sent to Lucknow for testing.

The test report was received in December, but the supplier, TATA Projects, was not instructed to replace the defective pipes, as per sources. It is alleged that NEA’s Managing Director (MD) Kulman Ghising, along with Bodhraj Dhakal, Director of DSSP and other officials, are reluctant to replace pipes worth approximately NPR 400 million that have already been installed.

"Even before the test report, Tijaria’s MD Vinayak Pai visited Nepal and met with NEA's MD, reaching an agreement not to recall the pipes," a source claimed. "The MD’s silence on a matter that could affect the distribution system in the long run suggests clear irregularities."

When asked about the implementation of the test report, Dhakal stated that TATA, the supplier, had already initiated the replacement process. "They have accepted their mistake and agreed to replace the pipes. If they fail to do so, we will deduct payments as per the 'Turnkey' contracts," Dhakal told Urja Khabar. "The supplier does not want to damage their reputation, so all defective pipes will be replaced."

According to Dhakal, about 300 kilometers of pipes in both projects (Bharatpur–Pokhara and Lalitpur–Bhaktapur) were found to be substandard. Despite his assurance that the issue is being handled normally, sources claim that millions of rupees are involved in financial dealings, and ADB, as the development partner, has remained silent.

The underground distribution expansion project is underway in Pokhara, Bharatpur (Chitwan), Lalitpur, and Bhaktapur. The Engineering, Procurement, and Construction (EPC) model was used for the contracts, with TATA Projects Limited supplying Tijaria-manufactured pipes for all four locations.

Suspicions Raised

In October, while stretching conductors through the pipes, some pipes cracked, raising suspicions about their quality. A subsequent technical inspection confirmed that the pipes did not meet the standards as per the contract.

As per the contract, each 6-meter-long pipe segment was required to have a minimum weight of 25 kg, but inspections revealed that the weight was up to 15% lower. Additionally, the pipe thickness was found to be up to 25% less than the required specifications. While the ends of the pipes met the standard thickness, the middle sections were below specifications, as admitted by the project itself.

NPR 600 Million Pipe Should Be Replaced

The NEA had already imported pipes worth approximately NPR 600 million for the underground distribution line. Out of this, pipes worth NPR 400 million have been installed. The PMD and the DSSP have instructed the contractor to replace only NPR 200 million worth of pipes, leaving the rest unchanged.

Replacing the defective pipes would require re-importing them, incurring customs duties of up to 54%, compared to the 1% originally paid. This would increase the total cost to around NPR 920 million, making it financially unfeasible. To resolve the issue, TATA Projects is reportedly preparing to spend NPR 200 million within Nepal instead of re-importing the pipes.

Corruption Suspicions

The consultant for both projects, Power Grid India, has not commented on the issue, further fueling suspicions of collusion or financial irregularities. Moreover, the ADB, which is financing the project, has shown no concern over the matter.

Meanwhile, TATA has reportedly devised a strategy to replace only NPR 180–200 million worth of pipes while settling the rest through financial dealings. According to sources, TATA’s MD Pai has been influencing key NEA officials, including the MD, to overlook the findings. It is believed that due to his persuasion and financial incentives, the test report from CIPET: IPT in Lucknow has not been implemented.

NEA officials, allegedly swayed by TATA's influence, argue that since the pipes are used only for electricity conductors, not for water pipes, they will not pose any problems. However, experts warn that high-voltage electricity faults could lead to catastrophic incidents, which are being ignored for financial gains.