NEA Transformer Scam: Chinese supplier offers to replace bad transformers

KATHMANDU, AUG 29 -
Hu Bei Sunlight Electric Co, one of the suppliers of power transformers to Nepal which were found to be of substandard quality, has offered to replace them following the arrest of two of its employees.

The Commission for the Investigation of Abuse of Authority (CIAA) has arrested 22 officials from the Nepal Electricity Authority ( NEA ) and two Chinese nationals, Hu Bei staffers Hu Zheng and Zou Yi Tian, in connection with the transformer case. Another employee of the Chinese company, Li Dao Gu, has absconded.

NEA Acting Managing Director Lava Bahadur Ghimire said they received a letter from Hu Bei on Aug 20 admitting responsibility for supplying shoddy transformers and promising to dispatch 1,940 new sets to replace them.

Last November, the Chinese company had sent 56 new transformers as replacements after a probe committee set up by the buyer NEA concluded that the products it had supplied were of inferior quality. According to a NEA source, during the inspection of those 56 transformers, problems were found in only one of them. An NEA official said the Chinese company had promised to replace all the substandard transformers unconditionally. “In its letter signed by the chairman Li Dao Gu, the company has also asked the NEA to appoint an official to initiate dialogue and fix a schedule for the replacement of the faulty transformers,” he added. Hu Bei’s chairman Gu is also under the CIAA’s scanner.

Meanwhile, Upendra Dev Bhatta, deputy managing director of Distribution and Consumer Services at the NEA , said they had not responded to the Chinese firm’s letter so far.

“At a time when the case is under CIAA’s control and the official who has sent the letter is also being sought by the anti-graft body, how can we initiate talks?” said the official. “Who will be responsible if the company’s chairman or other officials are arrested by the CIAA during the negotiations?”

Another official said that none of the staffers at the NEA , terrified as they are by the CIAA’s crackdown, would take the initiative to hold talks with the company to get new transformers. This is not the first time Hu Bei has tried to correct its mistake. NEA officials said that since corruption in the purchase of transformers was made public and received attention from all quarters last year, the buyer had received several letters from it. NEA Acting MD Ghimire said the company was willing to replace the inferior transformers for fear of being blacklisted in Nepal which will have an immense ill impact on its international market.

After problems appeared in the equipment imported from China and Thailand in the last five years, the NEA in 2012 had formed an investigation committee to study the matter. The inferior transformers had resulted in higher power leakage, and a number of them had broken down. The committee led by NEA board member Krishna Prashad Dulal had examined 4,657 transformers installed at several stations and sub-stations.

The NEA has imported transformers from a Thai company Sahabhant Electric and four Chinese companies - Shenyang Dongneng Electricity Equipment, SVR Electrical and Sichuan Dongfang Transformer.

The first probe committee had concluded that the imported transformers were technically flawed, and that NEA officials were responsible. When the report of the malpractice by Hu Bei was made public, company representatives had apologized and pledged to replace the faulty equipment.

The probe committee had discovered during its inspection of transformers installed in Sindhupalchok and other distribution centres that aluminium wire had been used instead of copper wire, resulting in inferior quality.

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