General

Italian tunnel contractor ‘breaches’ pact

  • Melamchi water supply project
- GAURAV THAPA, Kathmandu
The Italian firm has halted all tunnel works citing lack of materials due to strikes in several parts of the country

Sep 14, 2015-The Italian contractor responsible for digging a tunnel for Melamchi Water Supply Project has been deliberately breaching several terms of its contract to delay project completion but officials take no action saying their ‘hands are tied’.

Italian firm Cooperativa Muratori e Cementisti di Ravenna took over the Melamchi project in July 2013 and as per the contract it has to dig 40 metres of tunnel each day.

But project chief and executive director of Melamchi Water Supply Development Board Ghanashyam Bhattarai said it is not even digging 20 metres a day. CMC agreed to carry out work simultaneously in six sites but is actually working on three only.

Currently, CMC has halted all tunnel works citing lack of materials due to strikes in several parts of the country. But, according to the contract, it cannot stop the project under any circumstances and has to keep buffer stock enough for a month. After engineers overseeing the project reported to MWSDB about the contract breach, CMC changed its pretext to the closure of roads and has come to understanding to resume works in a week, Bhattarai said.

This is the second time CMC has halted work. Last month, the Italian firm had stopped digging for some 15 days citing lack of materials due to landslips in access roads at Kavre.

The entire project is scheduled to be complete by April 13, 2016 but going by the current rate of work, the company is certain to miss the deadline making it eligible for compensating variation, the amount the contractor is entitled if the project goes beyond set completion date.

Bhattarai said the only options available to them to make CMC comply with the terms of the contract are issuing warnings and payment deduction. But the company uses its political clout to pressure project officials against resorting to these options, Bhattarai said without mentioning names. According to him, the project can issue a ‘notice to correct’, a last resort when the contractor defaults on the contract, which leads to its nullification if the contractor does not comply even after.

“But that is exactly what the company is looking for. The contractor is purposefully provoking us to issue the notice so that it can cancel the contract. We would reach a point of no return if the notice is issued as we have to start from scratch to find a new contractor,” he said.

This would be another setback to the much awaited project which aims to supply 170 million litres of water per day from Melamchi River in Sindhupalchok to water-scarce Kathmandu. CMC had replaced the previous contractor China Railway 15 Bureau Group after government terminated its contract for failing to carry out work as scheduled. Out of the total 26.5 km of tunnel, China Railway dug only 6.5 km and CMC was awarded a Rs7.72 billion contract to dig the remaining 20 km. Less than seven months remain till the scheduled date of completion, but only around 13 km of tunnel has been opened so far.

If the current contract is terminated, the project would be suspended indefinitely as finding yet another contractor involves new deal with donors, international bidding process, signing new agreements and all procedural and bureaucratic hurdles that come along. CMC is riding on this vulnerability while its local agent does not cooperate with us to hold it accountable, Bhattarai said.

According to him, Sulochan Raj Rajbhandari is the local contact person for CMC but when contacted he denied being one and claimed no association with the company whatsoever. The Post wrote to CMC’s headquarters in Italy to clarify the allegations against it but the company did not respond.

The Melamchi project was envisioned in the late 1990s and the first agreement to construct the project was signed in 2003 with funding from various donors and developmental partners. The project was supposed to be completed by 2007.

Published: 14-09-2015 08:24

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