Pappu Construction has billions in contracts—and little work to show

  • Post investigation reveals that of the 41 bridge construction contracts snagged by Pappu and its joint venture partners, the company has missed the deadline on 25 contracts, while progress in all the remaining projects is dismal.

Sep 10, 2018-

Five people were killed in Rautahat’s Tikuliyaghat Village last month when a boat carrying 29 people across the Lalbakaiya river capsized after hitting a pillar of a bridge that has been under construction since 2014.

Had the bridge been completed on time last year, villagers in the region wouldn’t have had to risk their lives by using a dilapidated boat across the river during monsoon. But Pappu Construction, which was awarded the contract for the bridge four years ago and was supposed to complete the project by July 2017, has barely finished putting up the full structure for the bridge.

The Lalbakaiya bridge is just one of the dozens of infrastructure projects under Pappu Construction’s portfolio that have either been delayed or are yet to even kick off, despite the firm receiving billions of rupees worth of contracts in recent years. According to a Post investigation, of the 41 bridge construction contracts snagged by Pappu and its joint venture partners, the company has missed the deadline on 25 deals, while progress in all the remaining projects is dismal.

At the centre of the controversial company is Hari Narayan Rauniyar, its owner and a member of Parliament for the Sanghiya Samajbadi Forum-Nepal. Government officials and engineers familiar with Pappu Construction’s past and ongoing contracts told the Post that the company’s portfolio continues to grow while the firm makes little or no progress on existing projects, raising questions about the lawmaker’s use of political clout to win government bids while he operates with impunity, avoids accountability for the firm’s negligence, and evades inquiries and penalties for incomplete and delayed projects.

Glaring incompetency

Even in a country where development projects are carried out at a snail’s pace, the status of projects undertaken by Pappu Construction is emblematic of how poorly government contracts are overseen. One particular example is the firm’s handling of the Kamala Bridge, a project that was awarded in July 2011 with a  2016 deadline for completion.

“Even after two years past the original deadline, physical progress on the bridge stands only at 55 percent,” said a Department of Roads official who asked to remain anonymous because he wasn’t allowed to speak to the media. “The contractor has laid the foundation, but the bridge’s upper structure is yet to be built.”

For its part, Pappu Construction, instead of accepting its shortcomings, has been placing the blame on multiple external factors. Rauniyar says the 2015 earthquakes, local protests, and the lack of timely clearance of public utilities have led to delays in most of the projects. Officials at the Kamala Bridge Project, however, say that these factors made no significant impact on this project.

When it comes to bridge-construction contracts, Pappu Construction has a virtual monopoly. According to the Department of Roads (DoR), the company has dozens of projects on the Mid-Hill Highway and the Postal Highway.

According to the Postal Highway Project, the firm is responsible for seven bridges on the road--but the deadline for completing all seven of them has already expired, with project completion reported between 20 to 70 percent so far.

Hari Narayan Rauniyar

Besides bridge contracts, Rauniyar’s firm is also deeply involved in the construction of road sections along the Postal Highway. Of the total 14 road packages, Pappu Construction is involved in 10 projects, whose combined contract amount stands at Rs5.25 billion, according to the Postal Highway Project.

Contracts for as many as 31 bridges, worth around Rs6.3 billion, under the bridge division of the DoR, have been awarded to Pappu Construction and its joint venture partners. Two bridges in Kathmandu, over the Bagmati and Bishnumati, also being constructed by the firm, are valued at Rs400 million. Another contract for a bridge on the Mid-Hill Highway is worth Rs130 million.

The company also has two road contracts, worth Rs 900 million, under the Birgunj-Pathalaiya Trade Route Expansion Project and a 23-kilometre canal contract worth Rs980 million under the Sikta Irrigation Project.

According to publicly available records, the total amount for contracts across the country awarded to Pappu Construction and its joint venture partners is nearly Rs15 billion.

Another glaring example of the company’s incompetence is on full display in the construction of the bridge over the Bagmati river in the Capital’s Tinkune neighbourhood. The deadline for completing the arch-bridge expired in June, yet only some portions of the bridge have been completed so far.

In an interview with the Post, Rauniyar admitted that the arch-bridge project was first delayed because the Bangladeshi designer hired for the project sent in the designs late. But Rauniyar was also quick to blame government authorities for failing to clear public-utility installations such as high-tension electric lines and water supply mains.

The ten road projects undertaken by the company along the Postal Highway are in equally dismal states—most projects are less than halfway done. Pappu Construction received two separate contracts for the 7km Birgunj Dry Port-Parwanipur section under the Birgunj-Pathalaiya Trade Route Expansion Project. The deadline for the project is January 2019, but so far, less than half the work has been over.

“When you look at our progress rate, it is hard to say if we can complete the project within the deadline,” said Ashok Yadav, an engineer at the project office.

Exploiting legal loopholes

Despite the substandard performance, Pappu Construction continues to win some of the best construction deals in the country. Officials at the DoR say they have no choice but to entertain the company’s bids and hand over contracts to it because the company usually quotes prices much lower than their competitors’.

“We are compelled to award the contract to the lowest bidder, even though we have no evidence that the lowest bidder has the capacity to handle additional contracts,” said Mukti Gautam, spokesperson for the DoR. As of now, the government does not have a database to show the number of contracts a firm is involved at any given time. This means there is no efficient mechanism to evaluate the status of projects being undertaken by a contractor. According to officials, they are subject to a probe by an anti-graft body if they don't award the lowest bidder. Companies like Pappu Construction exploit this loophole all the time.

The Rauniyar-owned firm’s modus operandi can be discerned from, for example, how it tendered a bid that cost just half the estimated amount for the Kamala bridge contract, for sections of the Gaighat-Chatara-Sindhuli-Hetauda Road Project. “The project’s estimated cost was Rs650 million, but Pappu Construction won the contract by quoting a figure as low as Rs300 million,” said an official of the project implementing agency, who agreed to speak on condition of anonymity.

When asked for an explanation, Rauniyar said there are not many projects that Pappu handles by itself. “Most of our projects are carried out by our joint venture partners. We have the capacity to complete only nine to ten projects a year,” he told the Post.

Rauniyar also said the capabilities and capacity of his company should not be questioned because none of the government authorities has been able to prove that Pappu Construction does not have the means to handle many contracts at once.

The DoR, in an effort to get a grip on the dysfunction, has developed a new online database of contracts called "Contract Management System". Officials are hopeful that the software will enable them to determine the capacity of contractors and evaluate their bids.

Lack of quality control

Pappu Construction has also been negligent with, and irresponsible about, the safety and durability of its works. Last year, a bridge built by the firm over the Babai river at Jabbighat in Bardiya collapsed before it was formally handed over to the Road Department.

After the incident, the annual report of the Office of the Auditor General said a pillar of the bridge was sinking while others were bent. The DoR then asked the Institute of Engineering (IoE) Consultancy Service to conduct a technical study to find the cause of the collapse. In its final report, the consultancy said the length of the constructed piles, which also had cavities, was only 5.5 metres. Pappu Construction, however, had claimed the length to be 15 metres.

A bridge over the Babai river in Bardiya had buckled before its handover last August. POST PHOTO

Rauniyar rubbished the report. “The IoE is not an independent body. And we do not accept its report,” he told the Post. “If the court proves that we are guilty of failing to meet the quality standards, then we will rebuild the bridge.”

Rauniyar said the bridge collapsed because of its faulty design. “We had long warned the DoR about the faulty design, but they didn't listen to us. They are using me as a scapegoat,” he told the Post.

But the debacle with Babai Bridge is not an isolated incident--the state of the company’s numerous other projects is telling. They highlight the potential compromises in quality that Pappu Construction has made. Earlier this year, the DoR had to intervene in the bridge project over the Bagmati river at Tinkune, after the contractor was found not to have cemented the piles right after digging the foundation holes.

“Instant cementing of the piles is necessary to ensure that more clay does not fall into the hole, which will affect the quality of the bridge’s foundation,” said Arjun Jung Thapa, chief of DoR’s bridge division.

Evading penalties

What allows Rauniyar to operate with impunity is his political backing. The son of a Pradhan Pancha (village chief) during the Panchayat days, Rauniyar got into the construction business in the ’80s owing to his strong political background. While he made his way to the top of the construction business, he also actively pursued a career in politics as a member of the Nepali Congress. It was his association with the NC that elevated him to an 'A' class contractor from a petty contractor in Birgunj.

Over the years, Rauniyar increased his political clout. In the parliamentary elections last year, he was elected an MP from Parsa-3. Nepali Congress leaders from Parsa district say Rauniyar exploited his political connection to expand his business. Surendra Chaudhary, one of the local Congress leaders, called Rauniyar's success a byproduct of a corrupt political system.

“He exploited the political-bureaucratic nexus to rise to become an A-Class contractor,” said Chaudhary, who lost to Rauniyar in the 2017 election.

Today, Rauniyar and his company remain untouchable from any government action. DoR officials admit that the company has not faced any significant action from the authorities despite its poor track record.

As per contract agreements, executing agencies can fine contractors for late work, terminate contracts and even blacklist contractors based on the Public Procurement Act. However, Rauniyar’s company managed to avert any form of government action by either going to the court or influencing government officials. When the DoR fined Pappu Rs58.47 million a year and a half ago for failing to complete a section of the Nepalgunj-Kohalpur road and delivering poor quality, Pappu Construction went to arbitration and won the legal battle with a three-member team deciding in its favour.

“The arbitration some five months ago declared that Pappu did not need to pay any compensation amount; instead, the department owes the contractor around Rs20 million,” a DoR official told the Post.

The case of the collapsed Babai bridge at Jabbighat has also reached a court. “But when we tried to blacklist Pappu Construction, it directly went to the Supreme Court and got a stay order,” said DoR spokesperson Gautam.

Once blacklisted, contractors cannot receive government contracts for one to three years. But DoR officials told the Post that it is not easy to blacklist companies like Pappu Construction. “Whenever we take steps to punish them, the influential ones stop the process through a court order,” Gautam added.

Pappu has been blacklisted once so far for producing fake documents to bag a contact about 13 years ago. Even then, Pappu was able to halt the blacklisting process for a year.

Rauniyar has been doing a media tour in recent weeks, following a series of reports over his company’s mishandling of public contracts. The public outreach, according to him, was advised by his party President and Deputy Prime Minister Upendra Yadav. “I have been speaking to the media as per his instructions, though I have already handed over ownership of the company to my son, Sumit,” he told the Post.

Amid controversies over the firm’s poor performance, the Ministry of Physical Infrastructure and Transport last week formed a committee, headed by Deepak Shrestha, a superintending engineer at the department, to investigate projects handled by the company. Officials said the team has ten days to deliver a report.

However, Tulasi Prasad Sitaula, a former secretary at the ministry, doubts the committee will successfully address the real issues underlying Pappu Construction. “We have a history of forming such committees,” he said, “that never get any results.”


Published: 10-09-2018 21:05

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