The Italian contractor, Cooperativa Muratori e Cementisti di Ravenna (CMC), which had halted all the works of much-awaited Melamchi Water Supply Project, has agreed to resume its work.

Earlier on Monday, the CMC had written a letter to the government saying that it could not complete the remaining works as the company had run out of money.

The government, however, had been urging the CMC to not terminate the contract by leaving the project unfinished, but to return to work at the earliest. The government was planning to complete the project on time by handing over the contract to a Nepali company if the CMC refused to resume the work.

The CMC, during a meeting held at the Ministry of Drinking Water and Sanitation on Sunday night, agreed to complete the remaining works of the national pride project, Gajendra Thakur, Secretary at the Ministry of Drinking Water and Sanitation said.

Following an agreement, the government had returned passports of at least eight staffers of the CMC, including project manager Cristiano Greco, who had come to the Capital by leaving the site.

Shankar Prasad Subedi, spokesperson at the ministry, said that the CMC had reached an agreement with the government to send its workers to Italy to celebrate Christmas and will start the work soon after they returned to Nepal.

The Melamchi project, which has already missed a series of deadlines over the years, still has 960 meters of concrete lining work remaining inside the tunnel. The project was supposed to complete in 2007. The last deadline was set for October 2018.

The progress of the much-awaited water project has remained sluggish and snared into controversies after a breakthrough in tunnel digging last May, an achievement seen as a step closer to diverting water from Melamchi to Kathmandu Valley. However, the Italian contractor had continuously cited cash flow as a reason behind the sluggish progress.

The government roped in the CMC in November 2013 after terminating the contract with the previous Chinese contractor—China Railway 15 Bureau Group. The Italian contractor, which began its work in January 2014 at the Sundarijal upstream side, had received the contract for Rs7.72 billion excluding VAT.

Headquartered in Ravenna, Italy, the CMC is the fourth largest construction company in Italy by revenue with consolidated revenues of approximately 1.2 billion Euros in 2017.