Capital spending low despite simplified procurement process

- RAJESH KHANAL, Kathmandu

Mar 23, 2019-

The government has been working to simplify the public procurement process in a bid to boost spending on development projects, but it has not been able to achieve the desired result mainly because local units are not connected to the e-government procurement system and an effective oversight agency is lacking.

Analysts on Friday stressed the need to streamline the procurement process to increase capital expenditure which has consistently fallen short of the target. Almost every year, the government fails to spend all the money allocated for development projects. According to the Financial Comptroller General Office, only 28.89 percent of the Rs313.99 billion earmarked for capital expenditure for fiscal 2018-19 had been spent as of mid-March.

For the past three years, the government has been publishing the budget statement at the end of May, almost one and a half months before the start of the new fiscal year, to provide adequate time for planning and ensure that the allocated funds are spent.

Two years ago, the government also amended the Public Procurement Regulation 2007 and simplified provisions. The new regulation made it mandatory for bidders to be technically and financially qualified to get government contracts. Despite these measures, the government has not been able to increase capital expenditure.

Speaking at a programme organised by the Society of Economic Journalists Nepal, former finance secretary Shankar Prasad Adhikari said the government needed to devise a mechanism to promptly address issues related to quality assurance and project design. “In many cases, these issues are not resolved before the implementation of the project, and the government is compelled to compensate contractors by revising variation orders later on,” Adhikari said.

The number of A class contractors to whom the government can award contracts has increased, but authorities are stymied by confusion in the legal process with regard to procurement which delays decision-making, Adhikari said. “This has hindered the timely completion of development projects,” he added.  

The government has established the Public Procurement Monitoring Office as an oversight agency. Adhikari said the office had also failed to enforce an effective mechanism to coordinate with the concerned government agencies.

The Public Procurement Monitoring Office recently launched an e-government procurement system to facilitate online bidding. As per the monitoring office, 35 government agencies are connected to the system. “The online system allows contractors to submit their bid documents and advance payment guarantee, among other paperwork, electronically. The government can also issue letters of intent and letters of acceptance over the internet,” said Manish Bhattarai, director of the monitoring office.

Bhattarai said provincial and local governments were yet to be brought into the framework of the e-government procurement system. According to him, disruption in power supply and lack of internet facility in rural areas has prevented local governments from being connected to the system. The government awards contracts through its 4,500 agencies spread across the country. It spends around two-thirds of the budget

allocation on contracts that are awarded through the bidding process.

Bhattarai said that delays by the federal government in handing over key institutions and dispatching the required staff had hindered connecting sub-national governments to the the e-government procurement system. “Failure to implement the e-government procurement system at the local level has affected the ability of sub-national governments to spend on development projects,” he said.

Published: 23-03-2019 08:38

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