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Amended public procurement regulation may lead to summary termination of contracts

- Post Report, Kathmandu

May 20, 2019-

A large number of contracts of the ongoing development projects run the risk of being terminated following the government’s recent amendment to the public procurement regulations stating that no contract may be extended beyond half of the original period.

A study by the Commission for Investigation of Abuse of Authority of the various contracts related to seven ministries found that as many as 1,848 projects worth Rs118 billion are incomplete and past their deadlines.

The much awaited Kulekhani-3 Hydropower Project missed its latest completion deadline of January 2019 allegedly due to the dilly dallying by a Chinese contractor hired for the job, according to the Nepal Electricity Authority.

This was the sixth extension of the deadline for Jialin Company, the contractor hired for the hydro and electromechanical works. Although Sino Hydro, another Chinese company, has completed civil works for the 14MW storage project supposed to be over by 2012, power generation has not begun.

The under-construction labour room for the Golbazaar Health Post in Siraha is one of the projects identified by the corruption watchdog as sick. On June 15, 2009, Amrit Nirman Sewa, a construction company, won the contract to build the facility.

The project was supposed to be completed within a year. But even after nine years, only five percent of the work has been accomplished while the deadline has not been extended for seven years and the project has been lingering.

Swachchhanda Nirman Sewa, one of the biggest construction companies, got the Tumlingtar bridge construction contract on July 9, 2010 with the July 8, 2013 deadline. It was extended until July 2017 but there only has been 30 percent progress in the works.

The infamous Pappu Construction was supposed to complete the Nala bridge at Thori of Birgunj on October 11, 2014 after getting a contract on July 8, 2013. But there had been 25 percent progress in the bridge until a few months ago, according to the Department of Roads. All these contracts might be terminated following the latest revision to the public procurement regulation.

According to officials, the amended regulation prevents indefinite deadline extension.

“Irrespective of who is responsible for the delay in works, the contract should be terminated after the deadline is extended by a half of the original period,” said Keshav Prasain, director at the Public Procurement Monitoring Office, a body responsible for monitoring the government contracts.

Contractors have been blaming the government for the delays in executing development projects due to hassles in land acquisition, site clearance, and lack of timely budget disbursement, among others.

Although this may result in termination of a lot of contracts in the short-term, it is expected to help improve contract management in the future, Prasain said.

Procurement monitoring officials said the new provision would be applicable to projects whose contract has already been awarded as well as new projects that are yet to be contracted.

Contractors, however, protested the amendment to the regulation claiming that the provision was made without consulting with the stakeholders. “The provision of not extending the deadline beyond half of the original contract period has created the possibility of wholesale contract termination,” said Tanka Chaulagain, deputy general secretary at the Federation of Contractors’ Associations of Nepal.

The contractors are worried about this provision because it is supposed to be applicable even for the under-construction projects. “Our position is that whatever problems are prevailing in under construction projects, they should be solved through a specific policy,” said  Chaulagain.

 Contractors charged with corruption to be barred from fresh bidding

KATHMANDU: Contractors facing corruption charges will no longer be  allowed to bid for new projects after the amended  public procurement regulation came into effect. 

The amended regulation says that any bidder--firm or individual--that faces a corruption case in court as per the law cannot bid for projects either as individual or in the form of a joint venture unless the court gives a clean chit.

The provision has barred Kalika Construction and Pappu Construction and their owners--former minister Bikram Pandey and suspended lawmaker Hari Narayan Rauniar respectively--from taking part in any government bids.

In December last year, the anti-graft body filed a corruption case at the Special Court against Pandey, chairman of the Kalika Construction, for substandard construction and repeated collapses of the main canal of the Sikta Irrigation Project.

Twenty others including government officials and consultants involved in the multi-billion-rupee project were charged with corruption.

In October last year, the anti-graft commission filed a case against Pappu Construction owner Hari Narayan Rauniyar and his son Sumit Rauniyar for building a substandard bridge over the Babai river in Jabbighat, Bardiya.

But contractors argued that the new provision would do them injustice, Chaulagain, the deputy general of the contractors’ federation, said.

Published: 21-05-2019 07:00

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