Melamchi water project

  • Consultants take away 34pc money
- POST REPORT, Kathmandu

Apr 11, 2014-

The government has poured Rs 8.96 billion into the Melamchi Water Supply Project over the last 15 years, and it is nowhere near finished.

More interestingly, Rs 3.04 billion out of these billions was paid only to the project’s consultants. In other words, 34 percent of the total outlay as of the last fiscal year 2012-13 has gone to advisors and experts.   

This is one of the revelations contained in the 51st Annual Report of the Office of the Auditor General (OAG) which was made public on Friday. According to the report, four out of the seven consulting firms are still involved in the project. They have been assigned different tasks including tunnel excavation, water treatment plant design and supervision and social upliftment.

The government suffered cost overruns since the contractors didn’t keep to their schedule and it was forced to keep the consultants engaged, said the report. The contract for the water treatment plan and tunnel excavation was awarded through a re-tender, resulting in the tenure of the consultants being extended and massive extra costs.

“The expenditure for consultants in Melamchi is the highest among projects in which consultants have been involved,” said Auditor General Bhanu Prasad Acharya at a press meet here on Friday.

According to the report, most of the donor-funded projects have spent 4.40 percent to 24.50 percent on consultants. “Consultants have been hired even for projects in which Nepali staff could be mobilised,” read the report.

The report has also questioned tax exemption given by the government to industries and for various other purposes. According to the report, the government exempted taxes worth Rs 31.44 billion in the last fiscal year alone for institutions, goods, services, ghee, oil, mobile and exports.

For example, oil producers received value added tax (VAT) exemption worth Rs 1.3 billion in the last fiscal, although five of six phases of raw oil processing is done outside the country. “By importing such raw oil, they are hardly making any value addition,” states the report.

The government has also been failing to recover tax dues worth Rs 84.8 billion as of the last fiscal. The VAT gap stands at 47.5 percent, the report said, adding the major reasons behind the VAT gap include taxpayers not furnishing actual transactions, use of fake bills, non registration in VAT. “The gap cannot be brought down to nil, but it is too high,” said Acharya.

The report says VAT refund demand stands at Rs 175.39 billion, while the government collected just Rs 24.2 billion VAT in the last fiscal.

The report has also highlighted problems in the contracting process. Among anomalies are lack of timely awarding of contracts, non-transparency in purchase, non-completion of work within the set deadline, failure to take action against construction companies not complete work timely, and mobilisation of consumer committees in projects more than what the law has allowed.

Published: 12-04-2014 10:02

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