Contractors in firing line as parliamentary committee hints at enforcing new procurement regulations

  • The new regulations state that no contract may be extended beyond half of the original period, preventing norm of indefinite deadline extensions.
- PRAHLAD RIJAL, Kathmandu

Jun 1, 2019-

The Parliamentary Devel-opment and Technology Committee has directed the physical infrastructure ministry to lay out new construction plans for the road and bridge projects whose contracts will be scrapped with the implementation of the new provisions in the Public Procurement Regulations.

The decision of the committee has come amid reservations from the Federation of Contractors’ Association, an umbrella body of construction contractors, who on Wednesday decided to disregard current and future bids invited by the government and submit their construction permits back to government agencies.

The new regulations state that no contract may be extended beyond half of the original period, preventing indefinite deadline extensions that have become a norm in many infrastructure development projects.

Upon the implementation of the new provisions, a large number of ongoing development projects running past deadlines will be at risk of being terminated.

“The decision to enforce new regulations is immature, as the government and the committee has not considered the ripple effects their decisions will create,” said Rabi Singh, president of the Federation. “We will be forced to shut down our businesses and institutions, and construction material suppliers will lose massive amounts in loan paybacks, interests and revenue.”

“Moreover, many development projects have faced cost and time overruns because of the government’s inability to manage resources, release payment and secure land and easement rights in time,” said Singh. “How can the government blacklist contractors for delays caused by its inefficiencies?”

According to Singh, the government should allow current projects to run as per past agreements—in line with earlier provisions—to avoid hurting the economy and the goal of prosperous Nepal.

Government officials echoed Singh, adding that not all projects face delays only because of construction contractors’ dilly dallying and there is a need for more deliberation on the issue.

“The committee’s decision hints at enforcing new regulations, but enough deliberations have not been carried out yet,” said Keshav Kumar Sharma, director general at the Department of Roads. “The regulations should incorporate provisions that allow us to monitor whether delays were caused by the contractor or because of other factors, such as geography, climate and such before scrapping any contract.”

According to Sharma, if the provisions are to be implemented as they are, the road department will act according to the committee’s direction and begin work to scrap the contracts of projects soon.

The amendments to the procurement regulations came into place following a recent study by the Commission for Investigation of Abuse of Authority which revealed that as many as 1,848 projects worth Rs118 billion are incomplete and past their deadlines.

The highest number of sick projects are related to the Ministry of Physical Infrastructure and Transport (906), followed by Ministry of Urban Development (442), and Ministry of Energy, Water Resources and Irrigation (326), according to the report.

Also, according to the report, the government faces the risk of losing around Rs23 billion offered to contractors as advance payment, owing to the expiry of Advance Payment Guarantee (APG) issued by the bank on behalf of the contractors.

Awarding contracts without adequate preparation, extending contracts without valid reasoning, non-implementation of conditions directly related to the project, and the general lack of coordination among the concerned government agencies are among the problems highlighted by the report to explain why hundreds of projects are incomplete.

Meanwhile, the federation has also called a national meet of construction contractors next week to launch fresh protests against the government and the committee’s decision to enforce new provisions disregarding its concerns.

Ministry asked to expedite works on Mid hill and Postal highways

The committee has also directed the Ministry of Physical Infrastructure and Transport to fix the right of way in various stretches of the under construction Mid-hill highway, a national pride project, and ensure provisions to transfer land titles within this fiscal year.

Also, the ministry has been asked to categorise bridges according to their condition along the mid hill and postal highways and complete construction works of bridges in dire state without any delay. The committee has also asked for an annual work plan on the national pride projects mentioning ways to conclude the projects within stipulated time.

The direction has come in two days after the Finance Minister Yubaraj Khatiwada earmarked Rs12.20 billion to blacktop 435 km of the under construction Mid-hill Highway and Rs 13.63 billion to blacktop 350 km of the Postal Highway in the next fiscal year.

Recently, the Mid-Hill Highway Project Directorate (Eastern) has sought clarifications from contractors of 15 different road sections and bridges along the highway for their poor performance. The directorate has warned that they could get blacklisted or face termination of contracts.

The 1,776-km Mid-hill highway connecting Chiyabhanyang in Panchthar district to Jhulaghat in Baitadi district is expected to not only improve the livelihood of people along the highway but also discourage the existing migration trend to southern plains.

However, the progress in a number of projects has remained poor as contractors failed to work in a time-bound manner, according to the project office.

Published: 01-06-2019 12:39

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