So far, 35 contracts have been awarded under the Roads Department, 22 under the Water Resources and Irrigation Department, and 3 under the Urban Development and Building Construction Department.
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Recently, contracts under the Ministry of Energy, Water Resources and Irrigation, Physical Infrastructure and Urban Development have been being terminated on the grounds that they are unhealthy. The contracting body has initiated the process of terminating contracts by issuing notices regarding contracts that have not been worked on for a long time and have not shown any progress.
So far, 35 contracts have been terminated under the Road Department, 22 under the Water Resources and Irrigation Department, and 3 under the Urban Development and Building Construction Department.
While the concerned bodies have given priority to terminating sick contracts, there is still uncertainty about awarding new contracts in the same place. The reason is that after the contract was terminated in some projects, construction entrepreneurs have moved forward with legal proceedings. 22 contracts in the irrigation sector that became sick have been terminated due to no progress in construction after a long period of time since the contract was signed. The total contract amount of the terminated projects is Rs 14.23 billion. The contracts of the projects that were terminated are 6 for the Babai Irrigation Project, 15 under the Irrigation and Water Resources Management Project Janakpurdham Dhanusha, and the Sunkoshi Marine Dam construction project that was sick.
Mitra Baral, Director General of the Department of Water Resources and Irrigation, said that the evaluation of the broken contract is underway. ‘We are evaluating how much work remains to be done,’ he said, ‘The contract for the broken contract will be awarded according to the current cost estimate, not the previous cost estimate.’ He said that the procurement process will be moved forward after preparing the necessary documents. ‘We are working as quickly as possible, there is also a case in the Supreme Court,’ he said, ‘The construction businessmen, dissatisfied with the cancellation of the contract for the construction of the Sunkoshi-Marin Diversion Multipurpose Project of national pride, have gone to the Supreme Court. The Supreme Court has issued a short-term order and called them for discussion.’
He said that the hearing has been postponed twice and the hearing is scheduled for Sunday. "But in the meantime, work is underway to evaluate the broken contracts, prepare documents and estimate the cost," he said. "We will proceed according to the court's order regarding the Sunkoshi-Marin contract." He said that work is underway to evaluate and estimate the cost of the Sunkoshi-Marin dam construction site.
Minister for Energy, Water Resources and Irrigation, Physical Infrastructure and Transport and Urban Development Kulman Ghising has been instructing subordinate bodies to terminate sick contracts to end the trend of taking contracts but not working on them and leaving projects stranded. There are 15 ongoing contracts under the Water Resources and Irrigation Department. Out of these, 33 contracts are problematic. The department has stated that if work is still not done on these contracts, the process of terminating the contracts will be taken forward.
Out of 235 sick contracts under the Roads Department, 35 contracts have been terminated. Of the total number of sick projects, the contract amount for 8 has not yet been received by the department. The number of contracts received with the amount is only 227. The amount of sick contracts received is Rs 18.33 billion. The amount of broken contracts under the Roads Department is only Rs 2.97 billion. Most of the broken contracts have been taken by construction entrepreneurs in JVs (joint ventures).
Shyam Bahadur Khadka, Deputy Director General and Spokesperson of the Roads Department, said that work is being done to determine how much work is left in the broken contracts and what its cost estimate is. 'If it is a small work and the budget has been allocated, we will immediately call for contracts and move forward with the work,' he said. 'If it is multi-year and creates a liability, we send it to the Ministry of Finance for source assurance.' He said that after the source assurance comes from the Ministry of Finance, the process of placing new contracts for the remaining work will be taken forward.
The biggest contract under the Road Department has been terminated for the Kankai Bridge in Jhapa. The contract for the construction of the 725-meter-long bridge was signed on 29 Jestha 2068, and the work was supposed to be completed on 29 Jestha 2072. Despite repeated extensions, the progress is only 56 percent. The contract was taken by Pappu-Mahadev Khimti Company JV for 349 million rupees. Spokesperson Khadka said that the contract for the Kankai Bridge has been terminated and that it will be awarded after keeping it on a multi-year basis and managing the budget. Pappu-Mahadev Khimti JV had filed a case in the Supreme Court seeking an interim order on the contract. But the court did not give an interim order.
Out of 42 contracts under the Urban Development and Building Construction Department, the process of terminating 37 has been initiated. Of these, 3 contracts for the construction of health buildings have been terminated. The contract amount for the terminated building is 325 million rupees. Rabindra Bohara, Director General of the Department of Urban Development and Building Construction, said that preparations are being made to enter into a new contract for the broken contract based on the current cost. “We are evaluating the remaining work and estimating the cost, and accordingly, we will invite the contract,” he said. “According to the current Procurement Act, the remaining work will be recovered from the construction contractor, which is not practically applicable.” He said that work is currently being done on some contracts for which notices were issued to break the contract and some are in the process of being broken.
Construction contractors have been complaining that they are facing problems after breaking the contract. Roshan Dahal, General Secretary of the Federation of Nepal Construction Contractors, said that the penalties for breaking the contract are complicated. Construction contractors are demanding that it be changed as Section 59 of the Procurement Act, subsection (8), states that if the contract is broken and the work is left unfinished, the amount to be recovered from the construction contractor who took the contract. They say that if this provision is implemented, most construction contractors will be on the streets.
Former Secretary Arjun Jung Thapa says that both the contracting authority and the contractor are responsible for the project becoming sick. ‘It is better to terminate old contracts that have not been completed, some contracts have become sick due to the mischief of construction entrepreneurs,’ he said, ‘In some cases, this problem has also arisen due to employees.’ He says that he has also heard complaints that employees are prolonging the process of projects where construction work is about to be completed when they do not agree with the construction entrepreneur.
‘It is not right to terminate such contracts when 97 percent of the work is completed, but employees are often mischievous in such matters,’ he said, ‘Construction entrepreneurs also run away with contracts indiscriminately, such people should be dealt with accordingly.’ He says that the contracting authority should work towards extending the deadline for those with less work. After the contract is terminated, construction entrepreneurs go to court demanding an interim order. "Therefore, in such a situation, we must wait for the court's decision," he said. "The Ministry of Finance must arrange a budget for contracts that have not gone through the court process. Contracts cannot be re-contracted without the consent of the Ministry of Finance, so this must be worked on quickly."
