The government and businessmen have their own views and stances on the issue of breaking sick contracts. Kulman Ghising has made breaking sick contracts a top priority since he took over as the Minister of Energy, Water Resources and Irrigation, Physical Infrastructure and Urban Development, where the most development work is being done recently. And the process of breaking sick contracts has been initiated by selecting and breaking sick contracts under these ministries.

40 contracts under the Road Department, 22 under the Water Resources and Irrigation Department, and three under the Urban Development and Building Construction Department have been terminated. The remaining contracts have been taken to the process of termination. According to the Ministry of Physical Infrastructure and Transport, about 300 contracts under the Road Department are sick. However, construction entrepreneurs say that it is wrong for the minister to give priority only to terminating contracts.  

The minister's indiscriminate termination of contracts in the name of terminating sick contracts is a way of portraying construction entrepreneurs as villains of society and the country, complained Ravi Singh, president of the Federation of Nepal Construction Entrepreneurs.

‘Previous ministers did not say that I broke the contract, whoever was going to sign the contract would break it,’ he said at a program on ‘Causes and effects of breaking infrastructure project contracts’ organized by the Society of Economic Journalists of Nepal (SEJON) on Monday. ‘If the construction contractor does not work as per the terms, the contract should be terminated. But while breaking the contract, we need to see how fair it is.’ 

Political parties have a tendency to issue contracts to attract people in their constituencies. There is a provision in the Public Procurement Regulations that contracts cannot be issued without a minimum amount of 20 percent. ‘Contracts have been issued despite this, a solution should be found before terminating the contract, it is wrong to break the contract just to achieve the political goals of a single person,’ he said.

While terminating contracts that have not been worked on for a long time, Singh emphasized that the contracts that can be regularized should be made by studying why those contracts became sick and then getting the work done by the previous construction contractor. "If repeated attempts fail, then it should be terminated," he said. "But in Section 59 (8) of the Public Procurement Act, there is a provision that is not available anywhere else in the world, where it is said that after terminating the contract, the remaining work can be completed by recovering the government's dues from the construction contractor. These issues also make the contract unhealthy." 

A project that has not made expected progress even after the specified time has passed, has not been completed even after repeated extensions, and has left the remaining work unfinished, is considered a sick contract, said former Secretary Arjun Jung Thapa.

‘The number of contracts that are sick in Nepal has increased since 2060 BS. In 2075 BS, when the Commission for the Investigation of Abuse of Authority took an interest and investigated, 1,848 contracts under various bodies were sick,’ he said, who also worked as the Director General of the Roads Department. ‘Of which there were 966 sick contracts under the Roads Department alone, we reduced them to 200 by getting some of them worked on and breaking some within 2077/78 BS.’ 

Thapa understands that the main reasons for the sick contracts are the lack of continuity in the budget, the rapid change of government, and the failure of the previous government to continue the priorities of the previous government. Other reasons for the sick contracts include unprepared contracts and the construction site not being vacated.

‘At that time, a budget was requested from the Ministry of Finance, and construction entrepreneurs were hired to work, and a place to work was provided,’ he said. ‘In the case of some bridges, technical problems also arose, but we worked by understanding the technical side and solving the problem.’ 

Thapa claims that the joint venture provision has been misused by construction entrepreneurs. ‘A lot of work has been done by firms with the capacity to take on large contracts to place small construction companies with less capacity to take on large contracts in joint ventures, and they are still doing so,’ he said. ‘Some have worked in joint ventures in the hope of getting votes in the Federation of Construction Entrepreneurs and getting two to four percent profit, and large companies have been in trouble.’

Thapa says that some construction entrepreneurs have been blacklisted due to mistakes made by one of them while working in joint ventures.

Keshav Kumar Sharma, Secretary of the Ministry of Physical Infrastructure and Transport, clarified that contracts are not made to break the contract in the middle, but to complete the work. ‘Around 2800 contracts have been made by bodies under the Ministry of Physical Infrastructure and Transport,’ he said, ‘of which about 300 contracts are defective.’

He said that contracts are not made for an indefinite period but for a specific period. He said that the contracts are also becoming sick due to the low budget allocated every year, design changes, unavailability of construction sites, shortage of construction materials, local obstacles and natural disasters. ‘Construction problems also occur due to the managerial weaknesses of construction entrepreneurs,’ he said, ‘When the money from one contract is used for another and sufficient resources are not arranged by taking contracts from many places, the work does not progress.’