Since taking over the leadership of the Ministry of Physical Infrastructure and Transport, Kulman Ghising has been working to terminate one sick contract after another. In this context, on Kartik 11, the Road Division Kathmandu had issued a public notice asking, 'Why not terminate the contracts?' of 57 projects that had been contracted since 2067 BS but had not been completed. Since then, the office has terminated the contracts of 25 out of 57 projects. It is in the process of terminating 32 more.

Recently, the process of terminating the contracts of projects that have become sick after being contracted is moving forward through the departments and planning offices under the Ministry of Physical Infrastructure and Transport, the Ministry of Energy, Water Resources and Irrigation, and the Urban Development. Why has Minister Kulman prioritized the process of terminating the contracts? And has such work not been done before? Is the process of terminating the contracts complicated? We have tried to answer these and similar questions in five questions and answers.

How many contracts of what types of projects have been terminated since Kulman Ghising became the minister of three development ministries?

The process of terminating 229 sick contracts has been moved forward through various divisions and planning offices under the Roads Department. The demand was made because construction entrepreneurs could not complete the work on time under these contracts, said Shyam Bahadur Khadka, Deputy Director General and Spokesperson of the Roads Department. Some contracts are terminated by the concerned Roads Division offices from there. The department receives information about the termination of some large and important contracts.

‘The Road Department has received information that 38 contracts, including 25 under the Road Division Kathmandu, have been terminated,’ he said. ‘A number of construction entrepreneurs have started work even after issuing notices and seeking clarification.’ According to the department, some have not yet responded and are out of contact. Khadka says that some of the contracts that are said to be sick are in the process of being terminated and work has progressed on some.

The contract for the Kankai Bridge in Jhapa, for which the purchase agreement was made 14 years ago, has been terminated. The Itahari Planning Office under the Postal Highways Directorate published a notice on 11 Mangsir stating that the contract agreement had ended. The contract was taken by Pappu-Mahadev Khimti in a JV for Rs 349 million. The Planning Office has stated that it will write to the Public Procurement Monitoring Office to blacklist both companies. Earlier, the Planning Office had issued a public notice on Asoj 15 asking why the contract should not be terminated after giving 15 days. The construction progress of the bridge so far is only 56 percent. The agreement to build the 725-meter-long bridge was signed on 29 Jestha 2068, and the work should have been completed on 29 Jestha 2072. Pappu Construction, which won the Kankai Bridge contract, has been blacklisted by the Public Procurement Monitoring Office after it also stalled other projects. This company belongs to former MP Harinarayan Rauniyar. Due to being blacklisted, Pappu cannot take new contracts. After he was unable to work on this contract, the company, which is in the form of a JV, Mahadev Khimti, had been doing it. Mahadev Khimti Construction belongs to Ravi Singh, president of the Federation of Nepal Builders. Yubaraj Pokharel, Chief of the Planning Office, informed that the contract was canceled as per the provisions of the Public Procurement Act as the explanation submitted by the construction entrepreneur was not satisfactory. It is stated that the official representative of the construction entrepreneur was not present due to the inability to complete the work within the stipulated period and the updated work schedule that can complete the work, a reliable plan for resource mobilization and a commitment to complete the work, the explanation submitted was not satisfactory and the lack of readiness to resume the work has violated the Public Procurement Act and the contract agreement.

It is stated that the amount for the performance security will be confiscated as per the provisions of the Act, the amount required to complete the remaining work will be recovered as government dues and it has been recommended to be blacklisted. It has been requested to appear in the office within 15 days to measure and evaluate the work updated so far and the remaining work and make a financial settlement. If the construction entrepreneur does not appear in the office, the office will conduct the measurement itself.

Since then, 19 irrigation contracts have been terminated under the Department of Water Resources and Irrigation. According to the Department of Water Resources and Irrigation, one of the two contracts of the Sunkoshi-Marin Diversion Multipurpose Project has been terminated

 . The department says that the contract was terminated after a long period of time and no progress was made in the contract for the supply and installation of dams, electricity, civil structures, gates, and hydro-mechanical equipment.

The contract was taken by Patel-Raman JV. The contract period is 60 percent, but the progress is only 11 percent. The company took the contract in Magh 2079 to complete the dam construction work on the Sunkoshi River in 4 years and 7 months. Its contract amount is 14 billion 75.9 million rupees. Similarly, 12 river control-related packages in Mahottari and 6 packages under the Babai Irrigation Project have been terminated. Out of 42 contracts under the Department of Urban Development and Building Construction, the process of terminating 37 has been taken forward. Why has Minister Ghising prioritized the work of terminating contracts? Earlier, the project contracts were terminated after the work was not completed despite repeated extensions. The process of terminating contracts in large numbers was not carried out before. As a result, the number of sick projects increased due to lack of work for a long time and the contracting body not daring to terminate them. Kulman Ghising took over the responsibility of the three ministries that currently receive the most contracts, namely Physical Infrastructure and Transport, Energy, Water Resources and Irrigation, and Urban Development, and started preparing a list of sick contracts.

Minister Ghising has been saying that the work of terminating contracts is not done based on individuals. "Anyone who does not work after taking a contract will be punished. The people will have to suffer, but there will be no work for 15 years after the contract is signed," he told Kantipur while giving instructions to proceed with the process of terminating the sick contract. "There is a tendency to invest elsewhere without doing the work after taking an advance payment after the contract agreement has been signed. This should be stopped."

What is the method or legal criteria for terminating the contract?

The Road Department spokesperson Khadka said that the process of terminating the contract was initiated after there was no progress despite giving several opportunities and the work was not completed. "In cases where the work could not be done due to the construction business, such contracts should not be kept lying around. The public should get services on time after the project work is completed," he said. "Currently, the contracts that have not made progress are in the process of being terminated." Spokesperson Khadka says that various conditions were placed between the two parties when the purchase agreement was made and whether the contracting body complied with the conditions or not, and then the contract will be terminated.

‘If the construction entrepreneur is not satisfied with this and feels that injustice has been done, they can go to court,’ said Khadka, ‘Contracts that have been broken due to the negligence of the construction entrepreneur are sent to the blacklist.’ After the contract is broken, the source of the contract needs to be ensured to do new work. ‘If it is something that can be completed in a single fiscal year with a small budget, we will immediately proceed with the procurement process if there is a budget,’ he said, ‘If the budget is more, we will proceed with a multi-year contract after obtaining source assurance from the Ministry of Finance.’

After accepting the work done as per the initial contract, contracts are called only for the new work that remains to be done. According to Sub-section (8) of Section 59 of the Public Procurement Act, if the rules are violated by the construction entrepreneur, how much budget will be required to break the contract and do the remaining work?’ He said that there is a provision to recover it from the construction entrepreneur.

Are construction entrepreneurs affected after the contract is broken or can they easily reverse this decision?

Construction entrepreneurs have been complaining that they are facing problems after the contract is broken. Roshan Dahal, general secretary of the Federation of Nepal Construction Entrepreneurs, said that the penalties for breaking the contract are complicated. ‘There is a strict provision in Sub-section (8) of Section 59 of the Procurement Act, if the contract is broken and work is left unfinished, it is said that the amount required to complete all the work will be recovered from the construction entrepreneur who took the contract,’ he said, ‘In such a situation, where can the construction entrepreneur go? There is no other option than committing suicide, the bank guarantee is forfeited, the performance is also forfeited. They are blacklisted.’ He complained that if a construction company built for twenty years is blacklisted for three years, it will reach zero. "In such a situation, construction entrepreneurs go bankrupt, and the entire family has to suffer because of one person in the house," he said. "Now, the state has been frustrating construction entrepreneurs by arbitrarily terminating contracts." How did the

contract become unhealthy? He said that the contracting body should also be taken action regardless of whether the necessary budget was allocated for it, whether the work site was given or not, and whether the compensation was cleared. ‘After the contract was awarded, the budget and payment should have been regular. The Kathmandu Division has broken 25 contracts. In which the construction entrepreneur had repeatedly requested in writing to provide the site, but the site was not provided.’ He said, ‘Where there are contracts from 2067 BS, how many heads have changed in that office during this period? Was their responsibility within this contract? They have imposed all the responsibility on the shoulders of the construction entrepreneur without fulfilling their responsibilities.’

He said that not only the construction entrepreneur but also the employees who awarded the contract were equally at fault. ‘The government should not have made the contract sick. If the contract that became sick has to be broken, it should be broken.’ He said that both the contractor and the contractor should be made equally liable for the punishment.’ He said that if the construction entrepreneur had made a mistake, he should have been punished for it.

‘What did the employees wait for so many years to make the contract sick? They should also be brought under the purview of action,' he said, 'Sub-sections (3) and (8) of Section 59 of the Procurement Act have increased the complexity, it is necessary to make the said provision of the Act relevant to the times.' Minister Ghising has also been publicly stating that action will be taken if any shortcomings are found in the contracting body.

Was the act of breaking contracts done before or is it new?

According to the Road Department, the process of breaking contracts is not new. But the process of breaking contracts in large numbers at once had not increased before. Keshav Kumar Sharma, Secretary of the Ministry of Physical Infrastructure and Transport, said, 'We were breaking contracts like this before, now there are more.' He said that it was easier to work because the three development ministries that receive the most contracts have the same minister and the same directive worked on projects and schemes under all three ministries.