Small contractors still await payment for works of last FY

Published On: November 28, 2017 05:15 AM NPT By: Rudra Pangeni  | @rudrapang

Budget for such works have been sent to local bodies: finance ministry

KATHMANDU, Nov 28: Contractors handling small road projects in several towns and rural areas are yet to receive payments for works completed in the last fiscal year. Some have not received payments for multi-year projects completed in the current fiscal year.

The uncertainty over payment has prompted contractors to launch protest against concerned authorities, while some have gone to the extent to stop work, citing lack of resources.

Overdue payment for such works is worth billions of rupees, according to official estimates.

The government omitted budget headings for such small roads, several of which were a part of multiyear contract, giving local bodies authorities to implement such projects. Because of this the Department of Roads (DoR) and its division offices lacked budget to make payment for such small projects. 

Earlier, DoR and its division offices could make payment for works of multi-year contracts even after completion of the fiscal year.

In Fiscal Year 2016/17, the Ministry of Finance has distributed Rs 5 billion for small projects in towns and villages to all 753 local units. Each, unit has received Rs 6.7 million for such small projects. However, local bodies have chosen not to release payment for projects selected and financed by the central government. As a result, small contractors are not getting paid for works completed by them, according to officials of the finance ministry.

Talking to Republica over phone, Prakash Acharya, a civil contractor based in Baglung, said he has not received payment for works worth around Rs 10.5 million. “Over two dozen contractors like me in four districts of Dhaulagiri zone are still to receive payments worth Rs 50 million,” Acharya said, adding, “We have no option but to resort to protest, as we do not have resources to pay to our suppliers.”

Division Road Office, Baglung, is the authority managing such projects in Dhaulagiri zone.
Acharya is also the central committee member of the Federation of Contractors' Association of Nepal (FCAN). 

Thaneswar Khatri, divisional engineer of the Division Road Office, Baglung, said they do not have any budget to pay the contractors. “We signed contract with contractors after we received 'Resource Assurance' letter from the finance ministry. But the ministry did not release payment for such works,” he added.

Resource assurance letters were issued by the ministry on the influence of senior leaders of different political parties and highly placed bureaucrats with the motive of wooing voters. This has created serious problems now.

Rajesh Thapa, a Dolakha-based contractor, is still to receive Rs 70 million from Division Road Office, Dolakha. “Officials say that the payment will be released soon. We have been hearing this for the past five months,” he said. Thapa also said that contractors like him padlocked the division office for few days two weeks ago to pile pressure on the government. 

FCAN General Secretary Ram Sharan Deuja criticized the government for not releasing payment for works completed months ago. “It's an undeclared policy of discouraging contractors,” he said, adding: “Many contractors do not have resources to pay for their suppliers.”

Kewal Prasad Bhandari, chief of the Budget Division of the finance ministry, said he was aware of the sufferings of small contractors. “But we do not have the authority to address their problem,” he added. “It is unfortunate that local bodies did not allocate budget for projects prioritized by the central government.”

Only a cabinet decision can provide relief to contractors, government officials say, adding: “Otherwise, we will have to wait for the decision of the new parliament.”

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