“We have agreed on the new negotiated ceiling of Rs 4.2 million and the government has promised to strictly abide by the Public Procurement Act, that is, consumers´ groups will not be allowed to exclude overhead and value added tax from that limit,” said Shukunta Lal Hirachana, president of Federation of Contractors´ Associations of Nepal (FCAN).
The government had raised the ceiling for consumers´ groups to Rs 6 million in the budget for the current fiscal year, saying that this would help generate more employment at the local level and strengthen community-based development.
It had even indicated that the local groups could add overhead costs of up to 15 percent and 13 percent VAT on top of the limit. This made the ceiling actually swell to as high as Rs 7.7 million.
But FCAN protested the announcement vehemently, arguing that the volume of work was too high for consumers´ groups, who are restricted from using expensive excavators and heavy equipment and need to work with local manpower, tools and equipment.
It stated also that the ceiling was above the amount for which even professional contractors needed to submit past work-experience documents to make a bid. “This simply did not match with the existing laws and was hence unfair,” said one contractor.
Knowledgeable people had even alleged that raising the ceiling was a Maoist move to pocket money through construction work led by consumer groups, especially as the leaders of such groups forge a nexus with government engineers to siphon away a substantial portion of the project budget. Local authorities hardly monitor the operations of consumer groups.
“In order to prevent such leakages, the government has also agreed to form a monitoring committee comprising representatives of the Public Procurement Monitoring Committee, the Ministry of Physical Planning and Works, FCAN and the Office of the Financial Comptroller,” said a source.
The committee will mainly inspect the operation of consumer groups and ensure that they do not use heavy equipment in their work but instead mobilize local people and tools, transferring the money to the locals.
Moreover, the government has also decided to open up construction work of up to Rs 10 million to all registered contractors. What this means is, contractors need not possess past experience to bid for tenders of up to Rs 10 million. So far, only construction bids of up to Rs 6 million were open to all contractors.
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