KATHMANDU, Dec 26: The government has collected around Rs. 840 million under the contractors’ fund over the past 26 years to enhance the capacity of construction entrepreneurs. However, legal complexities have hindered the fund’s scope to utilize these funds, prompting the Ministry of Physical Infrastructure and Transport (MoPIT) to initiate the process of amending the 2056 BS regulation as per which the fund was set up.
Expanding the fund’s scope will allow the accumulated funds to be spent beyond their initially designated purposes.
As per Section 17 of the Construction Business Act, 2055 BS, a fund was set up to enhance the capacity of construction entrepreneurs and provide them with necessary services and support. The Construction Business Regulation, 2056 BS, requires construction entrepreneurs to deposit 0.10 percent of the approved contract amount into the fund. Based on this provision, the government established the Construction Business Fund in 2055 BS.
The MoPIT's Construction Entrepreneur Promotion Section stated that the government has accumulated around Rs 840 million in the fund so far by deducting 0.10 percent from every bill paid to contractors. The law allows the deposit of funds from the Nepal Government, prescribed fees from construction entrepreneurs, and amounts from domestic or foreign organizations into the fund.
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According to the Construction Entrepreneur Promotion Section, the law allows the fund to be spent on various areas such as social responsibility, enhancing the capacity of construction entrepreneurs, publicity, and training. The law also stipulates that the Construction Entrepreneur Development Council must approve programs to spend the accumulated funds.
According to the law, a Development Council must be formed under the chairmanship of the Minister of Physical Infrastructure and Transport to manage and audit the fund. The council's members will include the member of the National Planning Commission (responsible for construction and transport), the Secretary of the Ministry of Physical Infrastructure and Transport, the Secretary of the Ministry of Water Resources and Irrigation, the Secretary of the Ministry of Urban Development, and the President of the Federation of Constructors' Associations of Nepal (FCAN) or a representative appointed by the President.
Similarly, the president of the Society of Consulting Architectural and Engineering Firms (SCAEF) will also serve as a member of the fund. According to the law, the technical secretary appointed by the MoPIT will serve as the member secretary of the council. The law also stipulates that if only a state minister is appointed in the Ministry of Physical Infrastructure and Transport, the state minister will become the chairperson of the council.
The law mentions that "the council will determine the procedures for its meetings on its own." According to ministry sources, with the aim of expanding the scope of programs to utilize the funds accumulated in the Construction Business Fund, a committee was formed last week under the chairmanship of the MoPIT's undersecretary, Sushil Babu Dhakal, to amend the regulations.
The committee includes representatives from the Construction Entrepreneur Promotion Section and the Ministry of Law. Additionally, representatives from the FCAN and the SCAEF have been included as members of the drafting committee.
The chairperson of the drafting committee, Dhakal, stated that the committee was formed to amend the regulations not to expand the scope of expenditure, but to update the law in accordance with the existing norms and the spirit of the constitution.
A ministry source says, "Minister of Physical Infrastructure and Transport, Devendra Dahal, has shown interest in forming a drafting committee to amend the regulations." According to the Construction Entrepreneur Promotion Section, 17 programs worth Rs 24.9 million have been planned for the current fiscal year 2024/25, from the funds accumulated in the Construction Business Fund. Of this, only Rs. 130,000 has been allocated for publicity. Additionally, a budget has been allocated under the title of 'Poverty Alleviation Social Responsibility Program.'
According to a ministry source, some of the funds accumulated were used last year under the social responsibility title to assist the local residents affected by the Jajarkot earthquake. A ministry employee stated that amending the regulations and expanding the scope of the program aims to allow the use of the fund for disaster and risk reduction purposes. He added, "If this happens, the funds could be misused, going beyond the targeted objectives."
