Govt pays only Rs 2.5 billion to builders

Published On: November 7, 2023 11:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Nov 7: Even though the Ministry of Finance announced to have paid the arrears of the builders for the last fiscal year to the four development ministries, the builders have not received the payment as per the instructions. The Ministry of Finance issued a circular to all the four Development Ministries on October 18 and instructed them to pay the pending dues.

The builders have said that they have received only Rs 2.5 billion out of Rs 7 billion. Rabi Singh, the president of the Federation of Contractors’ Association of Nepal (FCAN), said that although the Ministry of Finance said that the payment would be made, the construction professionals received only Rs 2.5 billion. "After the Ministry of Finance issued a directive, we had hoped to receive Rs 7 billion," he said. "However, due to the financial constraints, only Rs 2.5 billion have been disbursed. 

Chairman of FCAN stated that the Ministry of Finance cited various reasons, including a lack of deadline extensions and unmet milestones, for the remaining payment of over Rs 44 billion from various projects."

Due to non-payment by the government, the builders are in a difficult situation. The Budget and Programme Division under the Ministry of Finance has written to four development ministries and requested them to pay the arrears of the builders. The Ministry of Physical Infrastructure and Transport, the Ministry of Energy, Water Resources and Irrigation, the Ministry of Water Supply, and the Ministry of Urban Development requested to pay the builders.

With the recommendation from the Council of Ministers Office, if the Ministry of Finance comes in writing for the approval of the Line Ministry Budget Information System (LMBIS), the Accountable Officer and related officials will be responsible for responsibilities and needs and accountability related to uniting the created obligations and confirming justification, ensuring the progress of the work, being subject to the details. The way was opened for payment.

In the fiscal year 2023/24, the Ministry of Finance had decided to release the resources until the third quarter by matching the accounts from the sources of the Government of Nepal, if the allocated funds are not received by the third quarter under the budgetary aid. Sushil Babu Dhakal, director general of the Department of Roads said that there was a problem in making payments because the Ministry of Finance did not allocate enough budget.

"Last fiscal year, the Department of Road had arrears of Rs 4 billion from the projects that were presented in the bill," he said. "It's not just limited to the last fiscal year; there is also an issue with payments for the current fiscal year's expenses."

Director General Dhakal claimed that only around Rs 3 billion have been disbursed from the current fiscal year's budget. "We have been facing payment issues throughout this year," he said. "Only 11 percent of the allocated budget for the current fiscal year has been spent. There are insufficient funds and limitations on spending for the current fiscal year, which is why we are currently experiencing these problems," he added.

The Ministry of Finance has issued various expenditure headings for road and bridge construction, railway and airport construction, embankment and dam construction, irrigation structure construction, water supply structure construction, sanitation structure construction, liability fund created in other public works and the amount filled in the accounting form of the Financial Comptroller General Office from the District Treasury Controller Office. In the case of payment, it has been decided to pay from the allocated amount in any quarter.

Similarly, it was decided to pay from the amount allocated until the third quarter of the current fiscal year 2023/24 in the case of payment of liabilities created and incurred lawfully according to prevailing laws and accepted standards.

Prior to this, various ministries and departments had requested to make payments for the budget of the fiscal year 2022/23, which were created through the plan implementation related to a letter dated October 5, 2023, from the Prime Minister and the Cabinet's office. The request was to disburse the outstanding amounts that could not be paid in the fiscal year and the legally established expenditure for the current fiscal year 2023/24.

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