KATHMANDU, April 27: The government has yet to pay Rs 60 billion to the contractors. The construction entrepreneurs stated that about Rs 40 billion is pending for multi-year projects that are still under construction and Rs 20 billion for projects completed as of the last fiscal year.
Earlier, under pressure from the construction entrepreneurs, the government approved the 13th amendment to the Public Procurement Rules, 2080, allowing an extension for unfinished projects of multi-year contracts. This resulted in an additional liability of Rs 40 billion. The obligation to pay Rs 20 billion remains for projects completed during the fiscal year 2022/23.
“The government should pay Rs 40 billion for the projects that have been extended,” said Rabi Singh, the president for the Federation of Contractors' Associations of Nepal (FCAN), “The government’s total liability for these projects is about Rs 500 billion.” According to him, the government has not been able to pay Rs 20 billion for the projects completed in the last fiscal year 2022/23.
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According to Singh, the government should provide the budget only by selecting important projects and prioritizing them. He stated that the government should cancel non-essential projects.
Raghubir Mahaseth, Minister for Physical Infrastructure and Transport has committed to paying contractors for completed projects by the end of the current fiscal year. He stated that a study is underway to assess multi-year projects that are still under construction aiming to determine the appropriate course of action.
Earlier, on July 5, 2023, the government amended the public procurement rules to extend the contract period of multi-year projects under construction by one year. On the one hand, this extension has increased the government’s annual expenditure burden when contractors and builders are holding projects costing billions. On the other hand, it is providing contractors an excuse to prolong the projects by extending the deadline.
In the (thirteenth amendment) of the rules, it is mentioned that the deadline will be extended only for projects facing specific challenges such as design changes in the purchase agreement, insufficient budget, non-availability of construction site, lack of payment on time, lack of construction materials, or natural disasters at the construction sites.
An arrangement has been made such that the deadline will be extended upon submission of the revised schedule and a commitment to refrain from making any financial claims in the event of an extension.
Under the pressure of the contractors, the government has been extending the deadline of projects by amending the laws related to public procurement under various pretexts for the past four to five years.
