Melamchi Water Supply Project

Italian contractor ‘almost unlikely’ to return to work, govt undecided

Published On: January 14, 2019 07:40 AM NPT By: Rudra Pangeni

KATHMANDU, Jan 14: Cooperativa Muratori e Cementisti (CMC) di Ravenna, the Italian contractor of the Melamchi Water Supply Project (MWSP), is almost unlikely to come back to work, against the promise it had made before leaving the county three weeks ago. This is a conclusion many officials have drawn after receiving an email from the company which has pushed a long list of preconditions for its return to work. 

The conditions the Italian company has put forth for resuming work include holding talks outside Nepal, unfreezing both bank guarantee and performance guarantee amounts and payment of all dues (approx Rs 1.3 billion) by the government of Nepal. 

The payment for new bills should not be deducted from the advance payments and assurance of no forceful arrest are the other conditions the contractor has put forth in the email. The email has come at a time when the government was waiting for the return of the employees of the Italian firm to complete the project’s tunnel work, which is in the last leg, and the work related to building dams. 

At least two high-level government officials who declined to be named said that the email from the Italian company has dashed their hopes that the contractor will come back to complete the remaining work of MWSP. The conditions put forth by the Italian firm are neither practical nor feasible but the government should proceed cautiously, they added. 

Spokesman for the Ministry of Water Supply, Shankar Subedi, confirmed that the MWSP office in New Baneshwar has received the email from the Italian contractor. But he said that he has no knowledge of the details of the email. “I will collect the information tomorrow,” said Subedi adding that the issue has to be resolved within this week. 

Work at the dream project, which aims to quench the thirst of the Kathmandu valley by bringing in 170 million liters of water from the Melamchi River in Sindhupalchowk per day, remains halted for over a month after the contractor’s project manager and other staffers tried to flee the project site in the third week of December and were later allowed to go home to Italy to celebrate Christmas and New Year. Officials at the ministry say they had expected the contractor would return but the email full of preconditions clearly indicates that the contractor wants to quit the project. 

The government has already frozen Rs 2.56 billion deposited by the contractor in two banks as performance bond. Government engineers say that the process to terminate the contract can be started immediately by asking the contractor why it is absent from the project site. 

In 2013, the contract for the tunnel work and dam construction was awarded to the Italian contractor after terminating the contract with the Chinese contractor, China Railway 15 Bureau Group Corporation, over non-performance. 

Since December third week last year, the ministry and the government have not made any information public except a press statement issued on the brief detention of the contractor’s project manager and staffers on December 18. Secretary of the ministry, Gajendra Kumar Thakur, had claimed that the contractor had made a written commitment to return to work before leaving for Italy to celebrate Christmas. Secretary Thakur could not be contacted for comment on Sunday.

The contractor has also lost performance guarantee of 8.74 million euros submitted to the Tanahu Hydropower Project for the construction of 140-meter dam but it was not provided advance amount. The contractor is also to lose an undisclosed huge amount from Sahas Urja Limited as its performance guarantee for the contract of tunnel works of Solukhola Dudhkoshi Hydropower Project of 86 MW. 

Officials assume that the contractor seems determined not to come back as it needs to pay the due amount which is far higher than the amount it may lose by leaving the project while it is facing a financial crisis back home.  Works in both projects are also hit by this incident.

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