Indian Line of Credit

Nepal for selecting contractors for road projects on its own

Published On: May 1, 2017 12:10 AM NPT By: Rudra Pangeni  | @rudrapang

KATHMANDU, May 1: Nepal has refused a proposal that authorizes India to select contractors for implementing different road and bridge projects to be built by its line of credit.

Differences between the two countries over selection of contractors for a bridge and 16 road projects have affected these key projects. Officials of the Department of Department of Roads (DoR) refused the Indian proposal, arguing that it is impractical and that it will affect implementation of the projects.

The projects worth around US$ 350 million are a part of Indian line of credit III worth $1 billion which was announced by Indian Prime Minister Narendra Modi during his Nepal visit in August, 2014. 

Senior Divisional Engineer of Road Improvement Project, Laxmi Dutta Bhatta, said that they denied the Indian proposal as allowing the southern neighbor to select contractors would be against the country's procurement laws.

DoR officials have been, for the past two months, arguing that they cannot implement road projects if they do not have any say in contract selection process“ "We have proposed to India that Nepal should be allowed to select contractors. Similarly, we have told them that joint ventures between Nepali and Indian firms can participate in the biddin”," Bhatta added.

But India has been maintaining that it will do pre-qualification of contractors on its own and that only Indian contractors can participate in the bidding.“

"These provisions are mentioned in India's guidelines issued in 2015 and are applicable for all projects financed by its line of cred”t," Bhatta said, adding that the Nepali side sought amendment in the provisions when it knew about it two months ago.

Work to prepare detailed project report (DPR) for strengthening Koshi Pump Canal and Distribution System and building Mahakali Irrigation Project III by utilizing Indian credit line of $200 million is currently underway. Remaining $450 million has been put on hold, saying that projects are not ready to use the credit. 

According to the project agreement, 51 percent of contents, including construction materials, used in all these projects should be produced in India.     

Delay in contractor selection was one of the key reasons behind delay in Postal Highway Project.

The project has seen delay of at least three years. The Indian government had selected contractors for the project. But they have walked away, making little progress in project work.

The DoR has recently appointed new contractors for the Postal Highway Project.

Leave A Comment