Nepali contractors barred from bidding for ADB-funded projects: FCAN

Published On: November 28, 2018 09:05 AM NPT By: Rudra Pangeni  | @rudrapang

Road projects worth Rs 38 billion being awarded to international companies

KATHMANDU, Nov 28: Federation of Contractors’ Association of Nepal (FCAN) has blamed the government and development partner Asian Development Bank for denying Nepali contractors’ participation in at least two mega-billion road projects.

Organizing a press conference on Tuesday, FCAN’s President Rabi Singh said that the requirement of work experience and other criteria inserted in bid documents clearly show that not a single Nepali contractor is eligible to bid for building Kanchanpur-Kamala and expanding Butwal-Narayangadh road sections. 

Both projects parts of SASEC Highway Improvement Project funded by the Asian Development Bank.

Project Directorate Office (ADB) under the Department of Road had published a notice of intention two weeks ago to award two packages of Butwal-Narayangadh road project at a total price of about Rs 18 billion. Chinese contractor China State Construction Engineering has won both the packages. The process of contract award signing is underway.

There is similar story about the contract of Kanchanpur-Kamala road project in which each joint venture partner of the Nepali contractor has to prove similar work experience in a single road construction project. Such joint venture partner should show turnover of minimum Rs 2.09 billion in the last five years to be eligible to apply for the project. This project has been divided into two and each contract is worth Rs 10 billion. 

Rabi Singh claimed that not a single national contractor possessed such experience. “This is how the Nepali construction industry is deprived of development partner-funded project.” 

An excerpt of the press release issued by the FCAN says: “The Department of Roads has never issued a bid notice for a contract of the size of Rs 2.4 billion of single road project in its history. So it’s clear that no contractor has that experience of single road project.” 

The deadline for bidding in this project recently expired. 

Singh said that the projects were designed in a way to disqualify Nepali contractors. “It is not only detrimental to the national construction industry but also a huge loss on the state coffers due to lack of competition,” he added. 

“These are not the projects of railway or any other complicated structure. These are road projects that Nepali contractors can easily take up,” he said. “Both the projects could have been packaged into smaller separate sections to at least allow Nepali contractors to be joint venture partners with foreign companies.” 

“Government’s policies and plans speak of encouraging domestic construction companies and capacity building. But the reality is strikingly different. The national construction companies are simply discouraged,” Singh argued. 

Prevailing procurement law (Public Procurement Act 2007 and other laws) of the land has barred any packaging of the projects in order to make limited competition. 

The FCAN has submitted memos to Prime Minister Khadga Prasad Oli and Minister for Physical Infrastructure and Transport Raghubir Mahaseth and other government agencies. 

The association has said that their repeated appeals to the government agencies are also unheard. “Officials of the project directorate office of ADB said that the contracts are awarded as per ADB guidelines and they have had nothing to do with packaging the projects,” Singh said. 

Chief of the Project Directorate Office Saroj Pradhan and Secretary of Ministry of Physical Infrastructure and Transport Madhusudan Adhikari were not available to comment on the matter.

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