Govt exceeds expectations in awarding contracts of ADB-funded projects

Dismal performance in effective and timely implementation remains a major issue

Kathmandu, July 14

The government has exceeded expectations in awarding contracts of the projects funded by the Asian Development Bank (ADB) in the first two quarters of this year.

There is not much reason to cheer though, as the government has failed to show improvement in indicators for effective and timely implementation of the ADB-funded projects. This was revealed during the tripartite portfolio review meeting of the ADB-funded projects held here with participation from representatives of ADB, Ministry of Finance and line agencies today.

The project completion deadline of the major projects has been extended many times due to lack of government’s efficacy in implementing the projects.

However, ADB has said that the contracts awarded in the first two quarters (January to March and April to June) is encouraging. In the six months, the government has awarded contracts of ADB-funded projects worth $157.5 million against ADB’s projection of $145.3 million. On the flip side, disbursement of the ADB-funded projects is very low. Disbursement amount stood at $73.8 million against ADB’s projection of $89 million in the review period.

The Manila-based donor agency has recently pledged to raise the lending level to $500 million per annum, but the country is yet to develop the capacity to mobilise the current funding availability of $275 million per annum due to weak performance in project implementation.

The cumulative ADB portfolio in Nepal at present stands at $1.72 billion, including both loans and grants, of which 57 per cent of the amount was still to be awarded contract and 74 per cent to be disbursed at the beginning of 2016, as per ADB.

“We have established an annual target of $414 million contract award and $247 million disbursement for 2016 and also agreed for realistically achievable targets,” said Kenichi Yokoyama, ADB country director for Nepal.

The ADB and the government review the progress of ADB-funded projects every six months to expedite the project implementation by resolving identified barriers. Today’s portfolio review meeting focused on generic issues that have been discussed regularly since a few years back.

Weak project management capacity of execution agency; delays in procurement and disbursement; close monitoring and support to implementing agencies and Ministry of Finance; high risks in procurement and contract administration and weak inter-agency coordination on environment/forest clearance, and land acquisition, among others were highlighted as major obstacles for effective and timely project implementation.

During the meeting, ADB country director expressed his concern over the dismal progress on some of the critical projects, namely Emergency Earthquake Assistance Project of $200 million, of which only five per cent of contract award target has been met.

“School component is a major concern, and we request Department of Education to urgently deploy deputy project manager (engineer) dedicated to ADB project to central project implementation unit and expedite supervision consultant recruitment and work procurement,” Yokoyama said.

Similarly, he also drew the government’s attention on Air Transport Capacity Enhancement Project of $75 million, of which only two per cent of disbursement target has been met. Deadline for the project has been extended twice already to 2018, but whether the extended deadline will be met remains doubtful.