Govt likely to end Melamchi contract with CMC

Kathmandu, January 18

The government is preparing to terminate the contract with Co-operativa Muratori e Cementisti (CMC) di Ravenna — the Italian contractor of the Melamchi Water Supply Project — following the company’s failure to resume construction works.

The government is planning to scrap the contract with CMC after its officials, who had left for their countries to celebrate Christmas, neither returned to complete the project nor tried contacting the government since they left the country.

“CMC officials were allowed to go home for Christmas celebrations following their commitment to return and the assurance provided by the Italian embassy in India and the Consulate General of Italy in Kathmandu of their return. However, they have not returned yet and CMC has not notified anything to the government in this regard,” said Surya Kandel, executive director of Melamchi Water Supply Development Board.

“CMC officials not returning to continue the project will increase the water project’s uncertainty. We are now left with only one option and that is to terminate the contract with the Italian contractor,” added Kandel.

However, as the dispute resolution committee of the water project had earlier made a decision that the government cannot terminate the contract with CMC till February 10 (the project contract period of CMC), the government cannot abruptly scrap the contract with CMC.

The government plans to begin the process to terminate the contract with CMC by sending a ‘termination letter’ notice to CMC’s headquarter in Italy. As per the legal provision, the government should send a notice of termination to CMC prior to scrapping the contract with it and the notice provides two weeks to the contractor to resume the project works.

“If CMC fails to resume work within two weeks after we send the termination letter, the government will publish another notice terminating agreement with CMC,” said Kandel.

Following this, the construction of the Melamchi Water Supply Project, which was expected to be completed by the next few months, is certain to be delayed as terminating the contract with CMC also means that the government needs to hire a new contractor for the project.

Earlier, CMC had terminated its contract with the water project citing the company’s bankruptcy. However, the government had not accepted the termination letter of CMC as the project was in the final stage of completion. Instead, the government had been doing its best to bring back CMC to the project.