Kathmandu, January 2

The government stands to lose millions of rupees with the recent endorsement of the amended public procurement guidelines as contractors delaying a project will not have to pay any compensation.

By revising the procurement guidelines for the record ninth time — fourth time in a span of just seven months — the government has given contractors a leeway to exploit state resources.

In the latest revision, the government has modified the earlier provision that required contractors to pay a penalty of one per cent of the bid amount and return the principal and interest on the amount received as mobilisation fund if they were unable to stick to the construction schedule.

The government gives 10 per cent of the bid amount to the contractor that bags a project as mobilisation fund.

The amended rule states, “No matter what is written elsewhere in the guidelines, the extension of the deadline pursuant to sub-section (6a) will not be taken.”

This means that the latest amendment will cost the state millions of rupees that the errant contractor would otherwise have to pay, while on the other hand, the contractor will be able to get one extension after another if it is unable to complete a project on time.

On August 2, the government had amended the public procurement guidelines for the eighth time after class ‘A’ contractors were found to be forming a syndicate in the bidding process for government tenders. Back then, the government had also included a provision that stated that any contractor that had been charged in corruption cases would not be allowed to participate in any government tender.

Subsequently, the contractors had warned that they would halt all construction activities of ongoing projects too if the government did not withdraw the provisions.

Giving into the threats, the government has revised the provisions so that they are in favour of the contractors.

A joint secretary at the Ministry of Physical Infrastructure and Transport, seeking anonymity, expressed concerns that the amended procurement guidelines will sharply hike development costs.

Stating that changing the law to suit the contractors will not ensure that development spending will pick up, he said, “The working procedure of overall development activities need to be altered.”

He further informed that the new amendment to the guidelines will greatly harm the state.

Alleging that the oversight mechanisms are not functioning properly in the country, he added, “This points at high level of corruption at the political level.”

Meanwhile, contractors have welcomed the government’s decision on procurement guidelines provision. “Now the construction works will gather momentum,” assured Nicholas Pandey, senior vice president of Federation of Contractors’ Associations of Nepal.