KATHMANDU: On April 4, the Public Account Committee (PAC) directed the Board of Melamchi Water Supply Project (MWSP) to clarify on the delays in the construction of headwork within a week.

The contract for construction of headwork and tunnel was awarded Cooperativa Muratori E Cementisti (CMC) on February 19, 2009 with intended completion date of September 2, 2013. Actual physical works started in April 2010. But due to the unsatisfactory performance of the contractor it was terminated on September 25, 2012. Later the contractor lodged a complaint against the board on Dispute Adjudication Board (DAB), stating that the delay in passing the design for the project led to the delay in construction of the headwork. The DAB is a ‘job-site’ dispute adjudication process, typically comprising three independent and impartial persons selected by the contracting parties, to compensate for delays in providing essential designs of the project.

Lawmakers claimed that the contractor was compensated by the MWSP Board for the delays. One of the lawmakers, Hari Nepal said, “Why was the design-making process delayed that led to the delay in completion of the headwork? And, why was the contractor in question compensated?”

Managing Director of MWSP, Ghanashyam Bhattarai accepted the claim that the Board paid a compensation of Rs 58 crores to the contractor. He said, “We were enforced to compensate the contractor by DAB. We provided money through the bank guarantee of the contractor company. Permanent Court of Arbitration (PCA) will have the final say on this case of compensation.”

PCA is an intergovernmental organisation which provides services of arbitral tribunal to resolve disputes between member states, international organisations, or private parties arising out of international agreements will, arbitration between companies or individuals in different states, usually by including a provision for future disputes in a contract.