Contractors want govt order eased

 Kathmandu, July 9: 

The government's order issued to remove obstacles in the deadline extension of the delayed construction work at public infrastructure would further destabilise the construction industry, the Federation of Contractors Association of Nepal (FCAN) said on Sunday.

It concluded that the order has been issued against the suggestions of the FCAN and would promote more distortions in the industry. The order has already been published in the gazette. 

In order to ease the construction works that were lagging due to the COVID-19 pandemic, soaring price of construction materials in the wake of the Russia-Ukraine war, the government had decided to facilitate the deadline extension of construction projects on July 6. The new order is said to benefit more than 2,500 projects of various scale.

Speaking at a press conference organised by the FCAN in the Capital on Sunday, its President, Rabi Singh, claimed that the notification of the order issued by the government cannot be used for the actual extension of the deadline. 

According to him, there are issues that could be the subjects and grounds for compensating the construction professionals, but the order has remained silent on this matter, instead it has been designed to save the government agencies from their basic responsibility. 

Changes in the design of the procurement contract, insufficient budget, non-availability of construction site, lack of construction materials and non-payment on time are the grounds for which the contractors should be compensated but it is not happening. 

Singh said that the arrangement mentioned in the order is contrary to the rules and regulations of the Public Procurement Act since the concerned public body does not have to bear additional financial liability due to the extension of the deadline.

The FCAN had demanded to remove milestones and make payment arrangements by mid-July, terminate the projects without budget in mutual agreement. Stating that the progress could not be made at work due to various reasons including general election, closure of crusher industry, failure to get payment on time, lack of liquidity in banks and unexpected and excessive price hike of petroleum and steel construction materials, Singh said that the FCAN had suggested to extend the deadline by one year along with price adjustments. 

Meanwhile, the FCAN has put forth its five demands to the government. 

The contracts with the projects that cannot proceed due to the reasons like lack of necessary budget arrangements, design problems, land acquisition problems, and complaints to the monitoring government agencies like the Commission for the Investigation of the Abuse of Authority should be scrapped and dues settled, the FCAN demanded.

There should be a clear circular to make the payment that has been pending due to the provision of unworkable milestones according to the 12th amendment of Rule 120-A of the Public Procurement Regulation 2007, and the deadline of the contracts that crossed the time limit before the 12th amendment should also be extended, demanded the federation. 

"The Russia-Ukraine war has caused an excessive and unexpected price increase of 50 per cent to 100 per cent of various construction materials, especially petroleum and steel. This situation is not addressed by the indices of the Nepal Rastra Bank. Likewise, in the case of projects of less than one year, there is no provision for price adjustment," said Singh. 

Hence, according to the previous agreement between the Prime Minister's Office (Chief Secretary level) and the FCAN, a circular should be issued to adjust the price even for the extension period, he demanded.

The FCAN has also put forward a demand that the deadline should be extended even for the projects that could not get an extension due to the dillydallying of the concerned offices even though they submitted an application according to the rule. 

Even till date, since the Ministry of Finance has not approved the budget information system, the Federation has demanded that the payment arrangement be made immediately, as billions of rupees have yet to be paid to the construction professionals.

The Acting General Secretary of the FCAN, Shivahari Ghimire, warned of a protest programme if the demands of the Federation are not addressed. 

Published in The Rising Nepal daily on 10 July 2023.