Govt to clear backlog accounts of contractors

 Kathmandu, Dec. 7

Deputy Prime Minister and Finance Minister, Bishnu Prasad Paudel, said on Saturday that the government would clear all the backlog accounts of the construction entrepreneurs up to the end of the last Fiscal Year 2023/24.

His statement came at a time when the contractors have been claiming that they are yet to get their due which amounted to multi-billion rupees from the government.

“Payments will be processed within a week. If not, visit my office, and we will resolve the matter,” he said while speaking at an interaction on 'Mobilisation of Development Budget: Role of government and private sector' organised by Nepal Association of Financial Journalists (NAFIJ) in collaboration with the  

However, he noted discrepancies in payment data, urging contractors to provide clear figures to streamline the process.

The Nepal Economic Journalists Association (NAFIJ) held a discussion programme on Saturday in collaboration with the Ministry of Physical Infrastructure and Transport’s Construction Business Promotion Management Implementation Committee and the Federation of Contractors' Associations of Nepal (FCAN) in Kathmandu on Saturday.

DPM Paudel also pledged to discuss extending loan repayment deadlines for contractors with the Nepal Rastra Bank (NRB). Contractors currently face a repayment deadline by the end of Mangsir (mid-December 2024) which has added pressure to their already strained financial situation, according to them.

The Finance Minister emphasised the need for improved cooperation between the government and contractors. Highlighting the shared responsibility of addressing infrastructure development challenges, he said, “Blaming each other will not solve problems. We are not two opposing sides; we must work together towards nation-building.”

According to him, the budget prepared by the previous government includes federal projects worth as little as Rs. 75,000 and there are 17,000 listed projects most of them are announced without necessary groundwork and assurance of finance resources.

"If the federal government is to implement the project costing Rs. 75,000, what would remain for the provincial and local governments?" he questioned. He stressed the importance of preparing well-designed projects with adequate financing to ensure effective execution.

Speaking on the occasion, Ram Hari Pokharel, Director General of the Department of Roads, noted that contractor payments would be prioritised but remain subject to the Ministry of Finance’s timeline. He said, “The Finance Minister has assured prompt action, and we have submitted our proposals. The speed of payment depends on the response of the Finance Ministry.”

Likewise, Bishnu Prasad Sharma, Joint Secretary at the Public Procurement Monitoring Office, stated that public procurement regulations is in the need to have 14^th amendment. “Even after 13 amendments, procurement issues persist. The revised rules, once approved by the Prime Minister’s Office, will address many challenges,” he said.

Sharma also acknowledged weaknesses in capital expenditure planning and execution, citing the lack of proper project preparation as a significant barrier to efficient spending.

He also warned against frequent blacklisting of contractors, arguing that such practices may lead to a shortage of contractors in the future.

Similarly, former Secretary Arjun Jung Thapa criticised the misuse of infrastructure projects for personal gain. He remarked, “Projects are treated as cash cows, whether in roads, water supply, or electricity. This undermines quality and efficiency.”

Thapa was also critical of hastily awarded contracts and poorly designed projects, particularly in border areas. He called for the termination of problematic contracts, especially for bridge projects disrupted by the Indian Border Security Force, and suggested better planning for cross-border roads connecting Nepal with India and China.

President of the FCAN, Ravi Singh raised concerns over the rising cost of construction materials, particularly cement. He said, “Cement producers have hiked prices by Rs. 200 per sack in a short period, adding to contractors’ financial burdens.”

According to him, with delayed government payments and increased material costs, contractors face mounting challenges. He urged the government to intervene immediately to stabilise prices.

Failure to meet loan repayment deadlines by mid-December could result in contractors being blacklisted, further paralysing construction activities, he maintained.

However, Ramu Poudel, Executive Director of the NRB, said the decisions on extending loan repayment deadlines would be based on further study. He said that loan restructuring and rescheduling options were included in the monetary policy to support contractors during the difficult time. He also said that there is a need to ensure financial stability while addressing contractors' demands.

Likewise, President of the Independent Power Producers’ Association Nepal (IPPAN), Ganesh Karki, said that the hydropower projects are facing problems like delays in land acquisition, tree cutting, and forest clearance. "The government need to work in resolving these issues during the project planning phase," he said.

Karki also stressed the importance of encouraging domestic contractors and investment to achieve the government’s goal of producing 28,500 MW of electricity by 2035 and boosting exports. The government is formulating a strategy to develop the hydropower of that amount of which 15,000 MW will be exported.

 Published in The Rising Nepal daily on 8 December 2024.