Country losing Rs 5b in commission
KATHMANDU, DEC 06 -
The country is losing around Rs 5 billion annually in commission to international construction companies, thanks to the government’s existing provision that restricts domestic contractors to carry out large-scale projects.
According to domestic contractors, despite knowing the reality and plea to relax such constraint the government had shown no interest in making changes to the Public Procurement Act that governs civil procurement. The act requires bidders to have one-and-a-half time higher annual turnover than the proposed contract amount to qualify for bidding in big projects for which local contractors sign joint-venture contracts with international contractors.
“It is the bitter fact that 5-7 percent of total contract amount goes to international contractors only for using their licence to bag project from the government,” said Jay Ram Lamichhane, president of Federation of Contractors Associ-ations of Nepal (FCAN) addressing a press conference on Wednesday. The country has been witnessing an annual outflow of estimated Rs 5 billion from physical infrastructure development projects.
As per the act, local firms bidding for the project worth over Rs 250 million must have an experience of executing similar type of project. Contractors said that over two dozen contractors from countries like India and China only sign contract with their Nepali counterparts to grab the commission on offer without being involved in the real work in field.
Even though they were capable of undertaking the big projects inside the country, FCAN argues, the government’s existing rule has limited them from building capacity and gaining experience required for such undertakings in future. It also blamed the government for neglecting the trend that forces contractors to pay money as donation to different groups with political clout.
Lamichhane said no project could be completed without spending at least 5 percent of total project cost on such groups. “Projects, mainly in remote areas are worst hit as the presence of government authorities is less there,” he added.
With over 15,000 contractors being involved in construction and development projects, the construction sector is the second largest contributor to the country’s GDP with 11 percent, after agriculture sector. Sharad Kumar Gauchan, general secretary of the FCAN, said that despite the repeated calls the government had failed to amend the rules and regulation as per the changing scenario in the sector and solve problem of contractors.
At its 15th annual general meeting last week, the federation had also unveiled 15-point declaration to end policy hurdles, non-professional interference and increase overhead cost of projects from 15 percent to 25, among others. A 15-member panel was formed to hold talks with the government agencies for implementing past agreements.
Programmes for construction day
The FCAN has announced it will mark the 5th National Construction Day on Friday with various programmes. On the occasion, the federation will honour the best performing contractors, firms at district and regional levels, and supporting media in 26 categories with prizes. Class A, B, C, D Nepali companies working inside and big firms involved in development projects outside the nation will be honoured for their performance and encourage other contractors, said FCAN Vice-president Bhisnu Bhai Shrestha.
Source: The Kathmandu Post
