Govt, ADB agree on 20pc advance payment

KATHMANDU, NOV 24 -

Differences between the government and the Asian Development Bank ( ADB ) over making advance payment to the contractor of the Melamchi Drinking Water Project (MDWP) were resolved on Friday.

The ADB , the major donor to the project aimed at easing Kathmandu’s chronic water shortage by bringing water from the Melamchi River through a 26.5-km tunnel, has agreed with the government on limiting the advance payment to 20 percent.

Divergent views emerged some months ago after the ADB insisted on paying the contractor 25 percent of the contract amount up front. The government did not want to go above 20 percent citing restrictions in the Procurement Act.

The Melamchi Water Supply Development Board (MWSDB), the project’s implementing agency, had paid 15 percent of the bid amount to the previous contractor, China Railway 15 Bureau Group. The amount of the advance payment was increased to 20 percent at the insistence of the ADB .

Board officials said that it was not final that it would pay 20 percent to the contractor to be hired for the project. “The advance money will be paid in a lump sum only after the contractor deposits a matching amount as bank guarantee,” said a source.

The disagreement had prevented the MWSDB from inviting tenders for a new contractor as scheduled. The tender issue had been planned for Nov 9 with the last date of submission set for Jan 7, 2013. The postponed tender notice means the project could be delayed.

MWSDB director general Krishna Prashad Acharya said that ADB headquarters in Manila had agreed to paying 20 percent after the board explained its position in a letter sent on Thursday.

“We are happy that the differences between us have been cleared,” said Acharya, adding that it would pave the way for issuing the tender notice. He said that the board had also sent a copy of the bid document to the ADB for its approval. “Once the donor endorses the bid document, the tender notice will probably be published next week,” he added.

Meanwhile, the long-awaited Melamchi project has been rescheduled for completion in March 2016. It had been originally planned to be finished in 2015, but the timetable had to be revised after the contract with the Chinese firm was terminated.

The board has also inserted a carrot-and-stick provision in the new bid document to encourage the contractor to finish the project before the deadline. Ghanashyam Bhattarai, deputy director general of the board, said the reward or penalty could be up to 10 percent of the bid amount.

Source: The Kathmandu Post