Govt rejects ADB call to increase advance payment
KATHMANDU, NOV 23 -
The government on Thursday informed the Asian Development Bank ( ADB ), the major donor agency for the Melamchi Drinking Water Project (MDWP), that it would not increase the amount of the advance payment to be paid to the new contractor.
There has been a difference of opinion between the government and the ADB over the amount and the modality of advance payment to the contractor that would be hired to continue construction of the tunnel for the MDWP. Due to this disagreement, the government has missed the deadline to issue a call for bids for the project.
The Melamchi Water Supply Development Board (MWSDB), the project’s implementing agency, had planned to invite tenders on Nov 9 with the closing date set for Jan 7, 2013.
MWSDB director general Krishna Prashad Acharya said that the board had sent a letter to the ADB on Thursday saying that it would not agree to paying 25 percent of the bid amount up front to the contractor. “The ADB previously asked the board to offer 30 percent as advance which it later revised to 25 percent,” he said. “The ADB also wants us to pay the advance amount in bulk before the contractor begins the tunnel construction.”
Board officials said that the ADB made such a request as it does not want the contractor to suffer a financial crisis during the project implementation.
“Our selection criteria for appointing the contractor will be rigorous, and we will appoint highly competent bidders both technically and financially as the contractor,” said Acharya.
The MWSDB had provided 15 percent of the bid amount to the previous contractor, China Railway 15 Bureau Group, which has now been increased to 20 percent due to the pressure of the ADB .
As the Procurement Act does not allow us to increase the advance payment to 25 percent, we cannot comply with the ADB ’s request. If the board chooses to increase the advance amount to more than 20 percent, it should be endorsed by the Cabinet.
The board is even ready to take the matter to the Cabinet for consideration despite knowing that it will consume more time and delay the project, but there is yet another tussle with the ADB in doing so.
Acharya said the board, if approved by the Cabinet, wants to pay the advance amount in two instalments, 15 percent first and then the rest. “We will pay 15 percent of the advance after the contractor provides details of its expenditure on project development and the rest will be given once the contractor shows its future expenditure in detail,” he added.
“This will ensure that the contractor invests the entire amount taken as advance in the project’s development.” He said that the ADB had rejected this modality and hence the disagreement between the two.
A board official said that the ADB was trying to show its supremacy over the government as most donors do when they provide loans. “But we will not follow the ADB ’s instruction unless it proves there is merit in it,” said the official.
He added that the board would not float the tender unless the matter with the ADB was resolved.
“But we do not know when the matter will be resolved,” he added. “We fear this difference could derail the tender announcement process.”
Source: The Kathmandu Post
