Citing a low budget allocated in a number of projects for the current fiscal year, contractors have declared not to take forward the construction works of various projects until the government guaranteed them with adequate financial resources.
The Federation of Contractors’ Association of Nepal (FCAN) in this regard has forwarded a circular to the concerned developers. “We have requested member entrepreneurs not to work until the government ensures financial resources to clear our outstanding dues,” said FCAN President Rabi Singh.
According to the FCAN, the government released only Rs 15 billion to pay to contractors in the last week of the fiscal year 2023/24. After the Ministry of Finance (MoF) expressed its inability to clear dues of the infrastructure development projects through budget transfers at the end of the FY, the contractors are yet to receive a total of Rs 20 billion from the government for their completed work.
The contractors have been blaming the government for allocating scanty amounts in the development projects without considering the huge financial liabilities in the construction works. For instance, the government is left to clear Rs 1.29 billion for the work done on the postal highway that falls in Banke, Dang and Bardiya districts. However, the government has allocated a budget of only Rs 780 million under the heading for the FY 2024/25. The amount, in addition, involves Rs 30 million to fund the administrative expenses, said the contractors.
Every year, the government falls short in spending the fund allocated for development works. However, the government is found to be dilly dallying while it comes to clear the dues of the contractors.
Of the total capital expenditure of Rs 302 billion allocated in the last fiscal year; the government utilized only Rs 191.71 billion. It made up only 63.47 percent of the earmarked amounts.
Likewise, the government makes heavy budget transfers at the end of almost every fiscal year, in the name of paying to the infrastructure development projects. The records with the MoF show that the government carried out budget transfers of around Rs 25 billion in two months during mid-May and mid-July of the FY 2023/24, releasing Rs 13.96 billion for development projects.
“The government should come up with clarity about how it will pay our dues first. As the sufficient amount is not allocated through the budgetary system, it should be clear whether to clear our dues via budget transfers, taking borrowings or any other means,” said Singh.
Meanwhile, the MoF claimed that it made necessary arrangements to clear the contractors’ dues in the fourth quarter of the last FY. “It is now solely the responsibilities of the line ministries how they work on it,” said Uttar Kumar Khatri, spokesperson for the MoF.
