The government has cancelled contracts worth Rs 2 billion over the past few months after Prime Minister Sushila Karki assumed office.
According to government records, around 250 projects have become inactive due to contractors abandoning work, with several remaining incomplete for nearly 15 years.
Speaking at a program on Tuesday, Keshab Kumar Sharma, Secretary at the Ministry of Physical Infrastructure and Transport, said that only poorly performing contracts have been scrapped and that genuine contractors need not worry.
“The cancellation of haphazardly awarded contracts should not deter genuine entrepreneurs,” Sharma stated, emphasizing the need to strengthen corporate discipline in the construction sector.
In late October, Minister for Energy, Water Resources and Irrigation, Physical Infrastructure and Transport, and Urban Development Kulman Ghising directed relevant bodies to terminate inactive contracts to end the trend of taking contracts without delivering work. Following this directive, several government offices issued public notices asking contractors to appear within 15 days with revised work plans, resource mobilization strategies, a commitment to complete work, and factual explanations if there were valid grounds to retain the contract.
Authorities also warned that contractors failing to resume work within the deadline would face contract termination, blacklisting under the Public Procurement Act, recovery of performance security and advance payments with 10% interest, and reimbursement of government expenses.
Secretary Sharma blamed loopholes in the public procurement law for widespread non-performance, arguing that a single act cannot regulate diverse procurement processes effectively.
Most of the recently cancelled contracts involve irrigation, road and bridge construction. Officials cited the Kamala River bridge, which has seen no progress for 15 years, as an example.
Bijaya Jaisi, Director General of the Department of Roads, said authorities cannot remain lenient towards delinquent contractors. “Excessive negligence cannot be tolerated as everyone must abide by the law,” he remarked.
However, contractors have expressed dissatisfaction. Rabi Singh, President of the Federation of Contractors’ Associations of Nepal, accused political leaders of influencing contract allocations and government officials of delaying approvals, which hindered project completion.
“Some officials delayed approving project extensions by as long as 29 months,” Singh claimed.
Minister Ghising acknowledged that government negligence also contributed to project delays. He added that although contracts tied to bureaucratic failures have not yet been cancelled, the government will take action against civil servants whose irresponsibility led to project stagnation.
