CEO Tab
  • Home
  • Prime News
  • International Market
  • Special Report
  • Corporate
  • Opinion
  • Next Gen
  • Entertainment
No Result
View All Result
CEO Tab
  • Home
  • Prime News
  • International Market
  • Special Report
  • Corporate
  • Opinion
  • Next Gen
  • Entertainment
No Result
View All Result
CEO Tab
No Result
View All Result
Home Prime News

Nepal Ends Lowest-Bid Rule in Public Procurement, Introduces Average Pricing System

CEO Tab by CEO Tab
July 16, 2026
in Prime News
0
Nepal Ends Lowest-Bid Rule in Public Procurement, Introduces Average Pricing System
74
SHARES
1.2k
VIEWS
Share on FacebookShare on Twitter

Kathmandu: Nepal has officially ended the long-standing practice of awarding public contracts solely to the lowest bidder, replacing it with a new procurement approach that will evaluate bids based on average pricing in a bid to improve project quality, reduce delays, and strengthen accountability.

You might also like

Finance Committee Gives Government 10 Days to Submit Report on Capital Market Reforms

Parliamentary Committee Directs Government to Curb LP Gas Black Marketing, Study Pipeline Supply Option

Private Sector Credit Growth Slows to 6.2% as Banks Struggle with Loan Recovery

The reform comes through the Second Amendment to the Public Procurement Act, 2007, recently endorsed by Parliament. The government says the revised law is designed to make public procurement more transparent, efficient, and practical while addressing chronic problems that have plagued infrastructure projects for years.

Under the previous procurement system, public contracts were typically awarded to the bidder offering the lowest price. While intended to ensure cost efficiency, the policy often encouraged contractors to submit unrealistically low bids—sometimes below actual construction costs—to secure contracts. This frequently resulted in poor-quality work, repeated deadline extensions, cost overruns, and abandoned projects.

Government officials believe the new average-price evaluation model will discourage aggressive underbidding and encourage contractors to submit realistic and financially viable proposals.

Construction Sector Welcomes Reform

The Federation of Contractors’ Associations of Nepal (FCAN) has welcomed the amendment, describing it as one of the most significant procurement reforms in recent years.

Federation General Secretary Shiv Hari Ghimire said the abolition of the lowest-bid system is expected to reduce unhealthy competition among contractors and improve the overall quality of infrastructure development.

“The government’s amendment is a welcome step. We expect it to address most of the long-standing challenges facing Nepal’s construction sector,” Ghimire said.

According to the federation, contractors have often been compelled to quote unsustainably low prices to win projects, only to face financial difficulties later, resulting in delays, disputes, and compromised construction quality.

Stricter Rules Before Tendering

The amended law introduces several measures aimed at improving project preparation before procurement begins.

Public agencies will no longer be permitted to invite bids without first securing budget allocations or confirming financing sources. Likewise, land acquisition, compensation payments, site clearance, and environmental approvals must all be completed before tenders are issued.

The government believes these provisions will significantly reduce delays caused by unresolved land disputes, funding shortages, and administrative bottlenecks after contracts have already been awarded.

Greater Accountability and Incentives

The amendment also standardizes the preparation of project cost estimates by requiring all estimates to follow government-approved standards, improving consistency and accuracy in budgeting.

In addition, the law clearly defines the responsibilities of public agencies, contractors, suppliers, and consultants involved in project implementation.

Government employees who complete projects on schedule while maintaining quality standards will become eligible for incentives, bonuses, and other rewards. Contractors delivering quality work within the stipulated timeframe will also receive incentives and official recognition.

Among other key provisions, the revised law:

  • Caps the performance guarantee requirement at 5 percent.
  • Recognizes the combined qualifications of companies that merge.
  • Shortens bid submission deadlines to expedite procurement.
  • Makes decisions of the Public Procurement Review Committee legally binding.

Implementation Will Be Key

Construction experts say replacing the lowest-bid model could significantly improve Nepal’s infrastructure sector by reducing unrealistic pricing and encouraging more sustainable competition.

However, they caution that the success of the reform will depend entirely on its implementation.

Experts argue that the methodology used to calculate the “average price” must be transparent, objective, and scientifically sound to prevent manipulation or favoritism. They also stress that contract awards should not rely solely on price but should incorporate technical expertise, financial capacity, previous project performance, and implementation capability.

Without a comprehensive evaluation framework, they warn, merely replacing the lowest-bid rule may not fully address the structural weaknesses that have long affected Nepal’s public procurement system.

Towards Better Infrastructure Delivery

The Federation of Contractors maintains that the amendment marks an important step toward making Nepal’s construction industry more professional, competitive, and accountable. It has thanked the Prime Minister, the Ministry of Physical Infrastructure and Transport, and government officials for advancing the reform.

The federation has also urged the government to incorporate price adjustment provisions for contracts of all durations when amending the Public Procurement Regulations, arguing that such measures would further improve fairness and sustainability in public infrastructure development.

The abolition of the lowest-bid system represents one of the most significant procurement reforms in Nepal in recent years. If implemented effectively, it has the potential to improve construction quality, reduce project delays, and ensure better value for public investment. Its ultimate success, however, will depend on transparent enforcement, sound evaluation mechanisms, and consistent institutional oversight.

Share30Tweet19
CEO Tab

CEO Tab

Recommended For You

Finance Committee Gives Government 10 Days to Submit Report on Capital Market Reforms

by CEO Tab
July 16, 2026
0
Finance Committee Gives Government 10 Days to Submit Report on Capital Market Reforms

Kathmandu: The parliamentary Finance Committee has directed the government to submit a comprehensive study report within 10 days on the key challenges facing Nepal's stock market, amid growing...

Read more

Parliamentary Committee Directs Government to Curb LP Gas Black Marketing, Study Pipeline Supply Option

by CEO Tab
July 16, 2026
0
Parliamentary Committee Directs Government to Curb LP Gas Black Marketing, Study Pipeline Supply Option

Kathmandu: The Industry, Commerce, Labour and Consumer Welfare Committee under the House of Representatives has directed the government to take immediate measures to curb black marketing and artificial...

Read more

Private Sector Credit Growth Slows to 6.2% as Banks Struggle with Loan Recovery

by CEO Tab
July 16, 2026
0
Private Sector Credit Growth Slows to 6.2% as Banks Struggle with Loan Recovery

Kathmandu: Lending by Nepal's banks and financial institutions (BFIs) to the private sector slowed sharply during the first 11 months of the current fiscal year, highlighting weak business...

Read more

BFIs Disburse Rs 162.87 Billion in Share-Backed Loans Amid Surplus Liquidity

by CEO Tab
July 14, 2026
0
BFIs Disburse Rs 162.87 Billion in Share-Backed Loans Amid Surplus Liquidity

Kathmandu: Nepal's banks and financial institutions (BFIs) disbursed Rs 162.87 billion in loans backed by shares during the first 11 months of the current fiscal year 2025/26, reflecting...

Read more

NPC Calls for Reducing National Pride Projects to Improve Efficiency and Control Costs

by CEO Tab
July 14, 2026
0
NPC Calls for Reducing National Pride Projects to Improve Efficiency and Control Costs

Kathmandu: The National Planning Commission (NPC) has recommended that the government significantly reduce the number of national pride projects, arguing that a smaller and better-funded portfolio would help...

Read more
Next Post
Parliamentary Committee Directs Government to Curb LP Gas Black Marketing, Study Pipeline Supply Option

Parliamentary Committee Directs Government to Curb LP Gas Black Marketing, Study Pipeline Supply Option

Browse by Category

  • Corporate
  • Entertainment
  • Featured
  • International
  • Major Story
  • Next Gen
  • Opinion
  • Prime News
  • Special Report
  • Tete – A – Tete

EDITOR

Manish Raj Poudel
info@ceotab.com
9841317747


PUBLISHED BY

Welcome Group
www.welcomeadnepal.com

Publisher

www.ceotab.com is a premium news portal being run by Welcome Group. The website features quality business/economic news contents,  in-depth profiles of companies, stories of struggle and success of entrepreneurs, articles that assess various dimensions of  the commerce, trade and economy.

Editor

Manish Raj Poudel

info@ceotab.com

9841317747

Sub-Editor

Riza Poudel

poudelriza@gmail.com

Archives

© 2023 CEO Tab. All rights reserved.

No Result
View All Result
  • Home
  • Prime News
  • International Market
  • Special Report
  • Corporate
  • Opinion
  • Next Gen
  • Entertainment

© 2023 CEO Tab. All rights reserved.