Miscellaneous

Officials and Italian contractor have differing stories on Melamchi dispute and travel ban

A day after the government said it had barred eight members of the Italian contractor for the Melamchi project from leaving the country, the relationship between Nepali authorities and Cooperativa Muratori e Cementisti di Ravenna appeared to have strained further on Tuesday when officials prevented two other Italians from flying out of Kathmandu. Officials and Italian contractor have differing stories on Melamchi dispute and travel ban

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Chandan Kumar Mandal

Published at : December 19, 2018

Updated at : December 19, 2018 17:54

Kathmandu

Senior officials in the government said they had been trying to bring members of the Italian group back on board to complete the Melamchi Water Supply Project. However, a member of the CMC told the Post that the government had not made any outreach to the group on Tuesday, and instead resorted to restricting two of their staffers who had no involvement in the Melamchi project from leaving Kathmandu. Hours later, the two Italians were allowed to fly out of the country.

The CMC staffer, who only agreed to speak on condition of anonymity because they were not allowed to discuss the details of the incident, said the government told the Italians that it would continue to hold their passports even if the contractors returned to work to complete the project.

“The Nepali officials consider this the starting point for negotiation,” the CMC staffer said. “How can you ask us to finish the work without paying our due money, and keeping our passports?”

A high-level official with the Melamchi Water Supply Development Board, who has been barred from speaking publicly regarding the ongoing dispute, said the government wanted to resolve the matter at the earliest and continue working with the same contractor fearing more hassles in hiring a new contractor for the project that is near completion.

“If the contractor really wants to work honouring its previous commitments, then we don’t have any issue,” the official told the Post. “The government is still committed to completing the remaining work and supplying water in time to the Valley residents.”

The Melamchi Water Supply Project—seen as a solution to the water woes in Kathmandu Valley—still has about a kilometre of concrete lining of the tunnel remaining. Gajendra Kumar Thakur, secretary at the Ministry of Water Supply, among other officials, told the Post that negotiations were going on between the two parties following the incident at the Tribhuvan International Airport on Sunday night. However, he declined to divulge details.

“There has been some dispute between the government and the CMC. We are trying to resolve this, but I cannot say anything about the negotiation,” Thakur said.

The government had accused CMC staffers of trying to flee the country without completing the project, a claim that has been disputed by at least two senior CMC officials. “They left the project site without conveying any information to us. They did not book air tickets from personal expenses, giving ample evidence that they were trying to flee,” said the board officials.

But the CMC official who spoke to the Post said the personal tickets were purchased by some staffers, including a Filipino employee because they were leaving the country to celebrate Christmas with their families back home.

Government officials said representatives of the CMC were blacklisted from leaving the country after they had come to the government with a project termination letter two weeks ago, which was not accepted by Nepali officials.

“After they came to us with the project termination letter, we have grown suspicious of their intention of dropping the project and leaving the country,” the official said, adding, the contractor couldn’t ditch the unfinished project and leave the country.

However, the CMC official said they had the right to terminate the contract after the government failed to pay them the amount as recommended for disbursement by the Dispute Adjudication Board. The Italian contractors had been demanding Rs1.65 billion and an extension of 570 days for additional works they had to perform after the 2015 earthquake.

According to the board’s decision, a copy of which was obtained by the Post, the contractor is entitled to a total payment of Rs362,760,173, including the financial cost.

“This sum is to be paid by the employer [Nepal government] within 21 days of the receipt of this decision,” the letter says.

The CMC staffer said the company had given the government a 14-day notice period requesting the payment before they would officially terminate the contract.

Nepali officials said they did not pay the Italians because they feared the contractors would flee after receiving the payment. “If we gave them the money, they could have spent it to pay their creditors within the country and still leave without completing the project,” the official said.

Nepali officials confirmed to the Post that they had also frozen CMC’s bank account with a deposit of Rs2.5billion on Monday. The amount was deposited by the Italian contractor as a security deposit during the awarding of the contract in 2013.

The government official said after they denied the contractors the money, some members of the CMC started threatening the officials saying that if the contractors do not complete the project, the government would face humiliation after repeatedly promising Melamchi water’s arrival in the Valley by the end of the year.

The CMC official pushed back on the government’s claim and said they simply wanted the money the government owed them.

At the time of going to the press on Tuesday, officials from both the Nepal government and the CMC said they would exercise the option of approaching the Singapore International Arbitration Center to resolve the dispute as provisioned in the contract.

Chandan Kumar Mandal
Chandan Kumar Mandal was the environment and migration reporter for The Kathmandu Post, covering labour migration and governance, as well as climate change, natural disasters, and wildlife.