Finance Ministry issues new guidelines to ensure better capital expenditureGovernment agencies taking up development projects are required to invite tender bids by mid-August and award contracts by mid-October.
As the government plans to implement development projects at the earliest date possible to ensure better capital expenditure, it has instructed the agencies concerned to invite tender bids by mid-August and finalise project contracts by mid- October.
The government has long been failing to spend its capital budget due to delays in project implementation. Government agencies are notorious for not starting projects in time and rushing the works once the end of fiscal year draws near.
This has not only resulted in poor capital expenditure but also poor work quality.
As per the budget implementation guidelines issued by the Finance Ministry, government agencies will now have to invite tender bids by mid-August after completing necessary preparatory works, including annual procurement plan, detailed design and cost estimate.
Contract should be awarded by mid-October and work should begin within 15 days of awarding of the contract.
Even though preparatory works related to design and procurement plan were affected due to the Covid-19 lockdown, the ministry officials said that the concerned agencies will still have ample time to issue tender bids for development projects by mid-August.
“The deadlines were fixed because we reckon that it is still possible to meet them despite the impact of the lockdown,” Uttar Kumar Khatri, spokesperson for the ministry, told the Post.
However, Tulasi Sitaula, former secretary at the Ministry of Physical Infrastructure and Transport, said that the deadline for project implementation was brought forward because the budget was presented ahead of its usual date.
“The deadline set by the guidelines is not practical because all the projects incorporated in the budget have not got site clearances yet. They will have difficulty starting work from mid-October,” he said.
He added that unlike in the previous years, government agencies would find it hard to implement the development projects because of the Covid-19 pandemic.
Delays in inviting tender bids and awarding contracts is a major reason behind government resources being spent in the final months of fiscal year.
For example, capital expenditure remained at around 47 percent at the end of the fiscal year 2019-20, which was less than 25 percent in mid-March.
Overall capital expenditure remained poor in the last fiscal year. Before that, in the fiscal year 2018-19, nearly 24 percent of the budget was spent in the final months and over 14 percent of the budget was spent in the final weeks of the fiscal year, according to the 57th annual report of the Office of Auditor General.
“There is a tradition of introducing new projects while announcing the annual budget. So these new projects are going to take time while conducting surveys and estimating costs, among other preparatory works, leading to the delay in project implementation,” said Sitaula.
According to the guidelines, government agencies should begin the procurement process only after securing site clearance, such as work related to land acquisition, environment impact assessment and forest clearance.
They are also required to call for road projects in a single package by combining roads and the management of water supply, drainage, electricity pillars and underground works.
A lack of coordination among government agencies in site clearance work has also been blamed for delay in project implementation.
As per the latest guidelines, government agencies will have to prepare an implementation action plan by incorporating the project details, cost and completion deadline. They are also required to present indicators of achievements while the government employees responsible for implementing the project.
All these details must be published on their websites and at the project site by July end.
According to section 19 of the Fiscal Responsibility Act, the concerned department chief should sign a performance contract with the secretary while the project chief should sign a separate contract with the department chief with indicators of achievements written on the contract document.
If a government staff responsible for a certain project fails to meet the target as per the performance contract, or fails to spend the minimum threshold of the capital budget, they could face departmental action, according to this law.
Khatri, the spokesperson at the Finance Ministry, said the guidelines were prepared as per the Fiscal Responsibility Act and the budgetary provision.
“The government employee responsible for the project will face action as per the Fiscal Responsibility Act for failing to implement the guidelines,” he said.
The guidelines have mentioned that the contractors completing the work in time would be rewarded while those failing to deliver the work in time would be penalised.
The technical evaluation of those projects worth over Rs100 million would be carried out by the National Vigilance Centre.
The guidelines have also called on government agencies to make payment based only on physical progress and the work quality of a project.
Physical progress in a project is not necessary to secure payment until the first four months of the fiscal year. But for payments in the second and the third quarters, a project must have progressed at least 50 percent.
According to the guidelines, the budget that has gone unspent by mid-March 2021 and which cannot be spent by March end should be returned to the Finance Ministry.