The Finance Committee of Parliament grilled government officials involved with the Melamchi Water Supply Project over the last-hour disruption in the project that should have been completed by now.

Members of the committee on Thursday questioned officials at the Water Supply Ministry and Melamchi Water Supply Development Board over the ongoing dispute involving the project’s Italian contractor Cooperativa Muratori e Cementisti di Ravenna (CMC) and the government which has put the project’s future into uncertainty. The committee has directed the government to complete the Melamchi project within the allocated budget and the set timeframe.  

The fresh controversy has engulfed the national pride project after the government accused the contractor of abruptly terminating the contract, fleeing the country and leaving the project unfinished. The CMC, however, claims the dispute emerged after the government denied them the due amount.

At the meeting, lawmakers expressed their concerns over another dispute engulfing the project, dashing the public hope of getting Melamchi water at the earliest.

Nepali Congress lawmaker Gyanendra Bahadur Karki reminded the officials that the ministry had announced Melamchi water would be diverted in the next 60 days, but the last hour delay has hit the government’s credibility.

“The latest fiasco has resulted in the loss of credibility among the public. The government should work to restore it,” said Karki, questioning how the problem surfaced and the government was unaware of it.

The lawmakers criticised the government officials for glossing over the problem with technical and historical information about the project instead of clearly explaining the issues.

Nepal Communist Party lawmaker Juli Mahato said the government should try its best to complete the project at the earliest.

Addressing the concerns of lawmakers, Minister for Water Supply Bina Magar said the government had been in talks with the Italian contractor to resolve the crisis.

The fresh trouble surfaced after the contractor announced their bankruptcy, compelling its staff to abandon the project.

“The CMC has said it has gone bust and informed the government about that. The government was on alert after the company staff suddenly came to Kathmandu without even informing the consultant, which suggested they were trying to flee the country,” Magar told the parliamentary committee.

Committee member and Nepal Communist Party lawmaker Ram Kumari Jhakri said the government should have done more to learn about the situation earlier instead of holding CMC staffers at the airport at the last moment.

According to the minister, although both sides are holding talks to find a solution to the problem the government cannot fulfil their demands straight away.

The CMC side maintains that it had submitted the project termination letter to the ministry after the Nepal government missed the deadline to disburse the amount as recommended by the Dispute Adjudication Board.

The CMC officials told the Post they had served the government with a 14-day notice period, requesting it for the payment before deciding to terminate the contract.

DAB had decided that the Nepal government should pay the contractor Rs362,760,173, including the financial cost.

The minister, however, defended the decision not to pay the contractor the sum, arguing that the latter had expressed its dissatisfaction with the DAB decision through a letter, saying that it would challenge the decision by submitting more documents.  

The government side also informed the lawmakers that it did not make the payment as their local bank account has turned one-way and the money could channelled directly to the CMC headquarters in Italy.

“We would give them money if they would pay local vendors. Also, their bank account had become one-way, meaning one can deposit but not withdraw so local staffers couldn’t withdraw the money and make payment. The money would go directly to the headquarters of the CMC which has already gone bankrupt,” added Minister Magar.

Meanwhile, in a joint statement on Thursday, 28 sub-contractors of the project have claimed the CMC owe them nearly Rs1.5 billion for their works. 

The CMC had made a claim of additional Rs1.65 billion for additional works and an extension of 570 days in the aftermath of 2015 earthquake.  

The lawmakers also raised suspicion about reports that said the CMC staffers were trying to leave the country, ditching the project.

“It is interesting to note why the contractor was abandoning the project, especially when much the work is already completed. Besides, the company still has a huge security deposit here,” said Surendra Pandey, Nepal Communist Party lawmaker and former Finance Minister.

“The financial dispute involving claims and variable costs has emerged in the last phase of the project. Is it because someone suggested them to pick up an issue with the government as a bargaining chip?” Pandey said, urging the government to come up with more responsible answers. The government has already decided to freeze the Italian builder’s accounts at the Standard Chartered Bank and Nepal Investment Bank that hold its security deposits totalling Rs2.56 billion.

The government has held nearly Rs3.5 billion including security deposits and amounts due to the contractor, according to Secretary at Ministry of Water Supply Gajendra Kumar Thakur. He tried to assuage the lawmakers, saying that the government would not be in big trouble even if the contractor abandons the project as the government has the required budget and expertise to complete the project on time.

“We still want them to work on the project. If they don’t work, we can complete it on our. There is nothing to worry about,” Thakur said.

According to a government official, 95 percent of the project work has been completed.

The parliamentary members, however, said it would not be possible for the government to go to the project site and resume the remaining works.

Committee Chairman Krishna Prasad Dahal questioned the government’s intent of holding talks with the Italian contractor after having informed the committee about its bankruptcy and frozen its bank accounts.