Around 2,500 contracts related to hundreds of ongoing development projects are expected to get a last deadline extension of one year to complete the works, failing which will result in termination of the contract.

As per the seventh amendment to the Public Procurement Regulation made on June 6, the secretary of the concerned ministry can extend the contract of under-performing projects by a maximum one year even if the deadline of such projects has already been extended by a half of the original period.

But the government agency must be assured that the work can be completed if the deadline is extended.

Government agencies had allowed the contractors to apply by Wednesday (June 26) for an extension of the project completion deadline.

“The contractors have been submitting their applications for the final deadline extension. As per our estimate, their number could be around 2,500 at the three layers of government,” said Rabi Singh, president of the Federation of Contractors’ Association of Nepal (FCAN), a grouping of the contractors.

The government, however, has not maintained any integrated number of contracts whose deadline could be extended by one year as per the regulation.

However, according to a recent study by the Commission for Investigation of Abuse of Authority, there were 1,848 contracts worth Rs118 billion related to seven development focussed ministries whose deadline has already expired but works have remained incomplete.

The seventh amendment to the regulation had paved the way for under-performing projects to get one-year deadline extension last time after the contractors protested strongly against the provision of the sixth amendment to the regulation which had stated that any contract is subject to termination if the deadline has already been extended by more than a half of the original timeframe.

The regulation was amended for the seventh time in less than a month after the sixth amendment amid strong pressure from the contractors.

However, both government officials and contractors admit that there are several projects which cannot be completed even after a one-year deadline extension. Going by the regulation, they are subject to contract termination if not completed after a year, irrespective of who is responsible for the delay in works.

“There will be situations where a project can be completed within 14 months but the deadline cannot be extended beyond one year as per the regulation,” said Keshav Kumar Sharma, director general of the Department of Roads. ”We have to hold further discussions to address such a situation.”

He said another government decision could be required to address such situation as inviting fresh bids would be more expensive and time consuming. “There is a question whether to terminate the contract even if the project is not implemented on time due to factors such as natural disasters, requirement to change the design, and lack of construction materials, among other factors on which the contractor has no control,” said Sharma.

The contractors also expect that the government will treat the contract on case-to-case basis if the project could not be completed even after the expiry of the extended one-year period.

“Physical Infrastructure Minister Raghubir Mahaseth and Chief Secretary Lok Darshan Regmi have assured us in our recent meetings that the government would seek to address the issue even if the work could not be completed after a year, based on whether there has been notable progress in the work,” said FCAN President Singh.

He said that he believed 70 percent of the projects could be completed within a year after the deadline extension by one year.

“For the remaining projects, the government should decide on a case-to-case basis whether the contractor is responsible for the delay or the government agency,” said Singh. “And whether the remaining work could be completed within the extended deadline.”