Shaming defaulting contractors may have worked, but it signals system failureContracting firms get off scot-free despite their poor performance because most of the owners enjoy political patronage, experts say.
Tired of the continued delays in the completion of the Kamalbinayak-Nagarkot road and complete apathy of the concerned government agencies towards forcing the contractor to finish the task, people a few days ago decided to take matters into their own hands. No, they did not get to the construction sites with picks, shovels and spades. They started plastering the images of the contractor—Sharda Prasad Adhikari—on public vehicles, trees and poles.
A joint venture of Adhikari’s firm, Shailung Construction, and AIPL Construction (India) was awarded the contract for the construction of the road section in June 2014. But, according to the Department of Roads, the company so far has completed only 65 percent of work after several extensions of the completion deadline.
The public’s novel way of protest made headlines. The construction firm responded by quickly expediting the work.
People of Dolakha then thought what Nagarkot residents did was working. So they too decided to follow suit. They started sticking the images of Deepak Sapkota, who owns Shankar Mali Nirman Sewa, all around.
Shankar Mali construction won the contract to complete improvements on a road connecting Khadichaur in Sindhupalchowk with Charikot, Dolakha in August 2015 with a two-year deadline. After public protest, the construction firm has swung into action.
This new method of protest, which contractors have objected to, may have worked, but experts say when people have to deal with such problems themselves, it shows how the state machinery has become dysfunctional and ineffective.
“People had to resort to such tactics because state organs failed to take action against under-performing contractors,” said Srihari Aryal, a senior lawyer and former chairman of Transparency International Nepal, a corruption watchdog. “They were neither performing nor were being penalised. The reason is simple; they enjoy political patronage.”
The relations between Shailung’s Adhikari and ruling Nepal Communist Party (NCP) Co-chair Pushpa Kamal Dahal are not a secret. Dahal currently lives in Adhikari’s house in Khumaltar.
“Wouldn’t Pushpa Kamal Dahal have got any house other than contractor Sharada Prasad Adhikari’s in rent?” said Aryal. “How can a minister or government secretary initiate action against Adhikari if he has protection from a leader like Dahal who is a co-chairman of the ruling party?”
The Kamalbinayak-Nagarkot road section is not the only project where Adhikari’s firm has failed in meeting deadlines.
Shailung’s track record in Kalanki-Nagdhunga section, roads in Kapan area of Kathmandu including Akasedhara-Rammandir, Sattale-Akasedhara, Sundarwasti-Jagdol, Mutku-Ranipaura roads and Bishalnagar-Chandol-Chakrapath road have been extremely poor.
Nonetheless, its contracts have not been terminated. Nor has the company been blacklisted by the Public Procurement Monitoring Office.
Instead, the Road Department two months ago extended the deadline for Kamalbinayak-Nagarkot road until April next year.
“After the Nepali and Indian joint venture promised to complete the work by April next year—and also agreed to pay the fine—we extended the deadline,” said Keshav Kumar Sharma, director-general of the Department of Roads. “We had also sought the opinion of Exim Bank of India which funds this project about our plan to terminate the contract. But the Exim Bank said any fine levied on the contractor was agreeable.”
According to Sharma, the contract deadline was also extended after taking into consideration some other factors like possible cost escalation if the project were to be retendered and additional resources were required.
According to Rameshore Khanal, a former finance secretary, the nexus between politicians and contracts has been the bane of Nepal’s public construction sector.
“The problem in Nepal is not the lack of necessary laws and regulations and the institutions that have the authority to penalise the defaulters,” Khanal told the Post. “In some cases, contractors themselves are politicians, while in other cases politicians have benefited from contractors.”
Contractors wield so much power that the government makes regulations the way they want. The government, over the span of two and a half months earlier this year—on May 13, June 6 and August 1, amended the Public Procurement Regulations after three contractors complained that some provisions were not in their favour.
Experts say the country has also seen a proliferation of contractors in policy- and law-making bodies in the recent past, which also goes in their firms’ favours. A number of contractors have been elected in federal parliament, provincial assemblies and local governments.
Hari Narayan Rauniyar, who is currently suspended as lawmaker, is the owner of Pappu Construction, which has gained notoriety for its poor track record in a number of projects. But it continued to get more and more contracts until the Commission for Investigation of Abuse of Authority filed a corruption case against him in October last year over the construction of a substandard bridge over Babai river in Jabbighat, Bardiya.
In an accident on Lalbakaiya river in Rautahat last year, five people were killed when the boat they had boarded hit a half-built bridge. The bridge was being constructed by Pappu Construction.
It was after public pressure that the firm was denied the contract to construct Nepal Rastra Bank building. It was finally blacklisted in March this year for three years over poor progress in constructing the main and link canals and rehabilitation of headworks of the Dunduwa Irrigation System of Sikta Irrigation Project. During the blacklist period, the firm cannot participate in any government bids.
Khadka Bahadur Khatri is another example. A contractor-turned-politician, Khatri was the physical infrastructure minister in Karnali government until he was sacked after the Patan High Court sought his arrest on banking offence charge in August.
Khanal, the former finance secretary, says the presence of contractors in law- and policy-making bodies and contractors providing accommodation for powerful leaders
create a conflict of interest. “And on top of that, it becomes difficult for government agencies to initiate action against them when they hold powerful positions or enjoy political patronage.”
When people started plastering the images of defaulting contractors, the intention seems to be shaming them publicly, according to Khanal.
“It did help build public pressure to complete the work in time,” said Khanal. “But that’s not a lasting solution. The government agencies need to step up and take measures to build pressure on the contractors.”
Contractors, however, blame multiple factors for the delay in completion of the projects.
Shailung even described the recent protests against it as political propaganda.
“The move to plaster Adhikari’s images here and there is a ploy to defame him and Dahal,” Ramesh Subedi, director at Shailung, told the Post. “In the past, we failed to complete our work due to the lack of site clearance. Now, work is underway and we are committed to completing the remaining tasks by the newly extended deadline.”
According to Subedi, Adhikari’s relation with Dahal is now becoming a liability for the firm.
Subedi himself, in an earlier conversation with the Post, admitted that Adhikari and Dahal enjoyed good relationship since the early years of the Maoist insurgency. Even at the height of the conflict, when Dahal was wanted by Nepali authorities, Adhikari did not hesitate to assist Dahal—and the Maoists—by taking personal risks, Subedi had said.
Similarly, Sapkota of Shankar Mali Nirman Sewa, also said that his firm failed to continue work on the project because the government didn’t release payments of around Rs75 million of the completed works for more than seven months.
“The government has paid around Rs45 milion in the first instalment and we have already rushed to continue the work,” said Sapkota.
Sapkota has denied his affiliation with any political party. “I am purely a businessman; I have not acquired membership of any political party.”
Rabi Singh, chairman of the Federation of Contractors’ Association of Nepal, said he was unaware of Sapkota’s affiliation to any political party.
Meanwhile, contractors are now planning to stage protests with a number of demands.
“But that is very much expected. A majority of the contractors enjoy political protection and they are hardly scared of the law of the land,” said Khanal. “Contracts should be terminated whenever the contractors fail to perform, except in the cases of force majeure—unforeseeable circumstances that prevent someone from fulfilling a contract.”
According to the contractors’ association, around 2,200 contracts worth around Rs200 billion are awaiting extensions.
One of their key demands is an automatic extension of the contracts whose original deadline has already expired once.
"Although the government made the provision of extending deadline for such projects until June 4 next year through the eighth amendment to Public Procurement Regulations, government officials have refused to extend the deadline for most of them," said Singh, the chairman of the contractors’ association. “Since the authority to decide on deadline extension has been given to officials instead of introducing clear legal provisions, officials are trying to seek bribes.”