Government amends public procurement regulation for the fourth time in seven months amid pressure from the contractorsThe Cabinet meeting on December 23 amended the regulation.
Prithvi Man Shrestha
The government has amended Public Procurement Regulation for the fourth time in the last seven months, fulfilling at least two demands of public contractors.
The government’s spokesperson and Minister for Communication and Information Technology Gokul Baskota confirmed that the Cabinet meeting on December 23 amended the regulation.
Overall, it is the ninth amendment to the regulation.
Earlier, the regulation was amended on May 13, June 6 and August 1 and the latest three amendments were made because of pressure from the public contractors.
At a time when the government is under the spotlight over a number of policy decisions allegedly in favour of certain business groups, such as the Yeti Group, it amended the public procurement regulation in line with the demands of the contractors.
A source at the Prime Minister’s Office, who wanted to remain anonymous, told the Post that three major amendments had been made in the regulation.
“The amended regulation has increased the deadline of completing sick projects by one year,” Minister for Physical Infrastructure and Transport Basanta Nembang told the Post. “A sick contract can get extension for a year once the concerned government offices decide to extend it. Those who have already get contract extension will cover one year from the date of extension was approved”
He said that the government agencies will have to complete the extension related tasks within 45 days once the contractor applies for extension.
The eighth amendment made on August 1 had opened the door for extending the deadline of sick projects until June 4 next year.
But the contractors have been demanding that the government further extend the deadline, taking into account that all sick projects could not be completed within the new stipulated timeframe due to projects being in different stages of construction.
They have also been complaining that the government agencies have so far extended the deadlines of only a few contracts, even though around 2,200 contracts related to government agencies have turned sick.
“The decision of extending the deadline by a year has been taken after it was seen that it would take at least one year for awarding new contracts by terminating the existing ones,” said a source at the Prime Minister’s Office said. “While awarding the new tender, the cost will also increase exponentially, while the existing contractors will be working in accordance with their contracts.”
The PMO source also said that after the contract extension, the concerned government agency should be regularly monitoring the progress of the projects on day to day basis and take necessary actions regarding whether to fine, terminate the contract or reward the contractor based on performance.
“If any agency fails to perform its duty, concerned chief of the project will be penalised as per the latest amendment,” the source added.
The third amendment has also relaxed the provision regarding the credit line to be taken by the contractors from banks. Recently, the Public Procurement Monitoring Office had made the provision that any bidder should show credit line taken from banks to ensure that they can work on the project without relying on the government’s advance payment.
“The new amendment in the regulation has made showing of credit lines compulsory for only those bidders who have won the government contracts,” said Minister Nembang.
The contractors were demanding the amendment saying that those who don’t get contract should not be subjected to extra expenditure of paying fees and depositing bank collateral for credit lines. “As the old provision only profited the banks but not the government and the contractor, it was amended that only the bidder who wins the contract, is subjected to show credit lines,” said the minister.
This has raised the question about the government’s intent as regulation has been amended as demanded by the contractors. But, Minister Nembang claimed that the move was aimed at completing the idle projects at a lower cost than what it used to cost for going through new tender process.
However, according to former Finance Secretary, Rameshore Khanal, frequent changes in regulation invite instability in policy, which is not good. “The issue of extension should have been addressed in earlier amendments,” said Khanal. “There should have been a provision where only the contracts which remained idle due to the fault of the government agencies would be extended.”