Shailung Construction was fined for project delay, but government body is unsure whether it should recover the fine amountShailung is being fined Rs150,000 per day since October for the delay of upgrade and expansion of Kamalbinayak-Nagarkot road.
Shailung Construction, owned by Sharada Prasad Adhikari, is being fined every day since October for the delay of Kamalbinayak-Nagarkot road.
Adhikari had got an extension of the contract deadline after he agreed his company would pay the fine for the delay.
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According to officials at the Department of Roads, Shailung is being fined Rs150,000 per day, which according to the original public procurement regulation could be up to 10 percent of the total contract value. The road being upgraded and expanded by Shailung is with the Indian assistance.
However, Road Improvement and Development Project Directorate, which handles the projects aided by Export-Import Bank of India (Exim Bank of India), is now in a dilemma whether to recover the fine from Shailung after it applied for an extension of its contract deadline as per the newly amended Public Procurement Regulation.
The ninth amendment to the regulation issued on December 30 last year states that a contractor should not pay a fine to get the contract deadline extended for a maximum of one year.
Despite being forced to pay a fine, the company sought an extension of the contract deadline as per the terms mentioned in the ninth amendment.
“We have not deducted the fine from its bills, which amounts to around Rs30 million so far. We are not sure whether to recover that amount since their contract extension should be treated as per the amended regulation,” said Jagat Prajapati, an official at the Road Improvement Project under the Department of Roads.
Shailung is owned by Sharada Prasad Adhikari, the landlord of Nepal Communist Party Co-Chairman Pushpa Kamal Dahal.
The contract for the road project was awarded in June 2014 to the joint venture of Shailung and AIPL Construction (India). The widening of the 16-km road has not yet been completed.
Officials said even though the roads department was considering terminating Shailung’s contract, it was allowed to continue work due to the political clout that Adhikari wielded as Dahal’s landlord.
“There is some truth in the claim that political influence played a role in Shailung’s contract extension,” a senior official at the Department of Roads told Post, hinting at Adhikari’s political influence.
A few weeks after the deadline of the project was extended, local people had started plastering the images of Adhikari on public vehicles, trees and poles, asking him to blacktop the road at the earliest.
As matters stand, private contractors wield so much power that the government often makes regulations to suit their interests. The government, over a span of two and a half months earlier this year—on May 13, June 6 and August 1— amended the Public Procurement Regulation after some contractors complained that some provisions were not in their favour.
Contractors argue that they should not be subjected to fines for project delays.
“As long as the government has not collected the fine and the money is not yet a part of the government’s revenue stream, the contractors should not be fined,” said Rabi Singh, president of the Federation of Contractors’ Association, a representative body of the contractors.
“The regulation was amended as a win-win modality for both the government and the contractors where the government would not fine the contractors and the contractors would not demand compensation for delays caused by the government agencies in making payments,” Singh added.