The completion of the Kathmandu-Tarai expressway, scheduled for July 2024, is likely to be further delayed after the Public Accounts Committee of Parliament on Thursday directed the Nepal Army to scrap the bidding process of the second phase of the construction of tunnels and bridges.

The committee found serious procedural flaws in the pre-qualification process for the selection of the contractors to construct two tunnels of 2.77 km in total length and several bridges in the Simpani to Chalise Kholsi and Ghattepakha to Bandare Khola sections of the 72.5 kilometre expressway.

Nepal Army is executing the Rs213 billion project. The much-touted expressway will link the Capital with Nijgadh in the southern plains and cut travel time to less than an hour from several hours now.

“The committee’s study has found a serious breach of the Public Procurement Act and its regulation in the pre-qualification of construction companies for the second phase,” Roj Nath Pandey, secretary for the parliamentary committee, told the Post. “The committee has directed the scrapping of the entire process and starting a new one.”

The army had selected just one company from among the 22 bidders that had applied in the global bidding process, which is against the Public Procurement Act-2015 as more than one company must be shortlisted.

There are three phases for the selection of international construction companies.

In the first phase, global bids are called. The second is the pre-qualification phase, in which bidders' technical documents are evaluated, and shortlisted according to their strength.

In the third phase, the project asks for financial proposals from bidders that have passed the technical evaluation and the contract is awarded to the bidder who quotes the lowest price for the project.

However, for the expressway project, only one company—Poly Changda of Guangdong, China—was selected in the pre-qualification process for the second phase of construction of tunnels and bridges.

The expressway has a total of 86 bridges including 16 categorised as special and 6.415 km of tunnels.

The contract to construct bridges and tunnels in the first phase had been awarded to China State Construction Engineering Corporation but even this company was not selected in the pre-qualification process of the second phase.

“The existing laws envision selection of more than one company in the pre-qualification,” said Pandey.

The parliamentary committee had held the discussions with defence secretary Resmi Raj Pandey and Brigadier General Bikash Pokharel, who heads the expressway construction project, before issuing the directive to scrap current bidding and initiate the fresh process.

The parliamentary committee also questioned why the bidding process was not cancelled when there was no prospect of selecting more than one contractor in the pre-qualification process.

It has also pointed out a flaw of the Nepal Army using the terms of the international competitive bidding process to select the companies under the engineering procurement and construction model.

The international competitive bidding is undertaken for every project for which international construction companies are required while the engineering procurement and construction is a specific bidding process in which the project gives the authority and the needed funds to build the project within a stipulated time.

The engineering procurement and construction contract binds the contractor to deliver the project at a stipulated time with “predetermined price” regardless of any increase in cost that the contractor may incur after the contract is signed. The cost of the project in engineering procurement and construction is higher because the contractor takes the risk of time and cost overruns.

Recurring controversies regarding the price tag have bogged down the project. A study conducted by the Asian Development Bank in 2008 had estimated a price tag of Rs56 billion for the project. The cost was revised to Rs96 billion in 2014. The detailed project report submitted to the government in 2015 projected a bill of Rs112 billion.

Due to recurring controversies and delays, the project’s original cost estimate of Rs56 billion has doubled to Rs112 billion in seven years, which means the price tag has been swelling by Rs8 billion annually after adjusting for inflation.

The cost of the project, which originally was proposed as a component of the proposed international airport in Nijgadh, was later revised to Rs213 billion, including contingency costs.

The expressway is expected to save fuel costs as it will slash the travel distance by nearly 160 km. Officials of the Department of Roads estimate that savings will amount to Rs16 billion annually, based on 2016 traffic figures.

The government in May 2017 had decided to hand over the responsibility of the construction of the expressway to Nepal Army after building it under the build, operate, own and transfer model failed.

The Nepal Army had, in 2009, worked to open a track as per the government’s instructions. This was completed in 2013.

Then the government, in 2014, decided to award the project to India’s Infrastructure Leasing and Financial Services Ltd on the build, operate, own and transfer model. However, the award was scrapped in November 2016 following controversies.

The project was finally handed over the army in August 2017 from the Department of Roads.

The completion deadline was August 2021. But it was later extended to July 2024. In the three years since construction began, hardly 11.1 percent of the work has been completed, according to the Nepal Army.

The latest directive is not the first time the bidding process for the expressway has been dragged into controversy. In December 2019, the army had to scrap its decision to select six international expressway designing consulting firms after a probe found that the evaluation criteria for the selection of construction and design supervision consultant was leaked to probable bidders before the bids were called.

Based on the findings of a Nepal Army court of inquiry, the decision to select five Chinese and a Turkish companies was cancelled. However, no action was taken against anyone involved in the process and the leak was termed “unintentional” technical error.

Thursday’s parliamentary committee directive comes after its probe following complaints about irregularities, according to Pandey, the committee secretary.

The Nepal Army, however, says the entire selection process has been transparent and was done based on existing laws.

“We have fully adhered to the Public Procurement Act and its regulations,” Brigadier General Santosh Ballave Poudyal, spokesperson for the Nepal Army, told the Post. “We can make further comments only after receiving the letter from the House committee.”

(Sangam Prasain contributed reporting.)