The Department of Roads is making preparations to extend around 2,000 contracts related to road and bridge projects whose works were affected or stalled by several months of lockdown and prohibitory orders, until mid-April next year. The contracts of these projects were signed last year before and between the two Covid-19 lockdowns.

On August 21, the Cabinet decided to extend the contracts signed with contractors, suppliers, consultants, and service providers.

The government decided to give an opportunity to the contractors, suppliers, consultants, and service providers to fulfil their contractual obligations even though agencies including the Commission for Investigation of Abuse of Authority have advised the government against such extensions.

The Ministry of Finance sent a circular to all the relevant government agencies on Monday instructing them to implement the Cabinet decision. As per the circular, the government agencies can extend the contract deadlines until mid-April next year after analysing the necessity, but such extensions should not add to the government’s financial burden, according to the circular.

“We have not yet received the letter for the implementation of the Cabinet decision. As per our assessment, contracts worth around Rs100 billion of around 2,000 projects need to be extended,” said Arjun Jung Thapa, director general at the Department of Roads.

He said that deadline extension of most of these projects is justifiable as their operations were affected by the pandemic-related restrictions. “However, we think around 5-7 percent of the contractors would not work even if we extended their contracts. We will extend the contract deadlines without discrimination,” he said.

This is not the first time the deadline was extended. Earlier, the public procurement regulations were amended several times after the sixth amendment in May 2019 in order to extend such contracts. In the last two years alone, the regulations have been amended five times. Some unscrupulous contractors have been using the Covid-19 pandemic as an excuse to avoid their contractual obligations, according to Thapa.

The government has also admitted that the trend among a few contractors of occupying a large number of contracts beyond their capacities has remained one of the major factors behind the slow progress in projects.

Even the Commission for Investigation of Abuse of Authority showed interest in project delays—in late 2018, it suggested that implementing agencies should be held accountable for any delays in the projects.

The anti-graft body had recommended developing a solid standard for deadline extension and for sanctioning variation orders and that the government agencies properly vet contractors before awarding contracts.

Thapa said deadline extensions during the pandemic have been approved on an ad hoc basis. For example, in July last year, the government decided to indiscriminately extend the completion deadlines of all the contracts that were signed during the first lockdown and expired before the restrictions were lifted, by six months.

In January this year, the government decided to give just six-month extensions to the contracts, which were signed before the lockdown and their terms expired during the first lockdown.

“By the time the government decided to give a six-month extension, it had already been six months since the expiry of the contracts. Therefore, the government needed to take a new decision on deadline extension,” said Rabi Singh, president of the Federation of Contractors’ Association of Nepal, a grouping of contractors.

“With the latest decision, about 3,000 contracts including around 2000 related to roads and bridges are expected to get deadline extensions.”

Singh said that some contractors have failed to get project completion certificates and payments for their work due to the expiry of their contracts and the latest government decision would be a big relief for them.

Admitting that there are some dishonest contractors, Singh said a majority are honest and will complete their works within the new extended deadlines.