The Ministry of Federal Affairs and General Administration on Friday formed a committee to draft working procedures for mobilising user groups to carry out development activities at the local level. The ministry’s move comes after its earlier order not to implement construction projects through such groups was met with strong opposition from local governments.

The ministry had issued a circular to local governments not to implement construction projects through temporary user groups claiming that would be illegal. The circular came amid complaints that local governments were awarding contracts worth millions of rupees to politically-aligned user groups.

Local governments had objected arguing that the circular was against the existing laws and it would lead to complete suspension of development activities at the local level.

They had also warned of defying the ministry circular.

Given this context, the ministry consulted the representatives of local governments and formed the committee to recommend appropriate ways to mobilise user groups. The committee headed by Bishnu Dutta Gautam, joint-secretary at the ministry, also has representatives from the Municipal Association of Nepal and the National Association of Rural Municipalities in Nepal, the representative bodies of municipalities and rural municipalities respectively.

“We have given the committee 15 days to come up with a set of working procedures,” said Suresh Adhikari, a secretary at the ministry. “Once the proposed working procedure is approved at the ministerial level, it will be issued to local governments.”

Adhikari said that the ministry is seeking to strike a compromise with protesting local governments after they complained that the circular without any working procedure would be hard to implement.

“Until a new working procedure comes into effect, the local governments can continue to work with existing users’ groups,” he added.

The ministry has also removed the circular from its website.

Referring to the 58th annual report of the Office of the Auditor General, the ministry, on December 7, had issued the circular, stating that mobilising user groups which were not registered under Section 3 of the Associations Registration Act 1977 would be illegal. As per this section, user groups need to be registered with the District Administration Office.

User groups formed for various construction activities were not found to be registered as per this provision of the law.

“As user groups are formed temporarily to implement certain projects and they are dissolved after the completion of the works, they cannot be held accountable for operation and repair and maintenance and they also don’t get their income and expenditure audited,” the circular states.

The circular called for implementing the development projects only through permanent institutions [those registered with district administration offices], indicating that they need to be registered under Associations Registration Act 1977.

In response, the Municipal Association of Nepal and the National Association of Rural Municipalities in Nepal, stated in a joint statement on December 8 that the ministry’s circular was illegal considering that the Some Nepal Acts Amendment Act 2019 and Local Government Operation Act 2017 have clearly authorised local governments to register user groups.

“The circular is against the Public Procurement Act-2007, Local Government Operation Act-2017 and spirit of the constitution,” reads the joint statement. “So it would be good to allow local governments to register user groups at the local level under local laws.”

Office bearers of these associations told the Post that local governments defied the ministry’s circular and involved user groups in construction activities.

As per the Public Procurement Regulations 2007, user groups can be awarded contracts of up to Rs10 million.

Ashok Byanju Shrestha, the president of the Municipal Association of Nepal, said that local governments are not obliged to follow the recommendation of the Office of the Auditor General, as the recommendation itself was illegal.

“The auditor general office also should not make illegal recommendations,” he added.

Bansha Lal Tamang, the general secretary of the National Association of Rural Municipalities, also termed the ministry’s circular illegal. “Rural municipalities won’t implement such a circular,” he said.

Both of them insisted that the concept of implementing construction projects through user groups should not be undermined just because some user groups allegedly committed irregularities.

“Assigning construction works to user groups means ensuring participation of the local people in the development process,” said Tamang.

Earlier in October, the Ministry of Urban Development had decided to suspend all kinds of procurement through consumer groups until a clear working procedure was formulated.

The ministry had cited reports of irregularities in such procurements and substandard work by user's groups as the reasons for the suspension.

The ministry had also pointed out anomalies in the works done by users’ groups such as a lack of uniformity in work, a lack of competition, poor quality of works, and shortcomings in following laws and regulations, as observed by agencies including the Office of Auditor General, the Commission for Investigation of Abuse of Authority and the ministry itself.

Referring to a report of the anti-graft body, the ministry said in a press statement that the works done by user groups have not been effective and they have promoted corruption. Monitoring carried out by the ministry and its subordinate agencies also found many user groups had failed to ensure quality in their works and failed to curb irregularities.

According to experts, the involvement of local politicians in users’ groups was one of the reasons for the anomalies.

“In fact, politicians sought to provide benefits to their cadres who supported them in elections by allocating budget to users’ groups represented by political party cadres,” said Rajuman Manandhar, a former joint secretary at the Department of Urban Development and Building Construction told the Post last month.

In its 30th Annual Report 2019-20, the anti-graft body pointed out anomalies in the public works carried out through users’ groups. According to the report, the local governments were making advance payments to user groups without following due legal procedures, people represented in the user groups were using such advance amounts for personal benefits and there was a tendency to award work completion certificates without ensuring that the work had been completed.

The report also highlighted the tendency to subcontract construction works to commercial contractors, use heavy equipment and make payments without carrying out technical assessment. There is also a tendency to approve budgets for user groups without ensuring cost-sharing, the report said. As per Clause 97 (2) of the Public Procurement Regulations, there is a provision of cost-sharing between the government to the users groups.

Such reports on anomalies prompted the Public Procurement Monitoring Office to come up with a working procedure to tame the wayward users’ groups.

The proposed working procedure also bars user groups from being involved in public sector procurements, except those related to construction projects.

Given the involvement of local politicians in user groups, which invites conflict of interest, the proposed working procedure has barred elected representatives, officer-bearers of political parties, employees of government entities, teachers, and contractors from participating in user committees formed to carry out public construction works.

“We sent the proposed working procedure to the Cabinet last month for approval,” said Tikaraj Pokharel, information officer at the Public Procurement Monitoring Office. “But I am not sure about the latest development.”