The Supreme Court has issued a short-term interim order against the Nepal Army’s invitation to award the contract of the sixth package of the Kathmandu-Nijgadh Fast Track project to a Chinese company—China First Highway Engineering Company Limited.

After hearing the writ petition registered by advocate Rojan Khadka on behalf of an Indian company—Afcons Infrastructure Limited, a single bench of justice Tanka Bahadur Moktan issued the interim order valid till Friday while setting the date for another hearing on the interim order the same day.

“The Indian company was one of the bidders for package 6 of the Fast Track Project whose financial bid is second lowest after that of China,” said Rijal. “The disqualification of the Chinese contractor means the Indian contractor would get a contract.”

On Tuesday, Rijal had registered a writ petition at the Supreme Court demanding that Nepal Army not implement a notification to award the contract to the Chinese company issued on December 12 stating that a writ petition against the letter of intent to award the contract to the Chinese company was under consideration at the Supreme Court. The army, which is developing the national pride project, had issued a notification of awarding the contract to the Chinese company as it was the lowest bidder.

Under the sixth package, the contractor is supposed to construct double lane dual carriageway standard expressway road, bridge, slope stabilisation, interchange, toll plaza, and allied works.

The project faces the court case at a time when its implementation has not been moving forward as scheduled, which is expected to delay its completion.

Though the army was supposed to complete the whole project by December 2024, the slow progress is likely to push the deadline further. In February, the army admitted that it would be challenging to complete the project by December 2024.

Earlier, on November 24, Afcons filed a writ petition demanding an interim order against the Nepal Army’s letter of intent to award the contract to the Chinese company.

The army had first declared the China First Highway Engineering Co, ‘technically unfit’ to participate in the financial bid due to its alleged involvement in a conflict of interest.

At that time, the court had not issued an interim order in the writ sought by the Indian company against the letter of intent to award the contract to the Chinese company. Unrestrained by the court, the army issued another notice of awarding the contract to the Chinese company.

After the interim order in response to the fresh petition, the army cannot award contracts to the Chinese company at least temporarily. When the Nepal Army declared the Chinese company technically unfit on September 1, it had found based on the documents submitted by bidders that the Chinese CCB Financial Asset Investment Company Limited had a stake in two Chinese bidders—China First Highway Engineering Co and Zhnongding International Construction Group Company Limited.

Citing the conflict of interest, the army had initially denied China First Highway Engineering participation in the financial bids. But it registered an appeal at the Public Procurement Review Committee against its exclusion from the financial evaluation with the recommendation letter that the CCB Financial Asset Investment Company Limited provided to the Zhnongding International Construction Group on September 6 stating that the former has no stake in the latter.

Then, the Public Procurement Review Committee ordered the Nepal Army the inclusion of the China First Highway Engineering Company for financial evaluation. With the Chinese company making the lowest bid, it won the race for the contract of the sixth package.

“Our argument is that evidence of share transfer of CCB Financial Asset Investment Company Limited from Zhnongding International Construction Group should have been presented before the technical bid was opened,” said Khadka. The Public Procurement Review Committee also does not have the authority to take the evidence presented later.”

Nepal Army is developing this project in 11 different packages. It has already awarded contractors for six packages including a contract for constructing two packages of tunnel works. In May last year, the Army signed a contract agreement with two Chinese companies—China State Construction Engineering Corporation Limited for package 1 and Poly Chyangda Engineering Company for package 2.