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DOCKING NEPAL’S ECONOMIC ANALYSIS
INFRASTRUCTURE AGRICULTURE INFRASTRUCTURE
Given the importance of infrastructure for the economic growth and prosperity of the nation, many initiatives have been undertaken in the review period despite the hardships faced due to the coronavirus outbreak. In addition to continuing many of the past projects which are nearing completion, the government has also allocated budget for starting new ones in the upcoming fiscal year. Indian experts survey for pipeline in Jhapa: A team from the Indian
Oil Corporation, which built South Asia’s first cross-border pipeline in Amlekhgunj, surveyed for the proposed pipeline connecting Nepal Oil Corporation’s depot at Charali, Jhapa with Siliguri, which lies across the eastern border in West Bengal, India. The survey was conducted in response to Nepal’s request to India for carrying out a feasibility study in early January 2020. According to the Nepal Oil Corporation officials, the pipeline is expected to provide several benefits such as a reduction in the supply cost and fuel import cost for Nepal, as well as significant reduction in the leakage and wastage of fuel. Further, with reduced use of tankers to carry fuel, a significant benefit to the environment is also anticipated. The field study was carried out on February 12, 2020. Post study, the team will submit the report to Indian Oil Corporation, and will provide a financial assessment of the project.84
Delay of the construction of houses under the People’s Residence Programme: According to the Urban
Development and Building Office, Gorkha, around 287 houses are being constructed in the district for Kumal, Darai, Bote, Chepang, Gandharba and Dalit communities with the
support of the government. Up until now, the highest number of houses i.e. 60, is being built in Shuklagandaki Municipality, followed by 47 in Byas Municipality and 35 each in Bhimad and Bhanu Municipalities. Other houses are being built in other municipalities simultaneously. As per the procedure, the budget for the construction of these two-room concrete houses is provided in four installments based on technicians’ recommendations. However, the construction has now been affected due to the delay in releasing the third installment of the housing grant.85 Now, with the pandemic looming above the country and exposing resource gaps as it unfolds, the construction is expected to be delayed further. Contractors to be held accountable for ten years after project completion: Earlier in August
2019, the government of Nepal had amended the Public Procurement guidelines for the eighth time after class “A” contractors were found to be forming a syndicate in the bidding process for government tenders by including a provision stating that any contractor that had been charged in corruption cases would be disqualified to participate in any government tenders. Following
this, the contractors had warned the government of halting all construction activities of the then ongoing projects. In response to this, the government had revised its provisions in favor of the contractors. Moving on, by revising the procurement guidelines for the ninth time in January 2020, the government had modified the earlier provisions that required contractors to pay one percent penalty charge if they were unable to stick to the construction schedule, meaning that this latest amendment would cost the state millions of rupees that the errant contractor would otherwise have to pay.86 Now, to make contractors responsible and accountable, the government has been preparing to introduce a provision that would hold contractors accountable for the projects that they have developed for up to ten years after its completion. This move is expected to enhance the quality of work, especially in large infrastructure projects like hydropower, roads, railways, and airports. Along with this, the Ministry of Finance is also mulling over implementing the Hybrid Annuity Model (HAM) whereby the government will make payment in a fixed amount for a considerable period and thereafter, in variable amounts for the remaining period.87
