NA awarding Rs 45 billion contract to Chinese companies “surreptitiously” amid political crisis

Pramod Raj Sedhain

January 1, 2021


NA awarding Rs 45 billion contract to Chinese companies “surreptitiously” amid political crisis

KATHMANDU: The Nepal Army (NA) is all set to surreptitiously award a contract worth Rs 45 billion to a Chinese company by taking advantage of the current political crisis.

The NA has picked Chinese contractor Poly Chhangda Engineering Company Limited and China State Construction Engineering Corporation Limited to complete the two-phase work of the Kathmandu-Terai-Madhesh Expressway (Fast Track) by being constructed by the NA. 

Kathmandu-Terai Expressway is a mega highway project prioritized as an “infrastructure of national pride” having strategic significance.

The Government on May 4, 2017 had decided to give the responsibility of construction management to Nepali Army following a high-level comprehensive consultation and thought process.

The Expressway consists of a dual carriageway with double lane high design speed highway. The overall 76.2 Km (proposed) length stretches from Khokana (Lalitpur) to Nijgadh (Bara) inter connecting Kathmandu and Makwanpur district in between.

Evidence has shown that the contract has been given by violating the criteria.

According to evidence obtained by Khabarhub, the NA had selected a total of 43 companies — 21 for the first phase and 22 for the second phase. On December 25, the NA published a notice in the media giving eligibility to only two companies – both Chinese — for the contract.

The NA selected companies including China State Construction Engineering Corporation Limited and Poly Chhangda Engineering Company Limited. 

If the evidence is to be considered, the NA has chosen Poly Chhangda Company, which is not even on the list of the world’s 250 largest international contractors.

Meanwhile, the NA has excluded China State Company, which had qualified for the second phase of the work of the same nature. The NA picked Chinese Company Polly Chhangda only for the second phase.

High-ranking military sources conceded that Chief of Army Staff (CoAS) Purna Chandra Thapa picked a Chinese company that does lack any forte in the list of international contractors.

Speaking on condition of anonymity, a senior NA official told Khabarhub, “The NA has chosen the Chinese companies for the contract coming under the influence of Rajan Rayamajhi, brother-in-law of Chief of Army Staff Thapa, and contractor Lokendra Karki for both the phases. This procedure is against the standards set by the NA itself.”

If the evidence is to be considered, the NA has chosen Poly Chhangda Company, which is not even on the list of the world’s 250 largest international contractors.

The NA had called for bids for international companies for pre-qualification on March 13, 2020. Accordingly, the Fast Track Secretariat on September 30 had selected 21 companies for the first phase and 22 companies for the second phase during pre-qualification.

Among the selected companies, while the China State Construction Engineering Corporation Limited figures in the list compiled by the American Independent Appraiser Engineering News-Record, the Poly Chhangda, however, is not on the list.

Contract process not transparent: Source

The Management Committee of the Kathmandu-Terai-Madesh Expressway had suggested the NA select at least eight qualified contractors for the first phase and seven for the second phase. However, names of only two companies have been published in the NA’s notice on the media.

A member of the committee said, “Even among the two selected companies, concerns about the qualification of the Chinese contractor company Chhangda was repeatedly raised within the committee.”

The source added, “We are taken aback at the way to learn that the same company and another Chinese company were selected.”

According to him, the selection process needs to be done again on the basis of merit with fairness by canceling the current process.

The source said, Bikash Pokhrel, Chief Assistant of the Expressway Project had shown ignorance with the selection committee members.

Meanwhile, the Spokesperson of the Nepal Army, Santosh Ballabh Poudyal claimed that the contract process has been carried out in accordance with the Public Procurement Act and regulations. “All works were done in accordance with the law.”

He added, “We went through the tender process as per the rules, which means that no rules have been violated. However, the contractor company was selected according to our criteria from among the three involved in the process.”

According to him, there have been no irregularities in the selection process while ruling out any indiscretions. 

The members of the project’s steering committee include Major General Prem Shahi, considered close to CoAs, Suman Dahal, Joint Secretary at the Ministry of Finance, Shivram Neupane, Joint Secretary at Ministry of Defense, Pramila Devi Bajracharya, Joint Secretary at Ministry of Physical Infrastructure and Transport and Dr. Basudev Sharma, Joint Secretary at the National Planning Commission.

Lieutenant General Prabhuram Sharma has been given the responsibility of the Kathmandu-Terai-Madhesh Expressway, a project of national pride. He has been placed under the authority of the Chief of Army Staff to select a Lieutenant General in the project’s steering committee.

45 billion contract to Chinese company in a non-transparent manner

The Nepal Army had initiated the process of selecting a qualified contractor to construct a two-lane expressway, 7-kilometer tunnel and sky bridges by dividing the entire work into two phases — Phase-1 and Phase 2 within the 72.2 kilometers Fast Track.

While, according to sources, the first phase of the fast track is estimated to cost approximately 24 billion rupees (two hundred US dollars), the second phase will cost about 21 billion rupees ($180 million) to build two two-lane tunnels, five bridges and a four-lane road.

The issue of contract eligibility of both Chinese companies has been questioned. The detailed project details (DPR) of the project was approved by the NA on August 18, 2019.

The overall estimated cost of the project is Rs. 175 billion. Despite NA’s target of completing the project by 2025, the land dispute has yet to be resolved.