Fast Track: PAC smells rat while awarding contract to Chinese company

NA lobbying for resumption

Gajendra Basnet

April 13, 2021


Fast Track: PAC smells rat while awarding contract to Chinese company

KATHMANDU: The parliamentary Public Accounts Committee (PAC) has smelt a rat while awarding a contract of the Kathmandu-Nijgadh Fast Track to a Chinese company by the Nepal Army (NA) saying it contradicted the spirit of the Public Procurement Act.

Moreover, the bidding has not been competitive, according to PAC.

The NA is set to award a contract worth Rs 25 billion for the Kathmandu-Nijgadh fast track to a Chinese company without following the formal bidding procedure deemed essential by law.

It should be noted that the Public Accounts Committee (PAC) on April 1 had directed the NA to stop the contract process claiming that it did not abide by the financial regulations of the country.

Dr. Roj Nath Pandey, the Committee Secretary said that PAC has instructed to stop the contract process as the process lacked transparency.

“Noticing that the bidding was not competitive as only two companies entered the pre-qualification process in the first package and only one competed in the second package, we directed to cancel the second package and go for pre-qualification bidding once again,” Pandey told Khabarhub.

PAC directives have asked to ensure competition, transparency and economy while tendering the procurement process.

“The committee deems it essential to ensure competitiveness, transparency and economy in the procurement process as per the preamble of Public Procurement Act, 2007 and Public Procurement Rules, 2007, regarding the second of the two packages in the EPC Contract Pre-Qualification (PQ) case of tunnel and bridge of Kathmandu-Terai Fast Track.  For this, the committee decided to cancel the procurement process of Package 2 (KTFT / ICB / PQ / 076 / 077-2) for pre-qualification as it is found that competition in the bidding was  found prohibited,” the Directive states, adding, “The Committee has decided to direct the Government of Nepal(GoN) to proceed with the procurement process as per the rules.”

It has further directed GoN to stop the contract process for the time being.

PAC Chairman Bharat Kumar Shah says that the contract work put forward by NA is flawed.

“It is wrong for NA to select only one company for pre-qualification disregarding Rules 35(2) of the Public Procurement Regulations 2007,” he told Khabarhub, adding, “The Rules hail it mandatory to select many companies in a prequalifying stage so that the economic competition and transparency are ensured.”

Chairman Shah said that the Public Procurement Monitoring Office (PPMO) was not even consulted by the army prior to starting the procurement process. He said the army did not even get approval from PMO.

He pointed out that it is absolutely wrong.

Similarly, PAC member Meena Subba claimed that the contract process put forward by the army was against the norms and lacked transparency.

“It is wrong to select a Chinese company that does not have laudable performance record in the list of international contractors and that also without ensuring competitiveness in the process,” Subba told Khabarhub, adding, “There is ground to be skeptic why NA selected only two for the second phase when it had received 21-22 bidders.”

She is skeptical about transparency and honesty and opines that the selection process of the Chinese company in an opaque manner might have caused financial irregularities.

Nepali Congress lawmaker Dr. Minendra Rijal opined that a further study is needed on the issue relating to the selection of contractors for the construction of the fast track.

“The issue needs further study,” Dr. Rijal said, “NA cannot be allowed violating the Public Procurement Act. We should study the issue in detail.”

NC lawmaker Rajendra Kumar KC said is also suspicious of the motifs behind the selection of only one bidder in the first phase.

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

“The selection of only one contractor in the pre-qualification makes one skeptic,” KC said, “Such issues might bring NA to controversy.” He wants NA to further clarify the issue.

Another lawmaker Tejulal Chaudhary also objected that the NA has chosen the contractor company in a non-transparent manner.

As per the Public Procurement Act 2007, there should be at least three companies to tender. The army should have abided by it, but the way it is put forward shows that this issue was neglected during the pre-qualification phase,” he told Khabarhub, demanding, “The alterations must be stopped.”

Likewise, Janata Samjbadi Party (JSP) lawmaker, Pradip Yadav, claimed that the prequalification process, as executed by NA, contradicts the existing legal provisions and deserves a scrap.

“NA’s ‘fast-track contract contradicts the Public Procurement Act, so it should be investigated further,” lawmaker Yadav said.

NA lobbying for the resumption of the stalled work

According to military sources, the NA is lobbying for the resumption of the work stalled at the PAC directions.

The contractor company lobbied by the Nepal Army is Poly Chhangda Engineering Company Limited and China State Construction Engineering Corporation Limited are both Chinese companies. Out of these, Polly Chhangda has been selected for both the first and second phases.

According to military sources, despite having no lauding appraisal record on the list of international contractors, NA has awarded the contract to the Chinese company at the lobbying of the relatives of some high-ranking military officials.

Military sources claim that after the PAC halted the process they actively lobbying again for the resumption of the process.

Interestingly, the company chosen by NA is not included in the list of the world’s top 250 international contractor companies.

Under the second package, the army had selected Poly Chhangda Engineering Corporation of China for the construction of two tunnels and bridges in 1.37 km section from Simpani in Dhedre to Chalise Kholsi and 1.4 km section from Ghattepakha in Lendanda to Badarekholsi in Makwanpur.

Meanwhile, the Development and Technology Committee of the Parliament is also monitoring the construction activities of the Fast Track. The committee has formed a sub-committee to solve various problems related to the project.

The sub-committee is studying the issue of land compensation at Khokana in Lalitpur, the construction site, and the contract NA has given to a Chinese company.

The Council of Ministers had given the responsibility of fast track construction to the Nepal Army in April 2017.

This national pride project has the completion target set for 2024.

The estimated cost of the project is Rs 175 billion. This 76.2 km road is the shortest road to link Kathmandu Valley with Terai-Madhesh.